According to the Vancouver Sun, the financier of the Millennium Water condo project is looking for as much as $875-million in loan guarantees:
The Wall Street financial firm is saying it will continue to lend the money to build the Olympic Village — on the condition Vancouverites absorb most of the future risk. The money will be loaned until 2010, as promised, under contract, if the city guarantees repayment of the loans to Fortress.
[The Vancouver Sun, “Taxpayers beware of millions more in Olympic Athletes’ Village loans,” January 8, 2008]
The situation is a total mess, even if we have yet to learn all the details. What we know is troubling enough: taxpayers are locked in a deal based on real estate speculation. The viability of the Olympic Village depends on market demand for luxury condos. If the market fails, the debt falls to the public.
In this scenario, the city would take ownership of the condos to sell, almost certainly at a serious loss. If that pill’s too hard to swallow, the city could choose to speculate on a market bounce. The price tag on the interest payments of waiting it out? A world-class $1-million a week.
Bob Rennie once said you don’t have to buy to be a speculator. He was right.
Photo credit: Alistair Howard