Hearing that the City of Vancouver has “paid off the Olympic Village debt and recovered an additional $70 million” brings back a flood of memories – and raises a whole lot of questions.
I remember the sinking feeling in the pit of my stomach as our Non-Partisan Association (NPA) council signed off on negotiations to take over the Millennium debt to meet the commitment of the previous Council of Progressive Electors to build an athlete’s village in time for the 2010 Olympics. It was the eve of the 2008 election, and I was running for mayor. Caught between the immovable 2010 deadline, the city’s determination to hang on to title to the properties, the developer’s subsequent inability to get financing, the financial meltdown and soaring construction costs, we had no choice but to step into a snakepit of debt and risk. Our in-camera decision on the city’s bargaining position was leaked to the media and triggered a gong show for the NPA, jeopardizing not just the chance of a good deal, but any chance we might get re-elected. It was messy.
But all that is, as they say, water under the bulldozer. Vision won, did a gloom-to-boom pretzel twist away from damning the deal to defending it, and, to its credit, saw it through to a mostly happy ending.
But this golden cloud has a slippery lining. Developer, blogger and 2008 NPA council candidate Michael Geller points out that the so-called “paid-off debt” doesn’t clear the financial slate at all.
“Yes, the city has paid down the loan. But what about the $170 million outstanding balance of the $200 million land payment?” he asks.
Then there’s the $45 million overrun on 262 units of social/rental housing, not accounted for. How much of the $200 million in civic amenities should be counted here but isn’t? BIV’s Glen Korstrom and Tyler Orton found a $150 million shortfall.
The truth is, nobody really knows what the truth is.
“The city’s presentation [at the mayor’s press conference] was very incomplete, to say the least,” observes Geller. “There was no briefing paper ... just a hematologist at a whiteboard with a very faint magic marker. If you believe the Olympic Village hasn’t cost the city one cent, you’ll have to believe in magic!”
There are disturbing lessons for other municipalities in this wrenching episode in the city’s financial history.
The first is: don’t take unnecessary risks with taxpayers’ money. The City of Vancouver was pressed into the Olympic Village debacle. What’s Abbotsford’s excuse for blowing $15 million on a minor-league hockey team worth $420 million? Why does Surrey order the CEO of the Surrey City Development Corp. to “make money,” with investments in a $35 million purpose-built 65,000-square-foot brewery, hotel rooms, offices, a failed mall, townhouses and an industrial park? Why did New Westminster invest in an office building that private developers wouldn’t touch?
The second lesson is: cities’ business deals are dangerously non-transparent. Key financial details in the Surrey brewery deal are confidential because they involve a private company. Land transfers, share purchases and loans between municipal development corporations and the city fly under the public radar. Hiding unpleasant outcomes isn’t hard.
Third is the player-referee syndrome: a city-owned development puts the city into competition with private developers, except that the city makes all the rules.
How does a developer win in this situation? By getting sweet with the politicians. Not good for democracy.
Fourth: politics trumps honest accounting. Within minutes of his dubious “We’re done here” announcement, Mayor Gregor Robertson was emailing his supporters for financial donations.
Fifth: it’s easy to be a winner investing in real estate in Metro Vancouver. Until something goes wrong.
