November 12, 2008

Cost Overruns

Vancouver bails out developer of Olympic village site

RICHARD GILBERT

staff writer

Vancouver city council approved a $100 million loan to cover construction cost overruns at the Olympic athlete’s village in a secret meeting last month, but city officials refuse to provide details about the bailout plan.

During a mayoral debate with Vision Vancouver’s Gregor Robertson, Peter Ladner refused to answer reporters’ questions about a Globe and Mail story that said city council approved a $100-million loan.

Much later in the day, the city finally issued a statement on the financing of the Olympic Athletes Village, but there was little or no detail about the bailout plan.

“The financial and schedule risks assumed by the city with respect to the Olympic village remain unchanged,” said the press release.

“The city is conducting business related to Southeast False Creek and the Olympic Village pursuant to a unanimous Council mandate. Staff has kept all Council members informed on developments, since the beginning of the project, and will continue to report out as appropriate.”

A city spokesperson also failed to provide details about the bailout plan or the financial viability of the project.

“The timetable and schedule for completion of the Olympic village has not been slowed down in any way,” said Leslie Bolt, spokesperson for corporate communications at the City of Vancouver.

“So, we are still on schedule to complete and hand over the Olympic village to VANOC on time.”

The Globe and Mail story that broke earlier on Nov. 6 was based on an anonymous source inside city hall. It provided much more information than the vague statements made by city officials.

According to the story, city council instructed the city manager, at an in-camera meeting held on Oct. 14, to advance money to Millennium Development Corp. to help cover cost overruns and other shortfalls.

Later in the day, the CBC confirmed that the loan was approved at a closed-door meeting at city hall.

Details of the city’s plan to bail out the project had been kept secret because councillors are under a publication ban and face serious sanctions if they discuss the situation publicly.

The CBC also reported that Ladner would only confirm that money from the city’s property endowment fund had been used for the project.

The city has already advanced close to $30-million to Millennium’s lender, Fortress Investment Group, on behalf of the developer.

Robertson has called for complete public disclosure of the city’s financial obligations for construction of the Olympic village.

Vision Vancouver councillor Tim Stevenson said Vancouver taxpayers deserve to get more information about the project than what is being leaked out through the media.

He said that the closed-door deal is why he submitted a motion at a regular council meeting on Oct. 14, to have all of the city’s dealings with the project made more transparent.

“City taxpayers have a right to be informed as much as possible on the emerging developments around the Southeast False Creek project, in light of the recent financial crisis,” stated the motion.

“The city needs to work closely and constructively with the development community to ensure the project is fiscally responsible, and that all efforts are undertaken to prevent any undue burden for city taxpayers. Any decision requiring the city to commit funding to the Southeast False Creek development must be made in public.”

Ladner, who is the chair of the city’s finance committee, refused to comment on the Globe and Mail story.

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