Athletes’ housing already faces extra expenses of $60m to $65m
Katie Mercer, The Province; with files from reporter Kent Spencer
Province
Rising prices and the global credit crunch are squeezing the privately funded 2010 Olympic Athletes Village in Vancouver.
Construction is well under way in southeast False Creek for the 2010 Games. Les Baszo – The Province
The Olympic Athletes Village is facing cost overruns of between $60 million and $65 million, the city of Vancouver‘s real-estate director, Michael Flanigan, said yesterday.
“Our project is being managed very well, but we have seen some increases and they have to be dealt with,” said Flanigan.
“Those cost increases are being dealt with, but by Millennium Development and their lender.”
The Millennium group leads a consortium of 17 firms building the Olympic Athletes Village, a $1-billion, 1,100-unit development over seven city blocks in southeast False Creek.
Fortress Investment Group, a New York-based hedge fund and private-equity company, is financing the development. In case of a default by Millennium, Fortress has said it has the resources to complete the project, said Flanigan.
“They have their profit out front, their equity in the deal, their entire corporate guarantees on the line, personal guarantees on the line,” he said. “All this will be exhausted before the taxpayer will ever be exposed for a dime.
“We don’t see there is a risk with taxpayers.”
The city is responsible for seeing the development through to completion. It has signed a deal with the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games to hand over the keys to the village by November 2009.
Flanigan said there is what he called a “doomsday plan,” in which the city would step in and fund the project. He did not want to talk about it.
Councillors discussed the development in-camera last week. Flanigan would not say what was discussed, but said the city is providing oversight between Millennium and Fortress.
Mayoral candidate Gregor Robertson said it sounds like there are more problems between Millennium and Fortress than the city is letting on.
“I’m calling for a transparent process,” said Robertson. “The public has a right to know what the potential dangers are . . . We need to understand what has taken place here.”
Mayoral candidate and city councillor Peter Ladner called the situation “distressing.” He said Millennium is currently negotiating with Fortress for further funding.
“This is one of many projects around the city and the world that have been challenged by the current credit crisis,” he said.
“The city is secured not only by guarantees from Millennium, but by this project’s status as one of the most desirable real-estate locations and most sustainable developments in the world.”
Provincial NDP Olympic critic Harry Bains said Vancouver and VANOC are keeping people in the dark.
“I’m very concerned about behind-closed-door meetings [of Vancouver city council],” he said. “Many people are worried about their own finances. They may have to come up with more money.”
Millennium could not be reached for comment.
The athletes’ village will feature some of the highest green-building standards on the continent. The units will become private residences after the Games.
In Richmond, the Olympic oval, budgeted at $155 million in 2004, jumped to $178 million. VANOC will contribute $63.2 million, with all the other costs to be contributed by the City of Richmond.
© The Vancouver Province 2008
