Posted on February 13, 2009
Millennium not “off the hook,” city taking stronger oversight role
Millennium Development Corp., the Olympic Village developer, is not “off the hook for millions” as the result of any refinancing deal obtained by the City of Vancouver, as reported in a Globe and Mail headline yesterday. (The online story dropped this erroneous claim.) Nor has the city completed an $800 million refinancing, as reported in the same story.
In fact, as the paper reports this morning, council has approved the hiring of Bruce Tidball, one of the top construction managers in the country, to oversee the city’s interest in the Millennium project. As city manager Penny Ballem makes clear, he will have ultimate decision-making authority to do everything necesssary to ensure the project is ready for the 2010 Olympic Games at the best possible price for taxpayers.
No new borrowing will take place without a competitive process to ensure the best financial terms for taxpayers. This is an obvious step the previous NPA council skipped when it took on the Fortress Investment Group loan — and a market-ready completion guarantee — in a secret 2007 decision. Yesterday’s report was wrong to claim a new deal is in place, but did get this right: the new financial plan emerging from negotiations with Fortress will save taxpayers millions compared to the options that confronted the Vision council after the November election, thanks to the NPA’s mishandling of the file.
Why, some may ask, did the city require a emergency one-day session of the Legislature to obtain amendments to the Vancouver Charter if negotiations for new borrowing are still continuing? The answer: because the city lacked legal authority to borrow the funds necessary to change its financial undertakings with Fortress. Without that authority, the city could not engage in good faith talks for a new plan. The tools necessary to protect taxpayers did not exist, another disastrous oversight of the previous NPA council majority.
The June 2007 decision to take all the risk for the $1.1 billion Olympic Village project was not only costly, and contrary to public assurances about the financial plan, it was made without taking basic precautions to protect the public interest in the event of defaults.
Since being sworn in December 8, Gregor Robertson’s Vision council has taken steps to begin into negotiations with Fortress, reinforced the city’s legal team, stabilized month-to-month financing of the project, secured a vital amendment to the Vancouver Charter, established stronger project oversight, ordered a complete review by the city’s external auditors, created a special advisory committee of the city’s top developers, disclosed the details of the existing financial plan to taxpayers and agreed on further release of documents related to the project. Talks are proceeding well with Fortress and the resources are in place to ensure a competitive process by new lenders.
“Because of some deft negotiating on the city’s part,” says the Globe‘s Gary Mason, “this project isn’t looking like the financial disaster it once was. Taxpayers could still be on the hook for millions, but maybe not the hundreds of millions once thought.” That disaster is the NPA’s legacy.