False Creek water is clearer than Olympic Village sales

Vancouver’s Olympic Village is the multiparty monument to megalomania. The entire complex may no longer be a ghost-town, but Canada House (right), the waterfront home of Canada's 2010 Olympic team, remains an eerily empty haunted pocket on the controversial $1.1 billion site.

Whether it was the NPA, COPE or Vision Vancouver in charge at 12th and Cambie, they all share in the blame for creating this financial monster and it's the civic taxpayer that winds up with the ghastly loss.

The official version is a $48 million loss. We will never know the value of the time spent (or lost) by bureaucrats on this file since word leaked that a secret meeting took place on Oct. 14, 2008 to give developer Millennium a $100 million bailout after lender Fortress Credit Corporation walked away amid cost overruns and the global economic crisis.

The rush to slap the "sustainability" label onto this project was laughable and, frankly, deceptive.

Did you know? The original plan in the 1998 bid to the Canadian Olympic Committee was for the village to be student housing at UBC. UBC went ahead and built housing for students, but also for the market, anyway. City hall under NPA Mayor Philip Owen wanted to use the village to kickstart development in Southeast False Creek. A laudable goal, but it was a victim of scope escalation. Just like the Olympics, it had to be bigger, better, glitzier. World class!

Did the city really need more luxury real estate?

It's also the classic case of overpromising and underdelivering in the realm of social housing. Plentiful and affordable it’s not.

NPA Coun. Suzanne Anton, who is running to be mayor, has proposed a motion to council on Oct. 18 seeking the up-to-date numbers on sales and occupancy. We haven't had an official report since May 17 when Ernst and Young made new court filings. Anton really ought to be promising a full and complete independent audit and inquiry of the entire history of the project, should she upset incumbent Mayor Gregor Robertson in the Nov. 19 civic election. Of course, Anton was wearing her pom-poms when the NPA-majority city council chose Millennium as the developer in 2006. Millennium did not have the experience and, it turns out, the financial backing to undertake the ambitious project. A report by KPMG questioned Millennium's selection.

Lo and behold, city manager Penny Ballem has become a late addition to the agenda, to provide an update on the Olympic Village. Perhaps Ballem will explain why she signed a document filed at the Land Title Office that appears to let Millennium Development off the hook for $1 billion. Read my story here and see the documents here. Millennium is also a partner in a controversial West End condo tower where 49 rental apartments are being built under the politically motivated Short Term Incentives for Rental program. Ballem did not respond to my repeated requests for an interview on the topic.

Did Ballem, either working alone or on the instruction of the Mayor or council, leave money on the table in the negotiations with Millennium over its $740 million debt?

Perhaps Ballem will untangle the web of confusion and answer questions about those Land Title Office documents. Not to mention, tell us exactly how many Olympic Village units were sold and when. The answers are so elusive.

Marketer Bob Rennie told me in an April 11 interview that as of April 5, there had been 118 unconditional sales of units worth $80 million since the February marketing relaunch as the Village on False Creek.

On Vision Vancouver Coun. Geoff Meggs blog, it says there were 164 sold as of mid-September. His blog also says that 427 of the 737 total market units are sold.

Back in July 2009, Rennie told me there were 265 buyers. Does that mean only 162 units have sold in the last two years?

And how many of those since April 5? Forty-six?

Spokeswoman Lesli Boldt pointed out that the May 17 report from receiver Ernst and Young said there were 124 sales or unconditional offers, with a gross value of $86 million, since the relaunch.

"In other words, 40 additional condo sales occurred between mid-May and mid-September (and this is during summer, a typically slow sales season)," Boldt said.

That's four months with just 40 sales -- 10 per month, averaging 2 1/4 per week.

Meanwhile, lawyer Bryan Baynham, who is acting for 70 purchasers who want refunds for alleged shoddy workmanship and deceptive marketing, tells me there are no settlements or hearing dates scheduled and the city has yet to send him a list of documents.

The civic election happens Nov. 19, two days after the first anniversary of the receivership of Millennium’s Southeast False Creek division that developed the Village.

This story is far from over.

Three years later, more questions than answers

October 14 is an ominous day for the history of the City of Vancouver.

Vancouver city council voted unanimously in a closed-door meeting on that day in 2008 for a $100 million bailout of Olympic Village developer Millennium. Financier Fortress Credit Corporation, an arm of a Wall Street hedge fund, walked away from the deal in the wake of $65 million in cost overruns and the Lehman Brothers bankruptcy. Fortress exploited a loophole in the deal in which Vancouver city hall agreed to fund the project if Millennium faltered.



When Globe and Mail columnist Gary Mason broke the story on Nov. 6, 2008, it was the turning point in the civic election. Ex-NDP MLA Gregor Robertson and his Vision Vancouver party swept to power over Coun. Peter Ladner and the NPA. Robertson became the Olympic mayor and is seen in the photo above giving the key to the Olympic Village to Millennium owners/brothers Shahram Malekyazdi and Peter Malek at the public opening on May 15, 2010.

Not even a month after Robertson was sworn-in, he proclaimed after a Jan. 9, 2009 technical briefing that taxpayers were "on the hook" for the $1.1 billion athletes' village. Premier Gordon Campbell and his B.C. Liberals amended the Vancouver Charter to allow the city to borrow without a referendum. The village was refinanced and opened in time for the 2010 Winter Olympics. Post-Games sales were so dismal that Millennium Southeast False Creek Properties was petitioned into receivership on Nov. 17, 2010 because of a $740 million debt. Ernst and Young took over and rebranded Millennium Water as The Village on False Creek for its February 2011 relaunch. The controversy is bound to be on voters' minds as the Nov. 19 civic election approaches.

City manager Penny Ballem gleefully showed off a list of properties in an April 8, 2011 presentation that Millennium agreed to give the city. She claimed the city would recover between $56 million and $70 million but end up with a projected $48 million loss once all condos were sold in the next couple of years.

Lo and behold, filings from the Land Title Office that I obtained show that Ballem signed a form on Feb. 2, 2011 to discharge Millennium from a mortgage that was worth $1 billion on Sept. 14, 2010. See my Vancouver Courier story here.

A debenture signed Oct. 14, 2008 -- the same day as the $100 million secret bailout -- shows Millennium admits that it was really "on-the-hook" for $1 billion.

"The Grantors (Millennium Development, Millennium Properties, et al) jointly and severally make the agreements set out in this debenture and jointly and severally acknowledge themselves liable to and promise to pay to or to the order of the city, ON DEMAND, the principal sum of one billion ($1,000,000,000) dollars at such place as the city may designate by notice in writing to the grantors and to pay interest on the principal sum outstanding from time to time… at the rate of 20% per annum both before and after demand, default and judgement."

Millennium English Bay Properties was among the seven arms of Millennium listed as a grantor on the debenture. Millennium EBP is also a partner in the Alexandra condo tower under construction at Davie and Bidwell. It is to contain 49 rental suites, as per Mayor Gregor Robertson's controversial Short Term Incentives for Rental program intended to increase rental housing in the city. Here is a critical look at STIR by the West End Neighbours, who are opposed to Alexandra.

Neither Ballem nor Millennium's Malekyazdi responded to repeated requests for an interview.

The questions remain.

Could the City of Vancouver have negotiated for or seized more of Millennium's assets, so as to avoid leaving taxpayers with a loss on the Olympic Village?

Did Millennium's commitment to build politically motivated rental apartments in the Alexandra tower cause city hall to go soft on Millennium in the 2011 election year?

See the Land Title Office documents for yourself.

Premier Christy Clark plans to introduce an auditor general for municipalities. Here's hoping that the Olympic Village mess is the first matter examined by the watchdog.

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BB1742182 Release Van

Does this mean we can call Ballem "Nickel"?

Penny Ballem is not just Vancouver's $313,577-a-year city manager, but she's also the star of a five-part series of technical briefings on the terminally troubled Olympic Village. Her nickname might as well be "Not for Attribution Senior City Staffer." I'm guessing she'll appear for a curtain call. Part six, anyone?

On April 12, Ballem conducted the post-briefing news conference after her not-for-attribution performance for the media in a second floor meeting room. Coun. Geoff Meggs was in the room, but Mayor Gregor Robertson was not. Robertson also was conveniently off in Burnaby on April 8 for a Metro Vancouver board meeting and didn't want to take a five-minute break to give a cursory comment on a speakerphone. Instead he left the duties to Meggs (who some have called the real mayor).

The April 12 meeting was called in reaction to Gary Mason's Globe and Mail column estimating the loss to taxpayers for the Village to be $230 million. Ballem insists it is just $48 million. She also downplayed Millennium's original $200 million deal for the land. She said it was "aspirational" but never assumed by the accountants. Now the land costs $27 million. Millennium put a $29 million deposit on the land, but the remaining $171 million isn't counted as a loss.

Or is the loss $199 million, if you take the $48 million writedown and add the $87 million for the community centre, Salt Building and parks along plus the $64 million for social housing?

Even if it's just $48 million, that's 48 billion pennies and 153 Ballems -- based on the city manager's annual pay. Sure the city has a billion-dollar Property Endowment Fund (which doesn't meet nor does it publish a list of assets and values), but that $48 million could have been used for better things if the Village had been managed properly by the succession of NPA, COPE and Vision Vancouver councils.

While the city claims to put its stock in auditor KPMG, is it not time for the BC NDP to dust off that letter former leader Carole James sent to Auditor General John Doyle in January 2009? She requested an investigation into the Village's financing. There could not be a better time than now.

The only thing that was truly achieved at the April 12 briefing was a defeat of the city hall communications department's nonsensical attempt to ban reporters from Tweeting and blogging during the briefing. They claimed media outlets complained when a certain reporter (me!) Tweeted during the April 8 briefing. I did so openly and without any restrictions. None of my colleagues objected April 12. Why would they? It's another way to report to readers. The only reason for city hall to attempt an embargo was to control the message.

Enjoy the notices of city hall technical briefings -- all five of 'em! -- and the financial information from the April 12 edition. Bonus content is a Feb. 18, 2009 statement from Mayor Gregor Robertson, patting his party on the back for cutting interest costs to $90 million.


April 12 technical briefing on the Olympic Village





Technical Briefings advisories: collect the whole set!

Statement From the Office of the Mayor