The Lo memo: more questions than answers, but a pattern emerging
The City of Vancouver last week released, under a Freedom of Information request, the one and only piece of correspondence the Clerk’s Office can find from former Chief Financial Officer Estelle Lo to anyone on the question of the Olympic Village. You can read it here.
It is a list of very pointed questions about the then still-secret financial crisis unfolding around the Village’s finances. Three of Lo’s 11 concerns were deleted by the city’s privacy officer under Section 13 of the Act, which provides for certain policy advice to remain confidential.
As Frances Bula reported in yesterday’s Globe and Mail, both Raymond Louie and I find the memo “very odd.”
Why odd? NPA Councillor Suzanne Anton summed it up well: “How could a CFO not know what was going on?”
Good question, but it seems that at the City of Vancouver under the NPA, the CFO was out of the loop on the biggest project in the city’s history. In fact, the memo strongly suggests that Lo, like other residents, was alerted to problems with the Olympic Village by the first story on the topic, which Globe columnist Gary Mason broke on Oct. 6, 2008.
Lo resigned under murky circumstances some days later, as council was learning in camera that it needed to authorize up to $100 million in project advances to keep the Village project afloat. Her term at the city formally ended the day before the civic election.
Many of the questions Lo poses have since been answered by the Vision Vancouver coucil, which has conducted a number of public council debates on the financial plan and its replacement.
The new financial strategy executed by Gregor Robertson’s team should save the city about $90 million. In this regard, Lo’s final question leaps out: “Is it worth getting someone who specializes in this kind of project/analysis/structuring/financing as a second pair of eyes?” That was job one when Robertson took the helm.
The Olympic Village debacle leaves taxpayers on the hook for a $1 billion project, a far cry from the “all cash, no risk” deal touted by the NPA council in 2006.
Unfortunately, this terrible turnaround was not an anomaly, it was the norm. A review of the Olympic projects under the NPA reveals a pattern of massive cost overruns:
- The Olympic Village affordable housing project budget was estimated at $65 million in 2006, but that ballooned to $95 million by 2007 and was increased again to $110 million in a report to council earlier this year. That’s just the overrun. Council will need between $30 and $70 million to achieve “affordable” units.
- The community centre and childcare components of the Village also saw costs rise 40 percent to $34.6 million from $24.5 million.
- The Olympic “legacy” developments, which included some contributions from VANOC, went far over budget. In 2005, council believed it could build two rinks, a new aquatic centre and a new curling rink for $35 million in city contributions and $43 million from VANOC. Council learned in 2006 this $78 million project had risen to $105.1 million, leaving Vancouver taxpayers with a $28 million overrun, some of which must be recovered from Park Board revenues in years to come.
There is one contrary example: the neighbourhood energy utility, which council recently learned will be completed on time and on budget for $29.3 million.
Does the city need another “set of eyes?” No doubt.
Lo’s successor, Patrice Impey, assumed her duties last week and attended council for the first time Thursday. Raymond Louie’s plan for a comprehensive review of the city budget is proceeding. But questions remain about how the Olympic overruns unfolded and why the city’s CFO seems to have been watching from afar during this time.