NEWS: Village Triple-Bottom Line Woes

Vancouver’s desire to make the Olympic Village a triple-bottom line success story has taken more beatings in the past few weeks.

Environmentally, the Olympic Village is a jewel in the crown of green development. However, economically, the project is all but bankrupt, while socially, the affordable housing outcomes fall far short of their goals.

City taxpayers are now the owners of the Millennium Water project at Southeast False Creek after the project went into receivership on November 17. Ernst & Young Inc. has been appointed the receiver for the market housing development, officially known as Millennium Southeast False Creek Properties Ltd.

Both the city and Millennium tried to put the best possible face on the agreement – even going so far as to call it a “best case scenario for all of us.” But the fact remains that city taxpayers are now completely on the hook for the entire $740-million project.

Developer Rob Macdonald’s assessment of the factors that drove up the costs of the Olympic Village places the current value of the assets at $570-million. Other development experts believe this figure is somewhat generous, and the city could lose as much as $300 million when all the dust has settled.

Despite assurances from the mayor that all 737 units will eventually sell, it now appears certain that many will have to be sold at a substantial loss. Following the 2010 Olympics, sales have been very slow as buyers held back due to the uncertainty over the project’s future and a market already saturated with similar product at more competitive prices. Widespread media speculation that prices at the Olympic Village would soon be slashed has also put prospective buyers into let’s-wait-and-see mode.

It has been reported that Vancouver condominium marketer Bob Rennie had been seeking approval from the city and the developer to cut prices. Now that Millennium is out of the picture and Ernst & Young is handling the project for the city, many observers expect to see price cuts announced within weeks.

There has been much debate over what caused the cost overruns on the project and who is to blame. The Reader’s Digest version is that a series of bad decisions made by the Coalition of Progressive Electors, the Non-Partisan Association (NPA) and Vision Vancouver council majorities all contributed to the False Creek fiasco.

In particular, the city’s decision to award the entire project to one developer rather than breaking it into separate parcels, the decision to select the highest bid from a developer who lacked the resources to complete the project, the decision to “build a model sustainable community”, the decision to upgrade the green building certification from silver to gold standard, the decision to do design simultaneous with construction (which drove up the number of expensive change orders), and the overtime and labour costs of working to meet an Olympic deadline were all important factors in driving up development costs.

Since the last flickers of the Olympic flame, further delays and poor decisions have burdened the project with millions in additional operating costs and debt service charges as the overpriced condos have sat empty for the last eight months.

According to Rob Macdonald, when the city took over the project financing, it borrowed at an interest rate of about 2.5 per cent – a significantly lower rate than the private sector developer could obtain. But instead of passing this rate along to the troubled project, the city chose to charge Millennium Water rates that were approximately $30 million higher. Given the city’s stake in the project (at that point it was the ultimate guarantor and was still owed $170 million for the land), its decision to add to project’s debt load imposed another unnecessary cost.

In addition to the financial woes, city hall’s social development goal to create more affordable housing in Vancouver has also fallen far short of what was promised in the 2010 Games bid book. The affordable housing component has fallen from two-thirds of the entire village site to less than 20 per cent.

First the NPA knocked down the requirement for one-third social housing, one-third subsidized, middle-income “modest market housing” and one-third market housing to 25 per cent social housing in December 2005. Then, in April 2010, Vision Vancouver divided the 25 per cent social housing segment into two equal portions of partially-subsidized rental housing and social housing.

Now, seven months later, the Vision council announced the third affordable housing configuration for the troubled development. The Co-operative Housing Federation of BC (CHF BC) has been selected to establish a non-profit housing co-op in one of the city’s three non-profit buildings. The other two buildings will be managed by COHO Management Services Society, a branch of CHF BC, as partially-subsidized rental housing.

Under this new plan, the number of partially-subsidized rental housing spaces rises to 168 units. At the same time, the social housing component will be reduced from 126 units to a share of the 84-unit co-op. The balance of the co-op will be made up of market rental units.

These 252 units represent a tiny step towards meeting the demand for housing that is affordable for those not pulling in six-figure incomes. In the future, however, taxpayers will demand that any affordable housing projects be built more modestly. Decent affordable housing can be built for about one-third of what these monuments to Olympic hubris cost.

Whether there is the political will and the developer confidence to take risks after the Olympic Village debacle is another question entirely. What’s for certain, the triple-bottom line approach that privileges environmental standards over social and economic goals will need to be reconsidered.

ever wonder what its actually like to LIVE in olympic village?

as a resident of olympic village, i have some news for you. there has been no adequate heat for months from the radiant capillary system in the ceilings of all of the apartments. some apartments do not have adequate hot water. the toilets dont always flush since greywater plumbing is used and is not pressurized. the community center leaves all of their lights on all night long...including two full sized basketball courts. the gardeners use leaf blowers. there are two cooperative auto network (car share) cars sitting in my underground parking lot and it will be months before they can actually be used. there are more cars driving through olympic village on any given day than there are bikes and pedestrians. the ontario street greenway was recently paved and is primarily used for film and construction crews. everyone is so caught up in market prices and social housing but there are a lot more problems here than that. while i am confident that the environmental technology used here will improve over time, i argue that olympic village is a far cry from being socially sustainable.

With another $5 million, the

With another $5 million, the streetcar line could be extended from Cambie to Quebec. $2.5 million will buy two small streetcars [adequate for current demand]. Add to that an operating budget to run 18 hours a day, 5 days a week with the weekend traffic handled by volunteers of the Downtown Historic Railway--and you might come up with something close to the real estate success that the Olympic Village should have been. Without the public transit the community was designed for, we're all hooped. I'd rather pay slightly higher taxes in the interum to make the project work properly and achieve its market potential than to be saddled with the losses of this unfinished white elephant as it stands right now. So TransLink isn't interested? I'm sure there are investors out there who can connect the dots!

Olympic Village Want To Sell Do You?

What to sell the Olympic Village Units do you? Well sharpen your pencil, Personally I do not think these Units will sell until all the Wall projects are sold out, their units are better value for money plus the developer has done more outstanding projects in the city, the wall centre coming to mind. Why would you want to buy something from a developer you do not know in the first place. Before I bought the Olympic Village Units I would look at the 57 floor project by Bosa at Kingsway and Willingdon, what a outstanding view this project will have. What are your thoughts?

Olylmpic Village

Obviously my wish is to see the Olympic village become what it was originally intended for. However, reality has set in and there are difficult and urgent choices to make. It appears that those with the means to purchase the condo's are reluctant because of the looming or wavering debate about the possible mix of low income housing. They feel it will only drive their invested value. Practically and what we can assume, it is a fair concern. Their minds won't be altered on this issue unless they have a clear answer to that question. How did the Woodwards building fair in comparison. I've heard a few disappointing comments that were voiced 2nd hand from residents but not enough of a concern. Unfortunately I can't comment any further on this project however, I am a proud Vancouverite to see this project to fruition.

"affordable housing can be built for about one-third"

That pretty much says it all, doesn't it?

The prime mover for this stupid outcome is the people who insisted on a very large social housing component at that location. My suspicion is COPE, basically. The current mayor is just picking up the pieces, perhaps even competently. Perhaps not, time will tell.

I do not mind paying the same amount of taxes to spend the same amount of money providing social housing elsewhere. Not in the DTES mind you, because Vancouver has been sweeping its poor under the carpet in that area for way too long.

But building subsidized housing on such a prime piece of waterfront real estate?

I remember Councilwoman Woodsworth railing against proposals for sub-350 sq ft housing for the poor, calling it a scandal. News for you, Councilor - my partner and I lived for 3 years in France in a 350 sq ft, paid out of my own pocket. I suspect many new arrivals in Vancouver have similar stories from their homeland, do not think they lived in inhumane conditions then, and would appreciate realism from our city councilors now.

Olympic Village a Successful Prototype!

The Olympic Village is a successful prototype -and thus expenditures are going to be higher - that is what happens with prototypes. However! the infrastructure and the operation of the Olympic village is the model on how all future multi-residential buildings should be constructed. Human and "garbage" waste should be contained in the building and used as a resource, in this case producing an excess of energy and heat, that can be shared further, rather than demanding inefficient sewer and garbage collecting infrastructures that weigh taxpayers down unneccessarily. Global warming is an accelerating reality. The sooner building codes require large complexes to be self-sufficient in regards to waste resource mangement, the better for humankind. Seems to me the politics of who gets to live in the Olympic Village has thwarted the "Future is Now" vision . Get up to speed folks -the "old way of doing things" leads to extinction.

Olympic Village

I disagree with the comments of the reviewer " My this is a negative article----". The article is well- researched and factually accurate. The best case outcome is the city only loses the land value but to get that they would have increase the prices of already overpriced units. It will really be a mess if Vancouver real estate prices follow the rest of the world.

Millenium social planning folly

By what measurable standard is the Millennium project so superior to regular projects being built and sold around the city? Do we not connect the dots between cost and environmental viability? In having to subsidize this project Vancouver taxpayers are going to have to go out and earn money to pay increased taxes; forgo doing their own home renovations while the city will have to forgo other needed infrastructure structure upgrades and future affordable social housing. From a visually environmental standpoint the project is a debacle; it has all the ambience of 20th century soviet architecture; groups of cement barracks, no landscaping and its crowning jewel the behemoth of a recreational centre plopped on the waterfront obstructing everyone's view. This project is a morality tale in citizens with no direct financial stake enforcing their wish list of "social/environmental" on a developer.

Reply to article

Everyone keeps talking about how "environmentally friendly" this development is without ever connecting it to the cost of the development. Could someone please tell me by what measurable impact on the environment is this project so superior to regular projects being built; it is going to cost millions of dollars to Vancouver taxpayers who will have to go out and earn that money and forgoe doing renovations to their own homes, while the city will have to forgoe improvements to infastructure, forgoe affordable social housing projects etc., The Millenium project is a morality tale in the folly of citizens without a direct stake dreaming up a wish list of environmental/social ideals and forcing it on the developer. And the absolute kicker is that the project is visually an environmental debacle, it looks like an ugly barracks compound aka 20th cenutury soviet cement arichitecture with the crowning jewel of a community center plopped on the waterfront.

Well done...

...Spiro T Agnew. Talk about negative. What an awful quote from an extremely corrupt individual.

Post new comment

The content of this field is kept private and will not be shown publicly.