Sam Sullivan: Are taxpayers at risk? No. Are Vancouver citizens? Yes.

Post by Sam Sullivan in ,

6 comments

Former Mayor Sam Sullivan is breaking his silence and commenting publicly for the first time since completing his term in Mayor in November, as a CityCaucus.com exclusive. His choice of topic for our next guest editorial is everyone's favourite whipping post, the Olympic Athletes Village developed at Southeast False Creek. Check out the Vancouver Sun tomorrow where Don Cayo sits down for an in-depth interview with the former Mayor.

Sam SullivanIn my fifteen years at Vancouver City Hall I have witnessed the Property Endowment Fund (PEF) make about $1.5 billion in real estate profits for Vancouverites. The PEF is the envy of cities from around the world, and it has created financial security for our city that you, me and the rest of the citizens of Vancouver will continue to benefit from.

What have you heard about this fund over the past 15 years? Probably nothing. No headlines. No press releases. An investment that has been extremely well-managed by our civil service, quietly accumulating hundreds of millions of dollars of value on behalf of the citizens of Vancouver is just not an item that will make the front page. But it's a great success story.

Instead, we've got members of the current City Council telling citizens that the Olympic Village project will:

  • Cause taxes to rise
  • Drive the city to financial ruin

They are simply wrong.

A little background helps everyone to understand the City's finances. The City of Vancouver has two main accounts:

  • the annual operating account which receives taxes and delivers services, and;
  • the long term real estate investment fund through which Vancouver is the largest landowner in the city.

When I was first elected in 1993 the investment fund had just over $1 billion in real estate, when I left office last month this fund had grown to almost $3 billion dollars.

Citizens have been told the Athletes Village could see a $1 billion loss. This would have to assume the hundreds of brand new, green-design waterfront homes on some of the world's most coveted real estate would be worth nothing. Even if this were remotely possible, the citizens would still have made ½ billion dollars in profits in 15 years!

But Southeast False Creek is just one development in the citizen’s real estate portfolio, and the Athletes Village is just the first part of the project – only 1000 units of the planned 6000 to be built. Some would have you believe that the hundreds of millions of dollars spent on seawalls, roads and sewers to prepare the entire site will only benefit the Village. In fact, there will be more revenue generated from the thousands more homes to be built using this infrastructure over the next couple of decades.

Are the taxpayers at risk? Absolutely not. Are Vancouver citizens at risk? Yes. There is a good chance that in the short term they may not make $1.5 billion in real estate profits. It may only be $1.3 billion. How many cities would love to have this problem? In the long term however, the public and private sales will generate hundreds of millions of dollars on lands that we purchased for $50 million.

Members of the Council have made serious allegations about this project. Their behaviour has only:

  1. fueled a wave of anti-Olympic sentiment
  2. alienated potential purchasers in the Village
  3. resulted in the loss of some of the City’s best staff

Only time will tell who was irresponsible – either me and my fellow councillors and past councils whose decisions brought the project into being, or the people currently generating headlines.

In time, I believe the citizens will proudly recognize Southeast False Creek as the most environmentally sustainable neighbourhood in North America. It is providing much needed market and social housing,  outstanding public access to the waterfront, and a new community centre. It achieves all this while returning hundreds of millions to the citizens' long term investment fund.

Vancouverites will eventually recognize the real heroes of the project. They include the hundreds of men and women working diligently on the site today. They include Judy Rogers, the most competent City Manager in the country who led the city through the process. And they include Jody Andrews, the miracle worker, one of the most competent and capable men ever to work for the city, who poured his heart and soul into making this project a legacy for us all.

6 Comments

Still no comments?

You guys must be censoring them all.

I am really tired of hearing overstated values for the Property Endowment Fund used to praise City managers and to defend the City’s Olympic Village real estate gamble.

It seems clear to me that the value of the PEF has been systematically overstated for many years, by the way in which overvalued leased lands are included as PEF assets -- including lands (and leasehold condominium units on them) that the City has leased out for long prepaid terms. There are details and examples in the following documents which I wrote several years ago:

http://www.scribd.com/doc/11459745/PEF-Leased-Over-Valuation

http://www.scribd.com/doc/11459746/to-MAFF-re-PEF-2000may15-

On November 11, 2008, after hearing Ken Bayne, Vancouver’s General Manager of Business Planning and Services, on the radio saying “Vancouver's Property Endowment Fund is still worth two or two and a half billion dollars in real estate”, I sent him an email to ask the following question:

"Can you tell me how much of the Fund’s $2.5 billion in land assets is land for which the City has sold prepaid leases, and whether or not you think that land’s value as a City asset has been overstated?"

He hasn't answered or even acknowledged my email.

Here’s a link to an article in The Straight:

http://www.straight.com/article-198336/city-ignores-watchdogs-request-property-endowment-fund-accounting

Blah blah blah. I am so sick and tired of the childish bickering back and forth about this. Rather than building excitement in the final year leading up to the Olympics in our great city. The only thing people can seem to do is throw blame on perceived misconduct or claim responsibility on their assumed past glories.

Vancouver seems mired in so much negativity as we come closer to the opening ceremonies. Where is the joy and the excited anticipation that we will be an Olympic city welcoming the world? As a citizen who is not affiliated to the parties involved I am saddened by the total lack non partisan behaviour. It is time for everyone to get over themselves and get the job completed in time to show the world how awesome Vancouver/Whistler is.

Cost and budget overruns? How shocking. Like that has never happened and we didn't all expect that anyway. I think we all need to stop whining, stop complaining and either join in to make this happen for Vancouver or just get out of the way because you are all making the rest of us citizens look bad to the rest of the country and the world.

Negativity?
You bloody bet.
To have engaged this City in such a costly adventure when the writing was on the wall as far as the financial downturn was concerned, has those of us who opposed it from the start spitting mad.
Prestige means absolutely nothing to someone who will see little personal profit from this dog-and-pony show; and might very well be out of a job once the dust settles.
We were NEVER able to afford this adventure;and now we'll see how much pain the real-estate speculators, and their cheer-leading business friends have visited upon those that have nothing to gain from it except bigger bills/taxes, lower wages, or no job at all.
As usual those with megalomaniacal focus on their own bottom lines don't care about that.
I watch, and wait for proof that my pessimism is wrong; but I've been pretty accurate thus far, and doubt I'll be wrong this time as well.

Thank you for your comments, Andrew. With respect to the facts, I should point out that this deal was set in motion years before the current economic downturn, not in the past six to eight months.

Go to other cities and see what they have. Then when you return to Vancouver, you will appreciate all of our wonderful attributes. Then would all you pessimists please stop conplaining and get a real life.

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