The City of Vancouver says it paid off the entire $630 million debt for the troubled Olympic Village project after selling 67 remaining condominium units for $91 million to the owners of the Vancouver Canucks.
Mayor Gregor Robertson told reporters Monday the Aquilini Group’s purchase of the condos ends the city’s involvement in the project that he once referred to as a $1.1-billion boondoggle.
“It’s a very good day for the City of Vancouver, in particular for city taxpayers,” said Robertson at a press conference at city hall. “Today, I’m thrilled to announce that we at city hall here have delivered gold for the taxpayers on our Olympic Village.”
Though the mayor framed the news as an Olympic-sized achievement, a later briefing by city manager Penny Ballem revealed the original revenue projections for the $1.1-billion project fell short by $130 million.
Originally, developer Millennium Properties Ltd. agreed in a 2006 deal with the city to pay $200 million for the land. The city only received $70 million.
That $200 million was to be used to help build infrastructure such as roads, walkways and amenities including parks and a community centre for the Village and two large properties on both sides of the Southeast False Creek lands.
“There’s no question, that if we had got $200 million, that would have been more money to the city to cover more extensive parts of the infrastructure,” said Ballem, who couldn’t definitively say how or who will pay for infrastructure costs associated to the Village’s neighbouring properties. “We haven’t done all the analysis yet.”
That $200 million land value projection, along with the city acquiring a $690 million loan ($60 million of which came from city coffers) and another $200 million in condo pre-sales from Millennium added up to $1.1 billion.
The city ended up getting the $200 million in pre-sales in August 2010 and later made $411 million by selling off more condos and commercial space. The city also collected $68 million from 32 various properties turned over from Millennium and, finally, sold the 67 remaining condo units for $91 million to the Aquilinis.
That added up to $770 million, which gave the city enough money to pay off the $690 million loan and put $70 million towards some of the infrastructure and amenities on and around the Village property.
“It’s really, honestly, monumental,” Ballem said of the city’s ability to pay off the debt, which the city inherited seven years ago.
The controversy around the project dates back to a 2007 in-camera meeting at city hall when the then-NPA dominated council voted in favour of a $190 million financial guarantee in a complex three-way agreement involving the city, Millennium and New York-based lender Fortress Investment Group.
At the same meeting, council agreed to a “completion guarantee” on the loan to Fortress, effectively making the city the project’s developer and putting taxpayers on the hook for the tab. Up until that meeting, the agreement with Millennium was that the city would not assume any marketing or financial risk on the project, according to an April 2006 city staff report that recommended Millennium be selected the developer of the Village.
There was some urgency at the time of council’s decision to take on the risk because it needed to get the Village, surrounding parks and community centre built by the opening of the Games in February 2010.
Ballem acknowledged the speed with which the Village was built, comparing the time it took to plan and complete to large projects in China.
“Is that the normal way we do business? No,” she said, adding that the Village would have been built over 20 years anywhere else in the city.
Robertson zeroed in on the controversy tied to the development in a separate news release issued Monday by his Vision Vancouver party. In the release, the mayor said the NPA’s financial guarantee to Fortress was “an irresponsible move that left city taxpayers shouldering the risk for the entire project.”
The release did not mention four Vision councillors also agreed to the guarantee. Reminded of that fact Monday, Robertson said "at that point, the Village had to get built. That's why I'm saying it's a series of decisions that got made and mistakes all along."
Once during the mayor’s press conference and twice during Ballem’s briefing, former NPA council candidate Michael Geller, who is also an architect and developer, attempted to ask questions about the cost of the project. Geller later posted comments on his blog in which he questioned how the 252 units of social and rental housing at the Village factor into the city paying off the debt.
“Many will recall this was supposed to cost $65 million but ended up costing over $110 million,” he wrote. “It’s not worth $110 million. In fact, the city cannot find any non-profit willing to take over the social housing portion at anywhere near the price it paid. This, too, is a loss that will never be recovered.”
NPA Coun. George Affleck, who also attended the mayor’s press conference, said Robertson and his Vision Vancouver party cannot take credit for the debt being paid on the Village. Affleck was elected in 2011 and not part of the council that agreed to bail out Millennium.
“This was done by a receiver and a real estate company,” he said, referring to Ernst and Young, which took over management of the Village in November 2010, and Rennie Marketing Systems. “We were hands off. We merely oversaw the process. So for Vision and the mayor to take credit and say we had good business sense has nothing to do with this process. It’s simply the receiver that did the good work.”
The Courier left a message Monday at the offices of the Aquilini Group but was not returned before deadline. Francesco Aquilini, managing director of the Aquilini Group, said in a release Monday the city “has shown sound business-like leadership that has made the Olympic Village project an attractive investment and we’re pleased to be investing in such a great neighbourhood.”
Olympic Village timeline:
- November 2002 — City of Vancouver signs multi-party agreement for the 2010 Olympic and Paralympic Games.
- June 2003 — Vancouver wins bid to host the Games.
- April 2006 — City council selects Millennium Properties Ltd. as developer of Olympic Village. Millennium agrees to a final purchase price for the land of $200 million.
- June to September 2007 — Millennium arranges financing for $750 million from New York-based hedge fund, Fortress Credit Corp. The NPA-dominated council, which includes four Vision Vancouver members, approves a $190 million financial guarantee and completion guarantee as part of agreement with Fortress. As a result, the City of Vancouver is exposed to the entire financial risk of the project, initially estimated at $750 million.
- May to August 2008 — Fortress claims Millennium's loan "out of balance" after project experiences cost overruns.
- September 2008 — Fortress stops advancing money to Millennium for construction.
- October 2008 — The City of Vancouver, as guarantor of Fortress loan, steps in to keep project moving along to meet tight timeline for Games, which are to begin in February 2010.
- December 2008 — Mayor Gregor Robertson and his Vision Vancouver majority are sworn in to office. Vision hires city manager Penny Ballem to replace Judy Rogers. Robertson asks for review of entire Olympic Village project. City council appoints KPMG as an auditor to examine Village finances.
- January 2009 — Provincial government amends Vancouver Charter to allow the city to borrow and lend money to complete the development of the Village. The mayor also creates an advisory group with developers and business leaders, including billionaire Jimmy Pattison.
- February 2009 — City negotiates purchase of Fortress loan and becomes the lender to Millennium. City arranges financing through a syndicate of Canadian chartered banks. Lower interest rates secured by the city saves taxpayers an estimated $110 million.
- February 2010 — The Games open and close in Vancouver.
- April 2010 — The Vancouver Olympic Organizing Committee for the Games turns over the Village to the City of Vancouver.
- August 2010 — Millennium defaults on city's loan.
- November 2010 — The city announces it reaches an agreement with Millennium to place the project in receivership. Ernst and Young named as receiver. City negotiates settlement with Millennium and other guarantors and successfully transfers 32 properties worth $68 million which were part of loan guarantees to city.
- February 2011 — Rennie Marketing Systems relaunches first sales of the Village, which is renamed "The Village on False Creek."
- December 2011 — Receiver achieves opening of first commercial spaces Terra Breads, TD Bank, Legacy Liquor Store and Village Cleaners.
- March to August 2012 — Subway, Urban Fare, London Drugs and Tap and Barrel open.
- May 2012 — Creekside Community Centre opens.
- April 2014 — City retires $630 million debt, with the Aquilini Group buying the 67 remaining condos for $91 million. City manager Penny Ballem says city projections in 2006 to receive $200 million for land falls short by $130 million.