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.
The struggling Canadian canary - Back in March, I wrote about the new Fragile Five, which were five highly leveraged developed market economies that were undergoing property booms. The fiv...
1 day ago