Rumours have started swirling that sluggish condo sales at the troubled $1 billion former Olympic Village might prompt the project’s major creditor, the City of Vancouver, to encourage the receiver, Ernst and Young, to start renting out units as a way to generate some revenue.
Renting units might also be desirable for the City of Vancouver because it would cloud exactly how much money Vancouver taxpayers lose as a result of the bungled project, according to real estate consultant Michael Geller.
Mayor Gregor Robertson frequently points out taxpayers have been exposed to the full financial risk of the Olympic Village since June 2007 when the previous NPA council agreed to be the guarantor of the project.
“That decision was kept secret until we made it public in January of 2009,” Robertson said recently.
Still, many taxpayers expect Robertson to make decisions now to minimize losses. Making it difficult to pinpoint an exact loss would, therefore, also be in Robertson’s interest, Geller said.
“One piece of advice for the city is not to rent those units because they will lose too much money,” Geller said. “Besides, there are things the city could do in a more positive way.”
Geller advocates hybrid leasehold systems outside the common lease-or-own dichotomy.
For example, the city could initiate shared ownership. They could sell a $700,000 unit for $600,000 and have the contract structured so the city would get an additional $100,000 when the initial buyer resells the unit.
Another of Geller’s ideas is to have a rent-to-own program where the renter would put down a small deposit and slowly accumulate equity with each rent payment.
“Most developers don’t do this because they always need the money now. The city can have a much longer-term horizon,” Geller said.