The train wreck that is the Olympic village is slowly turning into Vancouver's version of Montreal's Big Owe, and Vancouverites face the prospect, as Montrealers did, of waiting for years to find out what the final bill will be.
Vancouver is unlikely to see the kinds of dollar losses that Montreal did.
But the Vision Vancouver council is strongly resisting suggestions (by some) and screaming (by others) that it simply sell off both the social housing and the private condos for whatever it can get and walk away. Poorer, but out of the mess.
Instead, it foresees years of being a landlord.
Mayor Gregor Robertson told reporters at the bombshell briefing this week about the village, after a full week of one bad story after another about its problems leaking out here and there, that it would be financially foolish to sell the 252 rental units the city owns.
"That concept is very naïve," he said. "Putting product on the market in this environment doesn't make any sense."
As well, the city absolutely does not want the developer of the market condos, Millennium Development Corp., to have a fire sale.
In fact, the Vision team appears to be leaning strongly towards the idea of having the developer (if things work out) or the city (if they don't) hang on to those condos at all costs and possibly rent them out until the "market comes back."
Although many real-estate experts say that renting out luxury condos is a disastrous idea - it instantly reduces any future sale value by a huge margin and the rent never makes up for that - Councillor Raymond Louie said the city has been having some modelling done that indicates it could work financially.
In one of the scenarios, "if there's no fire sale, we take it over and we rent it until the economy recovers," Mr. Louie said. "We are not a private entity that may come under pressure and fail. The benefit of being the city is that we are lasting and we can stay forever. So it's a paper loss for now, but we can wait for the market to recover."
Mr. Louie acknowledges that the sale price of the units will drop significantly if they're rented - just like the value of a new car does the minute it's driven off the lot - but that the modelling shows that "at some tipping point, it starts to make sense, the time horizon overcomes the discounts."
What is that time horizon? Mr. Louie didn't have a number to offer, but some have suggested that anywhere from 10 to 20 years might be needed.
That means Vancouver taxpayers, just like Montreal taxpayers did for 30 years after their Olympics, could be waiting a long time to see their final bill for the Games.
Does that make the village Vancouver's Big Owe, though, the way that Montreal's Olympic stadium and facilities were after the 1976 Olympics?
Well, just to put things in perspective, a couple of points.
First, the Montreal history. After the Games were over, the financial wizards of the day calculated that the total cost of Montreal's debt for the Olympics venues was $1.2-billion, much of it attributable to the stadium and its many repairs. Using the good old Bank of Canada inflation calculator, that is $4.47-billion in today's dollars.
By 1990, Montrealers had also paid $1-billion just in interest costs on that money owed, according to reports at the time. In today's dollars, $1.49-billion. So a total of $6-billion.
That's quite a bit more than Vancouver's into this mess for. The city spent half a billion upgrading or building new community centres and ice rinks, along with fixing up the Granville Mall and a few other reno projects for the Games, but we could argue we'll continue to enjoy those for years. The potential problem debt is the $561-million that Millennium still owes the city for the construction loan and the $171 million it still owes for the land - money that could be used to finance all kinds of city services if it were on hand. So, not that the prospect of a billion-dollar debt isn't horrifying; it's just not $6-billion. Quebeckers paid a special tobacco tax, and Montreal residents also paid a special municipal tax until 2006 to pay that off.
As a further point, the Malouf inquiry (additional cost: $3-million) into the whole Montreal mess later pinned almost all the blame on Mayor Jean Drapeau, saying he commissioned an excessively complex facility design, failed to appoint a project manager, and gave too much leeway to the architect of the famously unworkable stadium.
Any inquiry here would find no single person responsible. Instead, what's remarkable is how city staff and politicians, collectively over several administrations, marched confidently towards the cliff. Accident analysts note that accidents rarely happen because of just one big mistake but because of a long series of small miscalculations and misunderstandings that eventually put the driver or pilot onto an accident course that's almost impossible to avoid.
A final point. One of the biggest critics of Vision Vancouver's current handling of the mess, the development consultant who is occasionally rumoured to be a possible mayoral candidate for the enfeebled Non-Partisan Association, doesn't think the Olympic village is equivalent to Montreal's mess.
"It's not a white elephant," says Michael Geller. He believes all the units should be sold off in an orderly way, not in a panicked fire sale. But he thinks the village will ultimately be a beautiful asset in the heart of the city. "It's very lovely there."
Special to The Globe and Mail
Frances Bula