City of Vancouver officials played down suggestions Thursday that its $1-billion Olympic athletes’ village being built in the southeast False Creek area may be at risk. But they would not reveal what went on in a closed council meeting about the project in October.
They refused to confirm reports that the city has agreed to loan Millennium Development Corp. or its financial backer, Fortress Investment Group, up to $100 million in addition to the $190 million the city had already offered as a loan guarantee to make sure the 1,100-unit project is built in time for the 2010 Winter Games.
The new deal, apparently approved in a tightly scripted in camera meeting Oct. 14, was confirmed by Sun columnist Miro Cernetig after it was first reported by a national newspaper, which also claimed the city’s longtime finance director, Estelle Lo, had resigned over concerns about the city’s financial exposure on the project.
Mayor Sam Sullivan, Coun. Peter Ladner and other elected politicians who attended the in-camera meeting all refused to discuss it, citing confidentiality rules. However, both the mayor and Ladner, who is running under the Non-Partisan Association banner to replace Sullivan, said Lo continued to work for the city and that she had never expressed to them or to council as a whole, any concern over financing for the village project.
“She has not quit and continues to work for the city,” Sullivan said. He said he would have been told by city manager Judy Rogers if Lo had resigned, and instead had been assured that “she is still on the city’s payroll.”
However, he said Lo’s position with the city was a “human resources matter” that he would not discuss, leading to the possibility that Lo’s employment is still in question.
Ladner said he spoke to Lo on Wednesday night “about a tax matter” and that she did not indicate to him she had left her position. Lo, who was in Hong Kong on scheduled holidays and was expected back at work Nov. 17, could not be reached for comment.
Rogers did not return calls. Deputy city manager Jody Andrews, who is also the project manager for the village project, also would not discuss whether Lo had resigned, saying that was “a personnel matter.”
Andrews issued a statement saying the city’s financial exposure on the project had not changed and that it was confident construction will be completed in time for the Olympic Games.
Dan Doyle, executive vice-president of construction for the Vancouver Organizing Committee, which will take control of the village next November, deferred to the city for comment. He said Vanoc was confident the village will be completed on time.
Andrews said the city had been in negotiation with Millennium and Fortress for some time because the project is about seven per cent, or about $70 million, over budget, which he said was small in comparison to the overall price.
Concerns about the financial stability of the project led to calls by Vision Vancouver mayoral candidate Gregor Robertson for full public disclosure. Robertson said Ladner, chairman of the city’s finance committee, should step aside from that position.
Just who knew what and who was talking has become a thorny political issue. Robertson said none of the incumbent Vision councillors, including Coun. Raymond Louie, had revealed to him details of the in-camera meeting.
Louie, who is vice-chairman of the city’s finance committee, would not tell reporters what he knew about the new deal. But he took the opportunity to slam the Non-Partisan Association-led council, saying council should hold a public meeting to discuss the project’s finances.
Last month Michael Flanigan, the city’s director of real estate services, told The Vancouver Sun the project was at that time six per cent or $60 million over budget and that the city was not concerned about its viability.
Flanigan said the city’s $190-million financial guarantee to Fortress was not in danger of being exercised and that work on the village was proceeding.
Against a backdrop of the noisy construction site, Andrews said the city was not prepared to discuss details of the negotiations.
“I think that the taxpayer out there will understand that when we conduct business discussions on their behalf, that we don’t reveal those on a day-to-day basis because we’re in negotiations,” Andrews said.
The city’s commitment on the project is being financed through its property endowment fund, which holds land, leases and cash. The PEF, worth $2.7 billion at the end of 2007, according to city financial statements, is running a $26.4-million deficit so far this year.
Ken Bayne, general manager of business and planning services, said the city built up the PEF’s cash reserves over recent years in part because it knew that it would have to finance servicing costs for the Olympic village site.
The resulting deficit is being financed from the city’s capital finance fund, which Bayne described as an internal financing vehicle the city uses to lend money to other departments. At the end of 2007, the fund held $194.3 million.
Andrews said the city last week gave engineering giant SNC Lavalin a no-bid consulting contract worth about $30,000 to provide “project oversight.”
Andrews would not discuss whether financial rating services were concerned.
However, Standard & Poor’s said the reported loan to Millennium will likely not hurt the city’s credit rating, even if it does add to Vancouver’s overall debt.
“[The loan] is something we’d obviously be concerned about,” said Steven Ogilvie, director of public-finance ratings for Standard & Poor’s office in Toronto. “But [does it raise] red flags? No.”
Ogilvie added that Standard & Poor’s is in the middle of completing its 2008 assessment of Vancouver’s rating.
Standard & Poor’s currently rates Vancouver AA+, which is the firm’s second-highest rating. Ratings establish a municipality’s credit risk and influence the interest rates on the bonds they issue.
The city, in its 2007 annual report, showed $514 million in long-term debt, which Ogilvie characterized as modest for a city the size of Vancouver. The city’s strong economy also factored into its high rating, he said.
“The city sits very comfortably within its rating category,” Ogilvie added, which means its AA status could stand “against a fair amount of new debt” being added to its books.
source: canada.com
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