2010 Vancouver Athletes Village Commentary

Photo by eyesplash mikul

We feel it necessary to comment on the myriad of articles hitting the presses in ever increasing numbers over the past while, most of which seem to be painting a very dire picture of what could happen with the Vancouver Athletes Village.

First off, when the plan was formulated, no one could have fathomed that a global credit crisis of the magnitude we are all seeing would have come to fruition.

Secondly, no one would have thought that the Vancouver real estate market would have slowed down as quickly as it has.

That being said, the numbers being referenced for potential liability for the City of Vancouver, should the proverbial excrement really hit the fan are completely sensationalized and the reporting of them is at best irresponsible. So to make a little better sense of the numbers please consider the following:

• $1B - total approx. cost of the Olympic Village
• $200M - approx. value of the 250 condos already pre-sold with 20% deposits
• 10% - approx. drop in real estate prices from the peak value in May 2008
• Millennium Group of Companies had to put up other properties as security for the South East False Creek Lands the Olympic Village is being constructed on (SEFC valued at $150M)
  

You may have seen numbers of anywhere from $800M to $1B being what the city could be liable for.

Yes... if the condos being built can not be sold for as little as $1, then the city would be on the hook for a large chunck of change, likely in the neighbourhood of $800M. Though the city would gain the property securitized from the Mellinnium Group of Companies and the liklihood of the condos not being marketable at any price is nil.

So if we assume that the prices for the condos end up being 20% less than previous projections, on average, we can assume that there is a max potential shortfall of approximately $200M between the City of Vancouver and Millenium Group of Companies. A far cry from the $1B numbers being thrown around by juvenile reporters. (I might point out that it seems that most of the sensationalist articles are coming from the CanWest news service that did not win the bid to broadcast the Olympics... hmmm.)

My understanding is that this shortfall would primarily fall on Mellinnium Groups shoulders, though in all liklihood the city would be out at least $50-100M.

That being said a fantastic new neighbourhood will be born... so will the city really lose anything?