A few days ago the Globe & Mail did a story with Olympic Village developer Millennium. No doubt the developer has been taking jabs from our civic “leaders“, public and our respected Canwest papers.
I found it odd that Millennium did not have much to say about the fiasco up until this point. Even then once the story was out, it seems as though the local media turned a blind eye.
Anyways, here are a few choice quotes from The Globes Gary Mason article with Millenniums Shahram Malek:
“Because of the undertaking it made to VANOC [the Vancouver Organizing Committee for the 2010 Games] the city put fairly onerous restrictions on the land,” Mr. Malek said. “And because of those commitments it didn’t want to turn over title. For a typical project it takes six to nine months to get bank approval for a loan. We talked to Canadian lenders and others and the first thing they said to us was: ‘This title is not financeable.’ “
With the clock ticking on the project, Millennium was forced to turn to New York hedge funds, known for assuming riskier projects at higher interest rates. Well aware of the desperate situation that Millennium was in, Fortress Investment Group agreed to advance a loan of $750-million at a staggering 11-per-cent interest rate.
Did Fortress gouge Millennium, knowing it had few, if any, options available?
“That’s one way of looking at it, but we’ve never seen it as people extracting something from us or having us over a barrel,” Mr. Malek said. “If we had not had the timeline issue we would have had time to negotiate a better deal, prime plus 1 or 2 per cent. We would have made each phase subject to presale, which is standard. You build one building, get the presale, then build the next.
“We didn’t have that option here. We had to build all the buildings at once, regardless of presale, which is another thing that concerned the banks. So Fortress agreed to help us out.”
Far from being the disaster for taxpayers that it’s being portrayed, the city’s agreement with Millennium was “brilliantly” negotiated by its staff “because every single obligation the city had [to VANOC] has been passed on to a private developer.”
When you throw in the costs for soil remediation and site cleanup – about $25-million, which Millennium thought the city was paying for – and the price tag associated with the city-mandated edict that the complex be built to the top environmental standards in the world, Mr. Malek estimates Millennium has spent almost $130-million – on top of the nearly $200-million it paid for the land – on areas that technically should have been covered by the city.
“In total, that’s almost $330-million the city is getting first before we get a cent,” Mr. Malek said. “It’s a sweetheart deal for the city.”
Since this fiasco began local media and anti-commerce bloggers have jumped in to the pool to attack the Olympics. They ignored the fact that the Village contains condos that will be sold on prime real estate in close proximity to downtown. They forget that all the infrastructure will be used and made available for public use once the Olympics are long gone.
You can say that the Sea to Sky highway wasn’t a priority, same goes for the Canada Line. But you know what, sooner or later those projects had to be undertaken anyways, and if we were to wait they would have cost a lot more and you would be complaining as to why it wasn’t done sooner. Besides those aren’t technically Olympic projects anyways…