Mayor Gregor Robertson said Moody's Investors Service wasn’t overreacting today when it revised Vancouver’s enviable Aaa credit rating to negative for liabilities linked to the Olympic Village.

“They’re responding to the fact that we are at risk here, that the taxpayers of Vancouver are at risk on this project,” he told reporters.

Moody's said its revision was due to decisions made by the city that have exposed it to a turbulent real estate market. In June 2007, council gave a completion guarantee to financier Fortress Investment, which Robertson has said essentially made Vancouver developer for the $1 billion project.

“This exposure is roughly 1.5 times the city’s current tax-supported debt,” reads the Moody’s report issued today.

It added that the city’s decision to inject $105 million into the village for construction costs has seriously reduced Vancouver’s cash reserves.

Robertson said the credit rating decision could cost the city 25 to 30 basis points on all new borrowing. According to a financing update on the village presented to council last week, that could add $250,000 to $300,000 a year on every $100 million borrowed on Canada’s public markets.

“It’s a setback potentially,” Robertson said. “We need to do everything possible to restore our triple A – that means getting this project on solid footing.”

Vancouver was placed on a “credit watch” a few weeks ago by Standard & Poors for financing issues concerning the Olympic Village.

Geoff Dembicki is a staff reporter for the Hook.