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'No Risk to Taxpayer' Vows Olympic Village Builder

City claims taxpayers' interests trump public's right to know about $100 million loan.

By Monte Paulsen, 7 Nov 2008, TheTyee.ca

Olympic Village

Millennium project under construction.

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Neither the City of Vancouver, which reportedly loaned up to $100 million, nor Millennium Development, which allegedly accepted the money, would directly confirm the existence of a secret deal revealed Thursday.

But that did not stop either lender or borrower from commenting on the deal. Both insist the Olympic Village at Southeast False Creek will be completed on time and with no additional risk to Vancouver taxpayers.

Deputy City Manager Jodi Andrews said taxpayers' interests trump the public's right to know about any such loan.

"There's a difference between the public and the taxpayer," Andrews told a scrum of reporters outside the construction site. "It's not in the taxpayers' best interest to talk about the day-to-day dealings... it really is inappropriate and is harmful to the taxpayer."

And Millennium Development Corporation director Shahram Malek told The Tyee Vancouver's taxpayers are not at risk.

"Any money that may have been loaned is fully secured by the real estate and by other assets as well," Malek said in a brief telephone interview. "There is absolutely no exposure for the taxpayer. None."

Malek emphasized that the project is on schedule.

"I won't say there haven't been challenges. There have been a lot of challenges. But we've overcome them all," Malek said. "I have complete confidence the Olympic Village will be handed over to VANOC on or before Oct. 31, 2009."

Ladner out of media range

Globe and Mail columnist Gary Mason broke news of the loan on Thursday morning, with two dramatic but unattributed allegations: first, that the City of Vancouver has authorized lending up to $100 million to "rescue the financially troubled Olympic athletes village" project; and second, that Director of Finance Estelle Lo had resigned "after months of apparently expressing concerns the city might be assuming too much financial risk in an effort to meet its obligation to get the Olympic housing built on time."

Questions about that report were put to Vancouver Coun. Peter Ladner, who chairs the city's finance committee, at a Thursday morning debate. Ladner, who as the Non-Partisan Association mayoral candidate has been anything but camera shy, walked away from reporters seeking comment on the alleged loan -- and made no further public appearances on Thursday.

Vision Vancouver opponent Gregor Robertson joined the fray shortly before noon, and called on Ladner to disclose the deal.

"Voters need to know the full details of this story. I am calling for an emergency public council meeting next week to table the financial information," Robertson said.

NPA campaign spokesman Michael Meneer said Ladner was waiting on a City of Vancouver announcement that would clarify the situation.

"The ball is really in the city's court today," Meneer told The Tyee. "They'll be releasing something shortly."

City hall mum on loan, resignation

But the cryptic news release issued by the city shortly after 2 p.m. provided no answers.

"The financial and schedule risks assumed by the city with respect to the Olympic Village remain unchanged," the release stated.

"Staff has kept all council members informed," the release continued. "The city will continue to make information publicly available when appropriate..."

Deputy City Manager Andrews, who manages the Olympic Village project, spoke to a soggy scrum of reporters outside the construction site about an hour later. He refused to comment on either the loan or the resignation.

"If something like that has happened, I will not be able to comment on it," Andrews said.

He confirmed that the billion-dollar Olympic Village project is about $65 million over budget, but added that an overage of less than 7 per cent was exceptionally low for the Vancouver construction market. (One obvious comparison is the Vancouver Trade and Convention Centre, which is on track to cost up to double what was initially budgeted.)

Andrews also said the city has hired SNC Lavalin to oversee the project.

"They will provide us with a preliminary review. We'll have a look at that and decide where to go from there," he said.

Andrews stated several times that the city was acting in taxpayers' best interests by not revealing anything about the reported loan.

"If you were negotiating a contract with somebody, would you every morning go and tell everybody you know and the competitors what your positions were?" he asked.

'No favours involved': Millennium chief

Millennium's Malek also declined to discuss the $100 million loan, but spoke generally about the project.

"There are no favours involved. There are no risks to the taxpayer. These things I can tell you categorically," Malek said.

"We are meeting all of our obligations. We are paying the full price for the land. We have not gone to the city and asked for concessions. We have stuck to our agreement," he added.

Millennium Development is a part of the Armeco Group. The company's Metro Vancouver developments include Lumiere, L'Hermitage, SFU's One University Crescent, UBC's Bristol at Hampton Place, and Edgewater in West Vancouver.

Malek would not comment on why the city was so steadfastly obtuse about the Olympic Village deal, but said he was frustrated by the assumptions about his company that were being made in the press.

"It's been a bit disheartening," Malek said. "I believe this project will be a real benefit to the whole city. We haven't cut any costs. This is something that is going to be a model for other Olympic cities."

Other Millennium projects slowed

Malek also sought to correct recent press reports stating Millennium had "halted construction" at its eight-hectare Evelyn Drive project in West Vancouver.

"We never started construction. So there was no construction to halt," he said.

"Bob [Rennie] advised us to wait until the spring, or maybe even summer, before bringing those homes to market," Malek said. "We recently completed demolition and clearing, so we were at a logical point to take a break for the winter."

Likewise, Malek said Millennium is in an "enviable position" at Southeast False Creek.

"We can take our time," he said. "We have the loans in place for the full project. Those loans are not contingent on presales.... We have two to three years to sell the units. And those are our finest units, closest to the waterfront," he said.

"We happen to believe in the future of Vancouver," Malek added. "We're just moving a little more slowly than we were. Everyone has to be prudent."

Related Tyee stories:

[Tyee]

Monte Paulsen is investigative editor of The Tyee.

90 Comments:

  • jimmy_laroux

    07-11-2008

    Best. Quote. Evar.

    ...from a Vancouver civil servant.

    Quote:
    "There's a difference between the public and the taxpayer," Andrews told a scrum of reporters outside the construction site. "It's not in the taxpayers' best interest to talk about the day-to-day dealings... it really is inappropriate and is harmful to the taxpayer."

    Because it's not the public paying taxes? According to Andrews, Vancouver residents do not have a right to know what their tax money is spent on. I'd expect spin from the City on a story like this, but the above quote is just insulting. I like how she considers a 100 million dollar loan "day-to-day dealings". "Ho hum, a few hundred million here, a few hundred million there, who's counting?" It makes me wonder what other secret deals involving public money - that if revealed would be "harmful" to the "tax-payer" (i.e. embarrassing to the City) - have yet to come to light.

  • DJT

    07-11-2008

    Yeah, right.

    No risk to taxpayers- Ha Ha Ha Ha Ha Ha. Ahhh, that's a good one.

  • dorothy

    07-11-2008

    Supping with the devil?

    Is there anything in this scenario, that should not have been equally obvious way back when a lot of happy-go-lucky city-dwellers with lemming traits put their 'x' in the box for 'yes'?

    Not to me, there isn't, which is why I chose the other box.

    However, now that we're in this up to our necks, taxpayers indeed have no interest in a public dissection and panic. What do we want? people with a bit left in their coffee kitty, and who are contemplating a move to our fair city, running for the hills? No, we want them to come here and help us bail ourselves out of the muck. Therefore, we ought to all buy into the conspiracy of silence from here on in, like the co-op I was a member of once, which continued selling shares at full cost to new members, after it actually couldn't have paid the existing members more than 80 cents on the dollar for their shares. That's the spirit! So, shut up. No more panic or sensationalism, no more 'revelations'. let's play this right, so we have more people to fleece, so the pain will get less for each one, and particlularly for us. Imagine a European having to tell this to people born and raised in North America! I have the feeling I have finally understood what this place is all about...

  • David Lewis

    07-11-2008

    Olympic whoppers

    There's something about organizing an Olympics that brings out the best from con artists you'd normally think were just run of the mill types:

    Mayor Jean Drapeau, speaking about the Montreal Olympics in 1976 which he had pronounced to be "self financing":

    "the Montreal Olympics can no more have a deficit than a man can have a baby."

    in fact, the Games were going to make so much money, he said:

    "It won't be very long before some argument is started throughout Canada to find out how the surplus will be spent,"

    The total cost of the Big Owe, the Olympic Stadium is said to have been over $1 billion, some say $1.6 billion.

  • Luke Skywalker

    07-11-2008

    Vision Vancouver - Where Are You???

    Vision Vancouver councillor Raymond Louie, vice-chairman of the city's finance committee, and the other 3 Vision Vancouver councillors as well as COPE councillor Cadman all voted lock in step with the NPA in approving the $100 million loan.

    Quote:
    The City is conducting business related to Southeast False Creek and the Olympic Village pursuant to a unanimous Council mandate.

    So if councillors of all political stripes unanimously approved the $100 million loan, who's to blame?

  • NicS

    07-11-2008

    $100 Million Bailout - Peanuts On World Scale

    It seems we are luckier than most areas of the world right now. Goldman Sachs has just taken the lions share of their UK & US bailout monies and given Xmas bonuses to their partners.

    Quote:

    Goldman Sachs is on course to pay its top City bankers multimillion-pound bonuses - despite asking the U.S. government for an emergency bail-out.
    The struggling Wall Street bank has set aside £7billion for salaries and 2008 year-end bonuses, it emerged yesterday.
    Each of the firm's 443 partners is on course to pocket an average Christmas bonus of more than £3million.

    Of course this may benefit the 2010 winter Olympics, if any of these partners spend their bonuses at the games. Or maybe they'll invest some of their $2.5 billion in bonuses here and buy up the Millennium Project.

    Seriously though, if you want to start to understand why we collectively feel suckered by the financial world. Check out this conversation of Naomi Klein with Joseph Stiglitz and Hernando de Soto.

  • davidex

    07-11-2008

    More money to Fortress??? Oh, Please!

    Upon reading David Berner's blog, I notice that he reminded us that the money is not going to Millenium, but Fortress Investments. I forgot about these scoundrels - the ones who are currently holding on to their Whistler projects by a thread but apparently now have secure financing to continue. Did the City of Vancouver send some money to help Fortress there too? Did Gordo?
    This is getting interesting! I personally want to see everyone in that Finance meeting thrown off of Council!

  • egmont rapids

    07-11-2008

    I try again with her link

    Please read her olympic/millenium construction story,she is so wise,she will blow your mind!

    http://bettysearlyedition.blogspot.com/2008_02_01_archive.html

    This 80 year old investigative reporter scooped everyone!

  • Luke Skywalker

    07-11-2008

    More Political Blunders...

    In addition to my previous post...

    And now this:

    Quote:
    Hey, all's fair in love and scumbag campaign tactics, but the decision to go ahead with the loans, and the set-up of the deal itself, was a unanimous decision made by all of city council, including those Vision Vancouver members currently sitting on it.

    To this from former Vision Vancouver mayor Larry Campbell:

    Quote:
    Vision Vancouver founder Sen. Larry Campbell... "I think it's a helluva deal for the city, quite frankly. . . . And I don't think they [the city] cut a bad deal. I'm not critical of it at all. I believe ... there'll be a good return on this."

    To this:

    Quote:
    Campbell said he, too, thought it was proper the deal was done in camera. That, he said, is where the city had historically and often conducted deals like this.

    To this:

    Quote:
    Millennium has made financial commitments to the city in case of default. And if Millennium does default - again, as I understand the deal - then the land and buildings revert back to the city, plus, possibly, other Millennium assets.

    http://www.canada.com/vancouversun/story.html?id=8bf68757-f4cc-4cf6-91db-d78abd4b9ede

    Methinks Robertson's continual campaign bungling is gonna bite his arse big time by the end of next week.

  • zalm

    08-11-2008

    Millennium's broke

    Millennium has halted work on the Evelyn Drive project in West Vancouver. They've spent a healthy chunk of the original $64 million on land clearing and regrading the site, and gave assurances to Mayor Pam Goldsmith-Jones, as reported in the North Shore News and North Shore Outlook that the project, once begun with clearing the old homes (which was delayed for more than a year) would continue continously until project comletion.

    This is obviously another canard by Malek and Millennium. They're on the edge of broke, and they'll take not only Vancouver, but West Vancouver down with them, who has put money into beginning the servicing of the property without possibility of return.

    My aunt is one of the six holdouts on the project site, and she personally received assurances from both Malek's construction supervisor and his vice president in front of council that work would continue until completion, expected in about 3 years for the projects at the western end of the site, and 5 years for the projects at the eastern end of the site.

    This is typical of the bogus "Olympic fever" that Gordo said would be so good for the City. Richmond bought in wholesale and traded $178 million of their lands - a public trust for future generations - for what amounts to operating costs to build a bogus ice rink that won't amount to a hill of beans when the Olympics are over, due to warps in the ice sub-surface.

    Now Vancouver has traded $190 million of value in their Property Endowment (because this is where their money came from - the slush fund to end all slush funds) to prop up a development in SE False Creek that includes NO poverty housing and only 115 units of non-market but only marginally-affordable housing.

    This is a sickening turn of events by the party that was supposed to be so proud of their ability to manage our public funds - the NPA. What a bogus lot they are.

    Disgusting.

  • Stump

    08-11-2008

    In camera meetings

    I think the supposed necessity of this deal being done in camera is bogus. The deal is done and the developer is coming cap in hand. There's not negotiations going on that could be affected, no personnel issues at risk of going public. This is a far different animal from the secret deals earlier in the year that saw run-down hotels bought up for housing projects, where I can understand the need for secrecy to avoid gouging and speculation. The only outcome to fear here is investors looking twice at getting involved in this project and frankly they deserve to know what's going on. The developers' interests trump those of the general populace again and again (Eagleridge anyone?) and it's turning our democracy into a joke.

  • morechatter

    08-11-2008

    Ladner says Robertson Iresponsible

    Because he let the public know what was going on with their tax dollars. Ladner says Robertson could cost tax payers millions spoiling their negotiating. Ladner had also promised he would not increase taxes just about the same time the deal was going down insuring tax payers were on the hook for hefty increased despite property values dropping. So increased taxes are now a guarantee thanks to the NPA along with reduction of much needed services. I also heard they have been busy selling off the rental units promised to the area. Its very comforting isn't it when the guy who borrows the money promises he's good for it. I was unaware the tax payers were going to have to be on the hoook for the Olympics but I guess you are but how can you afford it?

  • Luke Skywalker

    08-11-2008

    I Prefer Alex Tsakumis' Take on The Matter...

    Yes, the same political pundit/insider Alex Taskumis who stated that he has "been very generous to Gregor, far more than Peter".

    Alex Tsakumis:

    Quote:
    BOTH (read that again, BOTH) the NPA and Vision have let the taxpayer down

    Quote:
    This entire affair does not rest at the feet of Ladner or Robertson, but one Judy Rogers, Vancouver City Hall’s political answer to Mommie Dearest

    Quote:
    There is absolutely no reason why this couldn’t have waited a month post-election, except that council was told the deal would collapse

    Interestingly enough, as for the Vancouver political race itself:

    Quote:
    In the poll I saw, WITH MY OWN EYES, (and I’ve seen a few polls in my time folks), Gregor Robertson (stunningly) trailed Peter by three points, simple as that.

    Quote:
    Mind, I will NOT reveal for whom the poll was done because I do not have their permission to do so, but it was not for the NPA.

    Quote:
    What I found most interesting was that Gregor’s negatives have skyrocketed relative to his (previously thought) unassailable approval rating.

  • MacKenna

    08-11-2008

    Re: "It's not in the

    Re:

    "It's not in the taxpayers' best interest to talk about the day-to-day dealings... it really is inappropriate and is harmful to the taxpayer."

    As someone who works for the gov't he's balled this one up. What he means is it's not in the government's (and to some degree society's) best interest because having to seek approval from taxpayers on every expenditure would hamstring every decision and stall projects and progress. That said, as every Olympics the world over has demonstrated, the Olympics tends to be a sink hole of debt for government.

    The trouble with this project isn't that it isn't viable in the long run, it's that developers are getting caught up in the credit crisis. Banks are raising lending rates and stalling lending right now. This is happening at the same time that sales are declining and fewer buyers are coming forward. Metro Van's housing bubble was bound to burst sometime because house prices were highly inflated. This was driven by investors buying to flip and 40 year mortgage offerings at low interest rates. Housing prices are still unaffordable for the average middle class earner. They're going to have to come down more.

  • DPL

    08-11-2008

    I havn't enjoyed the lead up

    I havn't enjoyed the lead up to a municipal election since I was stationed In Quebec. we couldn't vote as we had only been there two years, nobody knows why?

    But the big kicker was the mayor happened to be in jail so couldn't attend any candidate meetings. He won by the way. We learned a lot about politics in our time there. Shady deals all over the place.

  • SharingIsGood

    08-11-2008

    DPL and shady deals

    I trust that you are not saying that there are shady deals everywhere so BC might as well face it and continue to put up with it? I, for one, have had enough of my hard-earned money mismanaged by the provincial juicer and the Vancouver city boys. Vancouver doesn't just get its money from its citizens and businesses: we country bumpkins donate a good portion of our sweat for the big city coffers through provincial transfers courtesy of the juicer.

  • DPL

    09-11-2008

    Heck no "Sharing is Good".

    Heck no "Sharing is Good". We didn't condone the lack of a democratic vote way back when in Quebec, a place we arrived at because the military had sent us there.Nice people, crooked politics was the way things were run then. Nor to we condone some strange decisions right here in BC. Suddenly our home assesments are frozen which makes no sense at all as it passes on the flak to the municipalities who set the mill rate. So the tax payers can blame them. Hey not my fault says King Gordo and that's just one example. Take the tolls off the Coq. at a UBCM meeting so the folks will love Gordo. Sell our railway after prommising not to do so, is just a start of the deals pulled here. What do we do about it? Well either roll over or get rid of the folks cooking up the deals. I simply found this municipal election full of surprises so we find the lead up quite exciting. Time to get rid of the Liberal farm team, the NPA. Wonder what day the folks will find out if the Financial boss, has quit, fired, or just out of town? A couple of phone calls should confirm that. To say someone is on the payroll isn't a definite yes or no. most folks when they leave still get severance pay or saved up holiday pay. But why come clean? That isn't the NPA way. So put your mind at rest our family doesn't condone such deals any more than you do. Get out and vote the NPA into past history.

  • realisticman

    09-11-2008

    What's the Deal?

    All Gregor has to do is pick up the 'phone and ask his Millennium buddies what the deal is; since it's VISION that received campaign money from Millennium, not the NPA.

  • OilbertaRedTory

    09-11-2008

    Drapeau's Bouncing Baby Turned 30

    David Lewis wrote:
    Mayor Jean Drapeau, speaking about the Montreal Olympics in 1976 which he had pronounced to be "self financing":
    "the Montreal Olympics can no more have a deficit than a man can have a baby."

    Happy Thirtieth birthday ;

    http://www.cbc.ca/canada/montreal/story/2006/12/19/qc-olympicstadium.html

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