Which way out of the Vancouver Olympic Village mess?

Post by Mike Klassen in

22 comments


Tumbleweeds, anyone? A tourist in the 'ghost town' known as Vancouver's Olympic Village

Rumours are rampant about pending changes at the development at Southeast False Creek known as Vancouver's Olympic Village. Some say that the City of Vancouver and the developer Millennium are taking a huge bath on the project. Others point out the bumbled social and rental housing component has made even getting units for cheap a huge hassle. The following is clear, however: condo sales are flat; the marketing (for now) appears to have dried up; those social and rental housing units still sit empty after months; the Village is a ghost town; and the whole project is bending under the weight of expectations.

Some are asking, should Mayor Gregor Robertson have skipped to Asia on a $120,000 junket while this potential political crisis festers at home?

The Olympic Village has been the foremost whipping tool in Vancouver politics for the past several years. Last year this innovatively designed, environmentally-friendly neighbourhood, once considered a "jewel", was described as a billion dollar blunder that according to Mayor Gregor Robertson the City was "on the hook" for (note to Vancouver Sun: can you put this story back on your website?). In hindsight it would appear that by treating this project as a political sledgehammer, Robertson and his Vision colleagues are the cause of the biggest white elephant in Vancouver's history.

Robertson's Vision Vancouver councillors were involved in a leaked document scandal surrounding the Village which enveloped all of the previous city council, and even resulted in councillors taking lie detector tests. While every member of the NPA caucus took the tests, Vision councillors refused to participate, effectively ending the police investigation of the matter.

Vision Vancouver repeatedly slammed the previous NPA council for conducting the city's financial affairs and making key decisions related to the Olympic Village during in-camera meetings. When Gregor Robertson took power his first act was to release all the minutes of those in-camera meetings. The strategy was highly successful at painting the previous NPA council as secretive and financially irresponsible (forgetting of course that Vision councillors gave their unanimous support on key Village decisions). Oh, how times have changed now that Vision Vancouver are the veritable model of backroom in-camera politics.

In his first and only political statement after leaving office, former Mayor Sam Sullivan commented in January 2009 that Vision's politicking on the Village would "[alienate] potential purchasers in the Village". Regrettably, it appears Sullivan's prediction was accurate.

It was Sullivan's government that dispensed with the previous COPE/Vision council's commitment to two-thirds non-market and social housing. The twenty percent social housing the NPA government committed to seems positively generous compared to the paltry 11% Vision Vancouver have promised.

It's possible that the biggest barrier to the success so far is the unique building form and character in the Olympic Village. The original Official Development Plan for Southeast False Creek was set out in 1999, and it called for more podium:tower built form like in adjacent parts of False Creek. In portions of the site it called for:

Towers of up to 76.2 m (250 ft.) should be permitted, providing that they are designed to minimize shadowing on public open space and on the waterfront pedestrian-bicycle system. Streets should be defined by lower building forms and tower bases...

original-sefc-form For whatever reason, the COPE/Vision council threw the original ODP out (the image, right, shows an original model of the site – click for larger) and adopted a new set of guidelines recalling the low profile neighbourhood design of South False Creek west of the Cambie Bridge. Building heights were capped at twelve stories, making them much more expensive to build. Coupled with the aggressive timelines of the 2010 Games, the social housing commitment, and the City's promise to host the Olympic athletes within the Village itself, the die was cast for either a bold experiment in city-making, or a spectacular flop that should never be repeated.

Fast forward to January 2009, and the new Vision government at the reigns. Gregor Robertson argued that the financing with Fortress with its relatively high 8-11% interest rate was a bad deal for Vancouver. Until then staff felt that the rate was commensurate with the risk, as the developer did not own the land (the City does) and therefore could not use it as collateral.

Robertson & Penny Ballem lobbied the Provincial government to hold a special sitting of the Legislature in January 2009 to allow the City itself to arrange for its own financing of the Olympic Village (Fortress had been playing hard ball with the City for a loan guarantee). With a stroke of a pen the City of Vancouver became the financier on its Olympic Village. It was a bold move that was supposed to save citizens tens of millions in interest payments. However, by taking on the financing, Vancouver taxpayers may now be carrying hundreds of millions worth of additional liability.

Fearing that Vancouver would lose big time if the units were sold during a soft housing market, it was decided in early 2009 to forgo an aggressive housing sales plan during a soft condo market, and adopt a "take it slow" approach. Ironically, just as the Olympic fever waned the housing market spiked (a buying frenzy partly triggered by the July 1st adoption of the HST).

In hindsight, instead of throwing itself $30,000 parties at the Village, Vancouver should have "kicked into gear" and probably used the occasion of a "hand back" ceremony to drive serious interest in buying housing.

Since those exhilarating weeks just after the Games the narrative around Vancouver's Olympic Village just seems to get more grim. It began with social activists decrying Vision's "false promise" on social housing, then a new community centre opened with virtually no patrons to keep it busy, and finally rumours of big losses and the spectre of a "ghost town" reported nationally and internationally.

It doesn't sound good when the marketer's representative states:

"Incentives are yet to be determined, but they could include things like free washers and dryers"

Yikes! Will they be throwing in a set of steak knives and two months of free satellite TV next? What on earth will it take to move those units and get Vancouver's money back?

Despite having its reputation bruised by political opportunists, I'm confident Vancouver's Olympic Village neighbourhood is still a remarkable place that will one day hum with activity. It will become a place to shop, dine, live, work and play. It may also serve as a lesson to all future city governments that city-making is best left to the pros who really understand financing risk, and what the home purchaser is willing to pay for.

As for the politicians – especially the ones who rode into power running this place down – they should be banned from being involved in the Olympic Village in any official capacity forever more. Like everyone I want Vancouver to make its money back on this development. If anyone can do it, it's Bob Rennie. But if Bob needs some help getting the units occupied, then let's bring in some of Vancouver's A-list realtors to lend a hand marketing this puppy.

That's the only way out of the Olympic Village mess. Sell, baby. Sell, SELL!

For further background on the facts of how we got into this mess, read some previous feature reports regarding the Olympic Village development:

- post by Mike

22 Comments

Complex isssue. Why not rent out units at market to cover interest while looking for buyers? Perhaps even a rent-to-buy program is in order.

How quickly we forget that Robertson and his Visionistas wanted to make this Olympic Village project even less affordable by throwing in all the bells and whistles.

- LEED Gold not good enough for Vision, make it LEED Platinum please.

- 1 daycare not good enough for Vision, let's fund 3 instead.

- 20% social housing not enough for Vision, lets make over 60% of the project non-market housing.

- 2 parks not good enough, let's build 5.

- Community centre not on the waterfront is a no go for Vision? Let's use our most valuable land to build it on instead.

Yike! Vision didn't meet a costly amenity they didn't want to throw into their "showcase" social experiment/development during their disastrous term of government which thankfully ended in 2005. I'm sure they don't want any of us to remember these pesky little details. It doesn't add to their narrative. But here are a few good articles that every tax payer in Vancouver should re-read.

http://www.citycaucus.com/2009/02/breaking-news-cernetig-reports-social-housing-costs-overruns-at-athletes-village

http://www.citycaucus.com/2009/04/anton-advocates-sale-of-costly-olympic-village-social-housing-units

Check out what Vision originally wanted in the project back in 2005 as enunciated by their mouthpiece the Tyee. The article is an eye opener when you read it four years after the fact.

http://thetyee.ca/News/2006/01/18/DreamNeighbourhood/

Vision wanted the taxpayers to fund more daycares, social housing, parks, you name it at the Athlete's Village. The Tyee quotes Judy Rogers who raised a red flag as far back as early 2006.

"As envisioned in the Official Development Plan, the Southeast False Creek community provides a higher standard of public infrastructure and amenities than has been provided by other major developments in the city. Many of these are directed at achieving the sustainability goals set by council. However, there is also the risk that the development defined in the ODP will not meet traditional sustainability goals without careful financial management over the period of development…. In making decisions now and in the future about the extent of the financial commitment in SEFC by the PEF, these trade-offs deserve careful consideration."

The Tyee says

"Cutting edge environmental-tech bells and whistles to be run from the Olympic Village core and integrated with the multiphase development are sure to go forward, but the social sustainability component of the project is in doubt, since Mayor Sam Sullivan and the NPA asked city staff to revisit the SEFC plan with the goal of paying $50 million used to support social housing and amenities back to the city's property endowment fund.

The city manager's office reported back, recommending revising the housing plan approved by the previous council last summer, which included one-third market, one-third modest income and one-third affordable housing, in favour of an 80 percent market, 20 percent non-market ratio."

VISION VOTED AGAINST EVERY SINGLE MEASURE TO MAKE THEIR PET PROJECT MORE FINANCIALLY SUSTAINABLE. They were squealing like stuck pigs as those evil NPAers made cutback after cutback to bring financial stability to this project. Now Vision are in charge of this project again, and costs are spiralling out of control. Quelle surprise. Hellllloooo...social housing for firefighters, nurses and police. What are they thinking?

There is a feeling this whole project is about to implode with a hematologist assigned as senior negotiator and her merry band of socialists pulling the strings. Hold on to your wallets/purses everyone, this project may well be making its way back into the headlines for ALL THE WRONG REASONS.


When you have clowns at the helm, you can expect to run aground.

I believe this project was doomed from day one - who wants to pay top dollar to live in a building that includes social housing? Certainly the VISIONistas have made it worse (Jim Chu should have argued that hiring 125 more cops would have allowed them to rent out the 'essential services' suites). I heard on the street that buyers are not told which units are social housing and which are not - so your million dollar investment could be next door to one of the former residents of the HEAT shelter on Howe Street - how's that for location, location, location?

Bravo. One of the best written and researched articles on this topic I've read in a long time. The above comments are informative too. Too bad we never get to read this in the MSM. I'll post this on Facebook for everyone to read.

Forget the social housing component. Forget the daycare etc. Return it to a regular condo and sell at market rates. Fastest way out of the mess. This is what happens when people with social agendas start running City Hall.

We have been looking into the condo market for awhile! Its the cities fault! Lower the prices $100000 no HST and your condos will sell! Washer and dryer incentive when you buy a $500000 condo? Thats just pathetic!
Idiots!

Good post, Trent. But Vision does have a plan to fix this whole Olympic Village mess: Blame the NPA! Whenever they screw up, that's their first line of defense.

@Tom. LOL. That's funny and real both at the same time. When this whole project eventually goes south due to Vision's incompetence, get ready for NBC's most popular reality television show called Blame the NPA!

Really now. Subsidized housing for firefighters and cops making $100K+? This is a complete farce.

@ Trent:
"There is a feeling this whole project is about to implode.... Hold on to your wallets/purses everyone, this project may well be making its way back into the headlines for ALL THE WRONG REASONS."

What do you mean by that? I did enjoy some of your rant but how else can this implode? If anything they will have to lower the cost of the units, rent more, and fill the place up. At the end of the day there is one goal in mind:
Fill it up!!
That's it, once that is done we're good to go. The place will thrive once they fill it up. Incentives, reductions, I don't know but something has to change.

Let us not forget the Land which this whole Ghost Village was built on has still not!!!!!!!!!! been paid for by the developer !!!!!!!!!!!!!!!!!!!! so you my Dear Vancouver citizens are on the hook line and sinker !!!!!!!!!!!!!!

@Michael. Good point regarding the fact the developer has not paid the city the full amount of what they owe them. At least I don't believe this to be the case.

Therefore, if the developer can't pay up for whatever reason (let's say rapidly slowing condo sales), then the city would likely request the developer be placed into a default position.

This may well leave the city in the unenviable position of having to place the remaining condos up for a "fire sale" in a rapidly declining market. Who wants to buy a new home now when the HST on it is about to be scrapped in about 12 months. Who knows, another local developer might even be able to pick the condos up for 50 cents on the dollar. A bargain indeed.

This could all get very ugly, very fast as city taxpayers may then be on the hook BIG TIME due to the financing deal Ballem/Robertson cooked up.

Did I mention the city is losing over $300K a month in lost revenue due to the fact they can't find people to rent their affordable housing units?

I voted for Vision in the last election. Can someone tell me why?

"Yikes! Will they be throwing in a set of steak knives and two months of free satellite TV next?"

LOL!

Yet, what did anyone expect from this Olympic Village? The condo market in Vancouver has been a COMPLETE JOKE for decades. Over-priced, ugly condos with no character fill this city. As in the U.S., Vancouverites thought prices could go nowhere but up. Just buy, flip, grab another, wait a few weeks, then flip that one, too! This mentality is based on nothing but greed, greed and more GREED. Now it's time to pay the piper...

Here's the truth: For those of you who are getting nervous about rising interest rates (which you should be), the worst is yet to come. We haven't seen the bottom by any stretch of the imagination.

As far as the Olympic Village: Don't worry, kids! Just remember, Montreal's debt for "The Big Owe" was retired after only 30 years. You just need to stay patient, and perhaps by 2040 Vancouver's Olympic Village debts will all be settled!

As far as your real estate portfolios, tax payments, and overall quality of life in that time frame... all I can say is good luck.

By the way, I spoke to an old-timer here in Vancouver who knows the truth about that land. He's an engineer who has been working in the construction and engineering fields in Vancouver since the end of WWII.

He told me the piling only when down around half as far as it should!

Good luck.

Not all Olympic housing developments are created equally. Check out this one in neighbouring Richmond where the units are selling like HOTCAKES.

http://www.bclocalnews.com/richmond_southdelta/richmondreview/news/96514714.html

"Richmond realtor Patsy Hui has heard plenty of buzz about the project in recent weeks, including word that the bulk of the best units have already been gobbled up by investors and realtors.

"I heard that it's mostly sold already," Hui said Wednesday.

Sales director Lily Korstanje confirmed that 75 of the first 150 units being released this week have already been sold.

And Korstanje anticipates all 150 units to sell out quickly." - June 2010

I should note the project doesn't tout how much social housing is on site, nor are they plumping up how green it is. Mayor Brodie is even looking like a genius on this one, which as we all know can be a challenge at the best of times.

So before we say all condo sales have gone in the dumps, think again.

it seems the previous elected council and current council were both dealt a bad hand by the recommendations presented by senior staff. good luck to those new at the table, both elected and appointed manager and hired cfo. this white elephant is only one of many.

Vision has no one to blame but themselves.

Right from the get go, they put out and continue to put out negative messages about the Village.

Then the social housing portion - nothing like holding open houses that are hijacked by housing advocates - makes you want to spend you hard earned dollars knowing that little things like poverty rallies might become a monthly occurence.

Next up - the preference given to firefighters, police and teachers for the subsidized rentals may have left a bad taste in many a person's mouths.

Kind of like what they are doing in the West End - pitting one group against another - renters against owners.

Now the reference of it being a 'ghost town' - a nice homey image to consider for potential buyers.

I noticed a lot of people griping about the subsidized housing. I think people don't know the facts about it.

1)252 units are run by the city
2)126 of those units are prioritized for nurses, fireman, doctors, etc.
3)180 applications have been filled for these units @ market value

Subsidized housing:
Must meet salary requirements and follow specific regulations
-These units are in one or two buildings, whoever said you don't know where the units are is completely wrong.... they are in the green buildings

Subsidized housing and ruckus... wouldn't the police officers next door cancel this sort of thing out?

Yaletown has subsidized housing and everyone made a big stink about it. There are rules set in place and it isn't a problem at all (coming from an investors mouth (not mine))

It's not much of a surprise that the units aren't selling because it's not a very attractive development. To me it has a rather 60s East European feel, although dressed up with west coast "green" features. Look at that canyon of a street in your picture. I bet you get a great view - of the guy opposite wandering round his living room in his Y fronts!

Certainly there have been plenty of political contributions to this fiasco but the problem primarily arises from poor quality of design and possibly construction being offered at a premium price.

Fire sale pricing may be the only option, or a massive expansion of the social housing element. In fact, if the construction defects prove real it may be that only an owner with bottomless pockets, or rather with unlimited access to the taxpayers pockets, will be able to carry the cost.

False Creek used to extend right to Clark St. It was filled in by the railroad in the early 1900's so basically the Village is built on old swampland. But hey, didn't we all have a helluva good party for two weeks this February?

the only option

Liquidate!!
Shut down Mr Renney and friends office.
Appoint auctioneer and auction off all units at a loss then have a bond issue to cover debt. I know total shell game but time to move on.

I suspect this area could turn into a real ghetto. Very sad.

Mike - this is a great article. It does make me worry about the athletes village in London for 2012. I have written about that here

http://bit.ly/dvpsoK

@MusingUrbanist

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