Jeff Lee and Derrick Penner
Sun

The project

The Olympic Village is the first portion of a major redevelopment of the city’s last significant piece of False Creek waterfront. The entire redevelopment is scheduled to take place over two decades. The village is a $1.1-billion, 1,100-unit development with a mix of market and non-market housing, commercial space, parks and community centre.

Where

Southeast corner of False Creek. The city values the Olympic Village portion at $193 million, the price it got from Millennium Development Corp. in 2006.

The players: Vancouver, which owns the land; the Vancouver Organizing Committee (Vanoc), which will use the development for housing athletes during the 2010 Winter Games; Millennium Development Corp, the purchaser of the land; and Fortress Investment Group, Millennium’s commercial financial backer.

When

Millennium bought the site in mid-2006 for $193 million, with $29 million down and the balance to come at the end of 2010.

Building schedule/completion date: Construction is scheduled to be completed in October 2009, with Vancouver Olympic organizing officials taking over the following month. The site is to be returned to Millennium on March 31, 2010.

PEFs

Much of the public infrastructure is being funded through the city’s Property Endowment Fund, a $2.7-billion account that holds city leases, land and cash.

Millennium

A Vancouver-based privately owned company owned by Peter and Shahram Malek.

Fortress

A New York-based investment management firm.

Vanoc

The organizer of the 2010 Games. It supplied $30 million to the city as its contribution to 250 units of non-market housing. It has a completion guarantee from the city that states the village will be ready in October 2009. The city has retained ownership of the site until after the Games in order to protect the completion guarantee.

City spending so far

Vancouver has spent roughly $120 million of a $250-million plan to build roads, utilities, non-market housing, a community centre and a neighbourhood energy utility on the entire southeast False Creek property, which extends from the Cambie Bridge to Quebec Street.

Further city risks

Vancouver is on the hook for a $190-million loan guarantee to Fortress, and is said to be in negotiations to loan Millennium and/or Fortress another $100 million with interest to cover a roughly $70-million construction cost overrun. The deal includes a contingency of about $30 million.

Where we’re at now

Millennium has sales agreements on 265 of the 420 units it has put up for sale so far. It has not yet put to market another 300 units in what the developer and the city say are the prime locations. Millennium had expected to put those units on sale later this year but those plans may be in jeopardy in light of the falling real estate market.

The worst-case scenario

If Millennium defaults between now and October 2009, the city, as owner, takes over construction and completes the work. If Millennium defaults on the final payments — including any additional loan it may receive from the city — Vancouver takes over as owner. The property is not transferred to Millennium until all debts to the city are paid.

If all goes well …

Millennium makes a lot of money, the city gets a new source of property tax revenue, a new community centre, social housing and a new park.

© The Vancouver Sun 2008

 

Sun

Millennium Development Corp.

Vancouver-based Millennium Development Corp., according to the company website, is a subsidiary of a Canadian firm called the Aremco Group.

Millennium, whose principals are Peter Malek and Shahram Malek, won the right to develop the Olympic athletes’ village project in 2006 with a $193-million bid for the property, which was a record price for developable property at the time.

The developer outbid Concord Pacific and Wall Financial for the right. Concord had the next highest bid at $170 million.

The developer proposed to build the village as a leading-edge, environmentally sustainable community called Millennium Water, with a small number of social housing units and luxury waterfront housing, worth $1.1 billion.

Millennium’s past projects in Vancouver include the much-touted 79-suite Water’s Edge project in West Vancouver; the 32-storey, 203-suite L’Hermitage tower in downtown Vancouver; and the seven-tower, $350-million City in the Park project.

For the Millennium Water project, the developer obtained financing for construction from Fortress Capital, a branch of Fortress Investment Group.

FORTRESS INVESTMENT GROUP

New-York-based Fortress Investment Group bills itself as an investment management company with, as of June 30, $35.1 billion US in assets under its management.

Fortress Investment is a publicly traded company that earns fees from the funds and subsidiary companies it purchases on behalf of investors. Its investments, according to company filings, include private equity funds that invest in real estate, among other investments, and hedge funds.

Vancouver-based resort and real-estate firm Intrawest is one of Fortress Investment’s 11 subsidiary firms, which it purchased in 2006 for $2.8 billion.

Intrawest, which owns Whistler Blackcomb — the venue for alpine ski events during the 2010 Olympics — made news in October when it had difficulty renegotiating $1.7 billion in debt. Intrawest completed the debt restructuring on Oct. 23, just prior to its deadline, though details were not released.

However, overall, 2008 has proven difficult for Fortress, which to the end of June had posted $124 million US in losses.

© The Vancouver Sun 2008

 

New details emerge on conditions built into the financing arrangement

Jeff lee with files from Doug Ward
Sun

Only a third of the units in the Olympic athletes village housing development have been sold, but Vancouver officials remain confident that city taxpayers will not be left exposed because of rising construction costs on the $1.1- billion project.

Several new details emerged Friday about the complicated financing arrangements behind the 1,100-unit project that is at the centre of a political firestorm.

The Vancouver Sun learned Friday that when the city sold the 20-acre property to Millennium Development Corp two years ago for $193 million, it insisted on retaining ownership until after the 2010 Winter Games, which meant it also had to post a $190- million loan guarantee on behalf of the developer.

The city also required Millennium’s directors to put up extensive personal and corporate guarantees that could lead to forfeiture of other properties in the event they defaulted.

The deal also includes strict payment deadlines and forfeiture of the False Creek property to the city at any time for failure to meet any of those dates. And the agreement also stipulates that in the event of default the city could simply take possession without having to go through extensive court proceedings.

A senior city official explained the details to The Vancouver Sun as part of an effort to dampen concerns that have arisen in the wake of news that city council quietly agreed to give Millennium and/or its financial backer, Fortress Investment Group, access to up to $100 million more in loan guarantees.

Those concerns have spilled over into the political arena with less than two weeks to go before the Nov. 15 civic election. Vision Vancouver mayoral candidate Gregor Robertson said the city’s provision of such a large loan guarantee should have been discussed in public.

But his Non-Partisan Association counterpart, Peter Ladner, said such negotiations are so sensitive that he is worried the city’s bargaining position is being harmed and he called on Robertson to stop making this an election issue.

“If necessary I am prepared to lose this election to save this project . . .” Ladner said late Friday. “I have spent pretty well all of the day doing damage control on this leak. Every step I go, Vision Vancouver is piling on to this project and adding fuel to the flames.”

Ladner said “this posturing that is going on is costing the city’s taxpayers millions, it’s putting the project in jeopardy, it’s damaging the city’s finances and it’s got to stop.”

Robertson told The Sun he understands some aspects of the loan-guarantee negotiations need to be kept secret right now. But he said the leak of the information had damaged public confidence in the city’s control of the development and council needs to go public.

“If the United States Congress can debate in public a $700-billion bailout of the banking system, surely the city council should be debating plans to give a $100-million loan guarantee to a developer,” he said.

Millennium’s owners, Peter and Shahram Malek, declined to comment.

Ken Bayne, Vancouver‘s general manager of planning and services, would not talk about the agreement, which was made in an Oct. 14 in-camera council meeting.

However, he said the city has at every step of the way ensured it retains ownership of the land until Millennium pays back what it owes.

And he said the property has enough value, even in a declining real estate market, to cover any of the financing

“If Millennium defaults, the property goes to us,” Bayne explained. “We’re in a very solid position.”

Bayne said Millennium has so far received sales agreements on 265 of the 420 units it has put to the market. It has not yet put on sale about 300 units — all of them in prime locations in five buildings.

Bayne said the city retained temporary ownership of the land until after the Olympics because it had given the Vancouver Organizing Committee a guarantee the village would be finished in time for the Games. “We wanted to make sure that in the event the developer ran into trouble or defaulted, we could move in and complete the project,” he said.

Without owning the land, Millennium was unable to get regular construction financing. The city agreed to give Fortress the $190-million guarantee. Millennium put down a $29-million deposit and agreed to pay the city the balance of $170 million (including money owing on a related land transfer) by the end of 2010.

Cost pressures have escalated the construction budget by about seven per cent, or $70 million.

Bayne said Fortress is not in a position to lend Millennium any more money. Without disclosing any negotiations, Bayne said that if the city loans Millennium any money, the developer would still have to pay it back before obtaining fee simple title to the land by the end of 2010.

Once the Games are over, pre-sold units will be transferred to their new owners, Bayne said. Proceeds are first paid to Fortress, which is owed $750 million. The city is next in line, with Millennium coming last. If at any time Millennium defaults, the city owns the land and improvements, he said. Any shortfalls are covered under extensive personal and corporate guarantees offered by the Maleks.

Bayne said the deal is not risk-free and that the city’s exposure is dependent upon Millennium’s ability to sell its units. Although the market is softening, he said the property retains high value and the city isn’t worried about Millennium’s ability to sell all the units.

“This remains one of the most valuable pieces of residential real estate in the country,” he said. “We have no concerns the units won’t be sold.”

The development is part of a much larger plan to redevelop a 50-acre piece of city land between Cambie Bridge and Quebec Street. Bayne said the city will spend about $250 million in rehabilitating the land, servicing the entire site, building a community centre and social housing.

So far the city has spent about $120 million, he said, much of which is being financed through the city’s $1.7-billion Property Endowment Fund.

© The Vancouver Sun 2008

It takes a village to raise a panic

Pete McMartin
Sun

As of Friday, the measured, rational reaction seemed to be:

“THE CITY OF VANCOUVER IS IN HOCK FOR $100 MILLION AND WE’RE ALL GONNA DIE!”

Main-chance politicians were hyperventilating and calling for heads to roll. Bloggers were a-blog with indignation. I personally witnessed several Sun editors swoon with excitement and pass out on the newsroom floor.

Precipitating the panic was the news of the city’s loan, and/or loan guarantees to Millennium Development Corp., the builder of the Olympic athletes’ village, and Millennium’s primary lender, Fortress Investment Group. The quivering real estate and investment markets appeared to put the city in a position of considerable risk, and there was conjecture in the media that the deal was exposing Vancouver taxpayers from everything to a significant raise in property taxes to the complete bankruptcy of the city government.

This panic is entirely understandable. The number of zeroes in the amounts being discussed seems to run on into infinity.

But please, if I may?

Everyone, breathe deeply. Find your chi.

And then let us, calmly, consider the comments of a few interested parties and, as yet, an unconsidered outcome. Maybe afterwards things won’t look as dire as everybody has been trying to make out.

First, consider the politicking that Vision Vancouver and its mayoral candidate, Gregor Robertson, are engaging in right now. Gregor has been busily trying to pin the whole deal on NPA mayoral candidate Peter Ladner.

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.

And the original concept to engage in the athletes village development deal, which was brought forward to council in early 2005, was signed off by a council presided over by none other than Vision Vancouver founder Sen. Larry Campbell. (One of the more vociferous critics of the Millennium deal is Vision Vancouver co-founder and present council candidate Geoff Meggs, who was executive assistant to Campbell while he was mayor.)

Contacted in Ottawa, Campbell pointed out that while it was his council that okayed the concept of the deal, it was the next council under Mayor Sam Sullivan that signed up Millennium. Still, Campbell said, and I quote:

“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 — and I say this with the proviso that I don’t know all of the details — there’ll be a good return on this.”

As for Ladner’s insistence that the details of the deal remain in camera — an obstinacy that is hurting him politically, and one he clings to, admirably if stupidly — 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.

As for the city’s exposure:

For what it’s worth, Ladner went on record Friday promising: “There is nothing in this plan that will result in this [the cost of the athletes’ village] going on property taxes. It’ll never come to be paid by Vancouver taxpayers.”

As I say, you can take that for what it’s worth, which may be a whole lot less two years from now if the market is still in the tank when the bills come due.

But as I understand the deal — and you can read further details of this aspect in Sun reporter Jeff Lee’s story in today’s paper — 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.

And if that happens?

The city is left with the most desirable piece of waterfront property left in the country. That property will be cleaned of all its industrial waste and will be environmentally pristine. There will be social housing and an expanded tax base. There will be a rejuvenated neighbourhood.

Is there still risk?

Hell, yes.

But as yet, that whooshing sound you hear isn’t the sky falling. It’s hyperventilation.

City protected in village deal, officials say

New details emerge on conditions built into the financing arrangement

Jeff lee with files from Doug Ward Sun Saturday, November, 08, 2008 Only a third of the units in the Olympic athletes village housing development have been sold, but Vancouver officials remain confident that city taxpayers will not be left exposed because of rising construction costs on the $1.1- billion project. Several new details emerged Friday about the complicated financing arrangements behind the 1,100-unit project that is at the centre of a political firestorm. The Vancouver Sun learned Friday that when the city sold the 20-acre property to Millennium Development Corp two years ago for $193 million, it insisted on retaining ownership until after the 2010 Winter Games, which meant it also had to post a $190- million loan guarantee on behalf of the developer. The city also required Millennium’s directors to put up extensive personal and corporate guarantees that could lead to forfeiture of other properties in the event they defaulted. The deal also includes strict payment deadlines and forfeiture of the False Creek property to the city at any time for failure to meet any of those dates. And the agreement also stipulates that in the event of default the city could simply take possession without having to go through extensive court proceedings. A senior city official explained the details to The Vancouver Sun as part of an effort to dampen concerns that have arisen in the wake of news that city council quietly agreed to give Millennium and/or its financial backer, Fortress Investment Group, access to up to $100 million more in loan guarantees. Those concerns have spilled over into the political arena with less than two weeks to go before the Nov. 15 civic election. Vision Vancouver mayoral candidate Gregor Robertson said the city’s provision of such a large loan guarantee should have been discussed in public. But his Non-Partisan Association counterpart, Peter Ladner, said such negotiations are so sensitive that he is worried the city’s bargaining position is being harmed and he called on Robertson to stop making this an election issue. “If necessary I am prepared to lose this election to save this project . . .” Ladner said late Friday. “I have spent pretty well all of the day doing damage control on this leak. Every step I go, Vision Vancouver is piling on to this project and adding fuel to the flames.” Ladner said “this posturing that is going on is costing the city’s taxpayers millions, it’s putting the project in jeopardy, it’s damaging the city’s finances and it’s got to stop.” Robertson told The Sun he understands some aspects of the loan-guarantee negotiations need to be kept secret right now. But he said the leak of the information had damaged public confidence in the city’s control of the development and council needs to go public. “If the United States Congress can debate in public a $700-billion bailout of the banking system, surely the city council should be debating plans to give a $100-million loan guarantee to a developer,” he said. Millennium’s owners, Peter and Shahram Malek, declined to comment. Ken Bayne, Vancouver‘s general manager of planning and services, would not talk about the agreement, which was made in an Oct. 14 in-camera council meeting. However, he said the city has at every step of the way ensured it retains ownership of the land until Millennium pays back what it owes. And he said the property has enough value, even in a declining real estate market, to cover any of the financing “If Millennium defaults, the property goes to us,” Bayne explained. “We’re in a very solid position.” Bayne said Millennium has so far received sales agreements on 265 of the 420 units it has put to the market. It has not yet put on sale about 300 units — all of them in prime locations in five buildings. Bayne said the city retained temporary ownership of the land until after the Olympics because it had given the Vancouver Organizing Committee a guarantee the village would be finished in time for the Games. “We wanted to make sure that in the event the developer ran into trouble or defaulted, we could move in and complete the project,” he said. Without owning the land, Millennium was unable to get regular construction financing. The city agreed to give Fortress the $190-million guarantee. Millennium put down a $29-million deposit and agreed to pay the city the balance of $170 million (including money owing on a related land transfer) by the end of 2010. Cost pressures have escalated the construction budget by about seven per cent, or $70 million. Bayne said Fortress is not in a position to lend Millennium any more money. Without disclosing any negotiations, Bayne said that if the city loans Millennium any money, the developer would still have to pay it back before obtaining fee simple title to the land by the end of 2010. Once the Games are over, pre-sold units will be transferred to their new owners, Bayne said. Proceeds are first paid to Fortress, which is owed $750 million. The city is next in line, with Millennium coming last. If at any time Millennium defaults, the city owns the land and improvements, he said. Any shortfalls are covered under extensive personal and corporate guarantees offered by the Maleks. Bayne said the deal is not risk-free and that the city’s exposure is dependent upon Millennium’s ability to sell its units. Although the market is softening, he said the property retains high value and the city isn’t worried about Millennium’s ability to sell all the units. “This remains one of the most valuable pieces of residential real estate in the country,” he said. “We have no concerns the units won’t be sold.” The development is part of a much larger plan to redevelop a 50-acre piece of city land between Cambie Bridge and Quebec Street. Bayne said the city will spend about $250 million in rehabilitating the land, servicing the entire site, building a community centre and social housing. So far the city has spent about $120 million, he said, much of which is being financed through the city’s $1.7-billion Property Endowment Fund.

© The Vancouver Sun 2008

Loops at north end may be removed to extend street grid system

GERRY BELLETT
Sun

Vancouver city hall plans to take a hard look at redesigning the exits on the north end of the Granville Street Bridge early next year.

The aim would be to remove some of the traffic loops that create “ dead space” underneath the bridge, city planner Karen Hoese said.

Removing the loops would allow the city to extend its streetgrid system into the area south of Drake between Howe and Seymour streets.

“ If those maple- leaf- shaped loops were demolished it would create a proper street grid system, allow for commercial development in the area and give greater pedestrian and cyclist access to the waterfront,” Hoese said.

It’s a proposal that has often been bandied about at city hall, but now the city is considering implementing it as part of its overall transportation plan.

Meanwhile, the development company Rize Alliance has put the brakes on its plans to demolish the old Cecil Hotel just north of the bridge on Granville Street.

Rize Alliance plans to build a 21- storey residential tower containing 166 apartments on the site and linking it to the Yale Hotel with some sort of glassed atrium.

City council approved the plan in September but the state of the world’s money markets has caused Rize to slow down.

The demolition of the Cecil will reduce the number of singleroom occupancy units in the area by 50.

However, 43 SRO units in the Yale Hotel will be upgraded to city standards and turned over to the city as part of the deal.

T h e d e v e l o p m e n t w o u l d include a two- storey commercial area.

Luke Harrison, a spokesman for Rize Alliance, said the expected cost of the development is in excess of $ 50 million.

However, the company isn’t in any great hurry to market the suites.

“ We had thought we’d go to market at the end of this year, but a couple of things have slowed us down,” Harrison said. “ The civic strike [ last year] held us up, but now we are waiting to see if there’s going to be a correction in the price of Vancouver housing. There has been a feeling that prices were getting to be unaffordable here.

“ So there’s no rush to do the development. Thankfully, we’ve got good income- producing properties on the site,” he said.

Open-air eatery would be metres from residences

Marke Andrews
Sun

Tempers may be short tonight at Vancouver city hall when a public hearing resumes over a Yaletown rezoning that would allow a proposed 250-seat open-air rooftop restaurant in the middle of residences.

Trilogy Yaletown Development Corp. wants to build the restaurant-bar atop the seven-storey Opus Hotel at 322 Davie St., in spite of opposition from residents concerned about noise, privacy, traffic and parking.

The public hearing began Tuesday, when 30 of a scheduled 140 speakers were heard. There will likely be a third meeting next week.

The public hearing follows meetings Trilogy Yaletown has held over the past six months with residents and strata councils from surrounding buildings.

One resident who lives directly next to the proposed restaurant dreads the possibility that as many as 250 people will be drinking mere metres from his apartment.

“The neighbourhood is already noisy,” said Dann Wilson, who lives at 212 Davie St. “From my home, I can hear people at the Cactus Club balcony, and that’s a block away on ground level. Every single day I hear people yelling and goofing around and partying, and they only get 50 or 60 people there.”

Michael McCoy, head of the strata council at nearby 283 Davie St., said the majority of the 300 residents at his building are against the rooftop bar and restaurant which, he believes, will cater to non-residents.

“Who is this being built for?” asked McCoy, noting that the Opus only has 94 guest rooms.

Both McCoy and 212 Davie resident and strata council member James MacKenzie agree with Wilson that noise from other patio dining areas is a problem.

“The outdoor patios do get raucous, and they only have 20 or 40 people,” said MacKenzie. “As it is, I can hear two people talking on their balconies across the way. To have 250 people talking is going to be a non-starter.”

Dino Celotti, project manager for Trilogy Properties, said that since the application was made, the Opus Hotel has proposed putting up a tent to cover the rooftop on the side of 212 Davie which “we believe would muffle the noise and direct it away from 212 Davie.”

It also proposes putting up a 1.8-to-three-metre high bamboo perimeter wall on the outside of the glass rail as a visual screen to ensure privacy of the residents at 212 Davie.

In a report, the Vancouver police department did not approve the application because of concerns about enforcing noise complaints.

McCoy thinks the city has to take a longer look at the issue before running it through prior to the civic election.

“City council must defer this application and must develop a set of policies and guidelines to allow for the use of rooftop dining,” said McCoy.

He emphasized that unlike his previous neighbourhood of Gastown, where he voiced concern over noise and was told the bars were there before he was, in Yaletown, the residents were there before the hotel.

© The Vancouver Sun 2008

 

USA Today

WASHINGTON (AP) — Pending U.S. home sales fell more than expected in September, after posting a big jump in the previous month.

The National Association of Realtors said Friday that its seasonally adjusted index of pending sales for existing homes fell 4.6% to a reading of 89.2. That’s down from an upwardly revised August reading of 93.5.

Economists surveyed by Thomson Reuters expected a September reading of 90.6.

The index was 1.6% above year-ago levels. It sunk to a record low of 83 in March, and stood at 87.8 in September 2007.

The reading should provide a preview of October’s existing home sales numbers when the Realtors group releases them on Nov. 24.

Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.

The U.S. has been coping with the worst housing recession in decades, and many in the real estate and mortgage industries are poring through each month’s data for signs of a bottom.

An index reading of 100 is equal to the average level of sales activity in 2001, when the index started.

National Association of Realtors Chief Economist Lawrence Yun highlighted one positive sign: The pending sales index has been above year-ago levels for two straight months, though prices continue to sink.

Yun noted sales increases in California, Florida, Long Island, Boston, Minneapolis, Denver and Washington, D.C. Much of that gain, however, likely comes from buyers who are snapping up foreclosed properties at discounted prices.

The Realtors group forecasts U.S. home prices will rise slightly next year to a median of $200,800 after two consecutive years of declines. It forecasts existing home sales will pick up next year to 5.3 million after sliding to a projected 5 million this year.

Copyright 2008 The Associated Press.

What’s the deal with city’s $100-million real-estate gamble?

Miro Cernetig
Sun

Could the Olympics bankrupt the City of Vancouver, or put it in a financial straitjacket for decades to come?

I’ve never even considered that as a remote possibility. Until now.

If one starts probing into the city’s deal — let’s call it what it is, a $1-billion real-estate gamble — for the Olympic athletes’ village, the alarm bells start ringing in full force. Vancouverites — that means us, fellow taxpayers — have been heavily exposed by our political leaders and public servants.

The basic numbers (at least the ones I can wrest out of the cone-of-silly-secrecy at Vancouver city hall) are these:

A few weeks ago, in a closed meeting, city councillors unanimously agreed to “help” Millennium Development Corp., which is building the Olympic village. The city will lend up to $100 million to Fortress Investment Group, a Wall Street hedge fund manager, which in turn will be lending about $700 million to build the athletes’ village on the south shore of False Creek.

Fortress, its stock price now trading at under $4 from its 52-week high of $19.50 — it dropped 12 per cent Thursday — has also been given $190 million in loan guarantees from Vancouver taxpayers. The executives at Fortress and Millennium probably feel pretty happy about how it’s working out. In the current financial meltdown, they’re backed by an entire city.

Taxpayers should be less thrilled. Total exposure per ratepayer? Probably in the range of about $2,000 apiece.

But it could get scarier. Lots scarier.

There are 15 months to go before the 2010 Winter Games start. The city, in an agreement with the local Olympics organizing committee, must deliver the completed 1,100-unit Olympic village by October. If it does not, serious financial penalties may begin to kick in.

What are they? Well, the city won’t say. Vanoc won’t say. That, too, is a big secret.

That culture of secrecy alone is disturbing. Two taxpayer-funded entities — which like to see themselves as corporations, but are in essence supposed to represent the public interest — refuse to say how high the financial risk is for taxpayers.

The city might face huge penalties. In the unlikely (though not impossible) event the whole house of cards collapses — with Fortress’s funding evaporating or Millennium pulling out of the athletes’ village — the consequences would be dire.

How on earth did we get to this precarious moment?

In the next few days, you will hear that it’s all the fault of the global credit crunch, that nobody saw the meltdown on Wall Street coming. But the truth is that Vancouver city councils — and senior bureaucrats — tossed prudence out the window.

The hard reality is they have exposed citizens by crafting a poorly constructed real-estate deal. Let’s put the risk in perspective: The nearly $300 million in loan guarantees, if fully drawn down and reneged upon, would represent about 30 per cent of the city’s annual budget.

You will also no doubt hear from our city leaders that you don’t have to worry. If it all goes bad, the city will take back the development, and then sell it off to cover any exposure

Oh, really? That will be quite the trick in what could be a multi-year downturn in the real-estate market. What are the lost opportunity costs of all this public capital?

The truth is Vancouver taxpayers have been let down. Our councillors will happily let the people in on their micro debates over the future of bike lanes, laneway housing and $173 transit fare fines.

But when it comes to the big stuff, they drop the cone of silence, go into in camera meetings and sign a deal that has left citizens at the mercy of a Wall Street hedge fund and the vagaries of the global financial crisis.

It’s time to lift the veil of secrecy. Let’s see the Olympic village deal in full.

© The Vancouver Sun 2008