Friday, October 1, 2010

While we wait for September's numbers to come in From around the Province

We can cogitate a bit on what is happening with the City and Millennium. The story posted on other blogs is here.

Here is my thoughts, for the very little it is worth:

1) Millennium bit off too much. Not only the enormous Olympic Village, but developments on Vancouver Island, a tower downtown and a large development in West Van (Evelyn - designed by Arthur Erickson). All this was being done simultaneously. These guys were coming off some nice developments, Water's Edge in West Van and L'Hermitage Downtown so I guess they just carried away with their own hubris and ego and over-stretched.

2) Who is responsible? No one apparrently. It was just the financial crisis of 2008 , which by the way seems to have passed and we are at new highs in RE prices and yet this project is still a bust.

The Mayor and Councillors came out fighting today. They must percieve that there is going to be a big red hole and the quicker they are seen to be fighting hard to get back tax-payer's money the better for their political future. Until now everyone had been talking in very diplomatic and conciliatory tones, but the gloves are suddenly off.

So who is responsible? Well a developer in these agreements is responsible only to make the best deal for themselves. It is the responsibility of the City staff, councillors and advisors to make sure the sharks don't eat us...good luck with that!

The truth is the City of Vancouver was on the hook for this project as far back as
2002 when it was signed. Do you remember all the fanfare at the time about how this was a partnership with a private company and wouldn't cost the tax-payer anything except the land and they would be making money on that too! Wow. Amazing. Most other cities were driven to near bankruptcy by building Olympic Venues. But some of ours would be built for free, even a hefty a profit. Nice...lets have two.

Most of the senior staff who were there when the contract was signed are now out. Most of the Councillors are gone. Even those who apparently voted against it, did not speak up about the problems with the deal until it hit the fan (see the article).

BTW- why were so many of the meetings held in camera regarding this deal. I think it gives local politicians a sense of importance to have these oh-so-secret-the-national-security-is-at-risk meetings. In my experience the decisions that come out of these meetings are invariably BAD!

What is still a mystery to me, is what legal and financial advice the CoV got. Hopefully they did get some and did not just depend on staff and their own hunch on the matter.

If they did, What is the liability of these advisors Anyone have the energy to contact the city and get this information, or have we have all sank into whining apathy.

3) Ok so what now? Struggling developer with many diverse assets + dropping sales + unsold OV + complex agreement + $500 M or more on the line = Bonanza for lawyers.

What if the City takes a really big bath on this? Cut services, borrow money, raise taxes? What will they do.

My vote is to make Jacques Rogge and his merry band of Olympic glad-handers take them off the books. In fact Gregor Robertson should fly to Switzerland (now that he is back from China) and ask Jacques to buy an apartment each for all his Olympic committee members for all their hard work. They don't have to actually take possession, they can just rent them out like most of the other specuvestors in this town, and Voila the problem is fixed.

It should just be chump change for the Olympic Committee.

Next post- how should we tax homes.


  1. BTW- based on mid-Agust to Mid-Sept sales and total listings in Whistler we are sitting at 20 MOI.

  2. So let me get this straight. A private company (whos main purpose is to make money) enters into a deal with the city, whos main purpose is to make life good for its citizens, which in turn means making the olympics (since we were having them anyway) a success.

    And somehow, the city could end up losing money on this deal? What a shocker.

    IMO best thing for the city to do is to cut prices on the OV until they sell, I would say knock 15-20% off prices right now. That would still make them overpriced, but the press about it could drum up enough interest to get a good chunk of them sold.

    This would of course piss off everyone who bought at the higher prices, but thems the breaks and the city cant worry about hurting other peoples feelings at this point.

    Bottom line is the faster they can sell all of the units the better off they will be. The legal fees and the cost of holding all of these things for years is going to be nuts so it would be best to just cut their losses and be done with it IMO.

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