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Will the Vancouver Housing Bubble pop as the bill comes due....
February 25, 2010
Vancouver Journal
A $1 Billion Hangover From an Olympic Party
By IAN AUSTEN
Even the Torch looks a little sad
VANCOUVER, British Columbia — Josie Lombardi came downtown this week for a taste of the Olympics accompanied by a friend rather than her husband, because he is on an Olympics boycott.
She was thrilled to see the Olympic caldron up close, she said, but after being told she would have to wait five hours to see an exhibit of Olympic medals, Mrs. Lombardi began to think her husband might have a point.
“O.K., are the Olympics worth it?” Mrs. Lombardi said while stopping for lunch at Murchie’s, a venerable tea and coffee shop. “I don’t want to be too negative because there’s good and bad, but I have to agree with my husband. All he can talk about is the debt. I’m worrying about what’s going to happen next.”
While hundreds of thousands of people have streamed onto the streets to enjoy (some of them to excess late at night) the Olympic party, there is still an undercurrent of crankiness and apprehension in the city.
Vancouver was always an odd choice to become the world’s winter sports capital for two weeks. Among Canadians, it is best known as the nation’s winter avoidance capital. But the misgivings among residents began even before this winter’s unseasonable warmth and sunshine bathed the city’s renowned parks and gardens, bringing daffodils and flowering trees bursting into glorious February bloom.
Well before the Games began, the global recession pushed several of the Games’s sponsors, including Nortel Networks and General Motors, into bankruptcy. Whistler Blackcomb, the resort that is hosting the Alpine skiing events, will soon be sold at auction.
Security costs, first estimated at $165 million, are now headed toward $1 billion.
Full-bore Schadenfreude....
The real estate development industry, which is unusually powerful in Vancouver, provided the city with an Olympic Village plan that seemed — and ultimately was — too good to be true. A development firm would finance and build the village on a desirable piece of city-owned land. After the Games, the developer would convert the accommodations into luxury condominiums and pay the city for the property. Vancouver would get its village and turn a profit as well.
But cost overruns, combined with the credit crisis in 2008, destroyed the financing. Once in office, Mr. Robertson had to obtain special permission from the province to borrow $434 million to complete the village. In all, the city is responsible for about $1 billion in development costs, a situation that lowered its credit rating.
If Vancouver’s real estate market remains strong, the city may recover most of that money. If not, Mr. Robertson said, “the city is on the hook for some hundreds of millions of dollars.”
“What’s the substantive thing Vancouver has to offer other than its nice mountains and vastly overpriced real estate?” Professor Stewart asked. “The forestry industries have collapsed, so where is the money going to come from other than marijuana grow-ops?”
http://www.nytimes.com/2010/02/25/sp...journal&st=cse
February 25, 2010
Even the Torch looks a little sad
She was thrilled to see the Olympic caldron up close, she said, but after being told she would have to wait five hours to see an exhibit of Olympic medals, Mrs. Lombardi began to think her husband might have a point.
“O.K., are the Olympics worth it?” Mrs. Lombardi said while stopping for lunch at Murchie’s, a venerable tea and coffee shop. “I don’t want to be too negative because there’s good and bad, but I have to agree with my husband. All he can talk about is the debt. I’m worrying about what’s going to happen next.”
While hundreds of thousands of people have streamed onto the streets to enjoy (some of them to excess late at night) the Olympic party, there is still an undercurrent of crankiness and apprehension in the city.
Vancouver was always an odd choice to become the world’s winter sports capital for two weeks. Among Canadians, it is best known as the nation’s winter avoidance capital. But the misgivings among residents began even before this winter’s unseasonable warmth and sunshine bathed the city’s renowned parks and gardens, bringing daffodils and flowering trees bursting into glorious February bloom.
Well before the Games began, the global recession pushed several of the Games’s sponsors, including Nortel Networks and General Motors, into bankruptcy. Whistler Blackcomb, the resort that is hosting the Alpine skiing events, will soon be sold at auction.
Security costs, first estimated at $165 million, are now headed toward $1 billion.
Full-bore Schadenfreude....
The real estate development industry, which is unusually powerful in Vancouver, provided the city with an Olympic Village plan that seemed — and ultimately was — too good to be true. A development firm would finance and build the village on a desirable piece of city-owned land. After the Games, the developer would convert the accommodations into luxury condominiums and pay the city for the property. Vancouver would get its village and turn a profit as well.
But cost overruns, combined with the credit crisis in 2008, destroyed the financing. Once in office, Mr. Robertson had to obtain special permission from the province to borrow $434 million to complete the village. In all, the city is responsible for about $1 billion in development costs, a situation that lowered its credit rating.
If Vancouver’s real estate market remains strong, the city may recover most of that money. If not, Mr. Robertson said, “the city is on the hook for some hundreds of millions of dollars.”
“What’s the substantive thing Vancouver has to offer other than its nice mountains and vastly overpriced real estate?” Professor Stewart asked. “The forestry industries have collapsed, so where is the money going to come from other than marijuana grow-ops?”
http://www.nytimes.com/2010/02/25/sp...journal&st=cse
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