The B.C. Legislature has given Vancouver the authority to borrow badly needed money to keep the Olympic Village afloat, but questions remain about how much the city will seek and whether it will take financial control of the project.
Last week, city council passed a resolution calling on the provincial government to reconvene for a special sitting to discuss changes to the Vancouver Charter that would allow the city to seek outside financing for the financially troubled athlete’s village.
On Sunday morning, the legislature unanimously approved Bill 47, the Vancouver Charter Amendment Act, 2009, after over 20 hours of debate.
Vision Vancouver councillor Geoff Meggs told the Tyee the news was welcomed warmly in city hall.
“We were pleased obviously, pleased that it had happened, pleased that it happened quickly,” he said.
The legislation gives the city unlimited borrowing power to seek the $458 million it says it needs to complete the athlete's village by November this year. Mayor Gregor Robertson has said the funding will be used to cover shortfalls created after financier Fortress Investment stopped making payments on a $750 million construction loan in September. (So far, Fortress has advanced $317 million.)
As the Globe and Mail reported Saturday though, the city could be seeking up to an estimated $800 million in an attempt to buy the troubled New York-based hedge fund out of the project.
Because the city provided a controversial completion guarantee in June 2007, it is now essentially on the hook for the 11-per-cent interest rates that Fortress is charging Millennium Development, the project’s builder.
A renegotiated financing deal with one or more Canadian banks could result in much lowered rates. Those would likely reduce the $87,000-per-day interest charges that Robertson has said stem from the current funding arrangement.
Meggs said he couldn’t confirm whether the city is seeking to borrow more than $458 million or looking to take financial control of the project. He also declined comment on what kind of penalty fee the city would face if it chose to break its current loan agreement with Fortress.
“How negotiations are going to unfold and what’s happening to them is something we really can’t comment on,” he said.
Nonetheless, Meggs said the mayor wants to "keep all options open" and suggested the results of ongoing negotiations with Fortress could be made public within the next week.
Geoff Dembicki is a staff reporter for the Hook.
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Gordon_Ramble
3 years ago
I want a bailout to!!!!!!!!!!!!!!!!!
so I can pay off all my bad decisions too!.
NicS
3 years ago
No Negotiations Yet. Wait For Fortress' Bankruptcy.
By many accounts, Fortress is as likely to bite it as any of the other major Private-Equity funds and yes I do mean any or all.
I just read an interesting article in Vanity Fair about which of the biggest private-equity firms will go bankrupt first and the group of 6 firms mentioned, included Fortress.
I was curious about who the directors of Fortress were and it turns out the majority of them used to work for either Goldman Sachs, Leheman Bros., Bear Stearns, CitiGroup, Deutz Bank or BlackRock. It is fair to say that these directors are some of the biggest players in the world’s financial markets and those markets, suffice to say, are still crashing and the Vanity Fair article goes on to say:
Amazing opportunity is right! It is probable that no one expected all of the worlds Private-Equity funds to be at risk of default at the same time. No doubt Vancouver's default payment clauses need to be looked at carefully, as do Fortress' defaulting on loaning us the monies agreed to. But we appear to have the advantage here, especially if they go bankrupt. Vancouver could end up owing Fortress $317 million, less all interest already paid or even nothing at all.
Gregor and company need to take heed here and go slow. Only fools rush in!