The reaction of most NPA/Sam Sullivan acolytes when discussing the Olympic Village.

This is for a number of reasons – the fact that revelations released by the leak of Peter Ladner’s in-camera document detailing a $100 million loan to Millennium sunk the NPA in the final weeks of the campaign, the fact that former City Manager Judy Rogers’ head rolled due in part to the way the project was managed, the fact that it is Vision Vancouver that has pulled things from the fire to launch what is sure to be a jewel for the city for decades to come – you take your pick.

I have seen the anger, the bitterness and the venom that emanates from these individuals when the Olympic Village is brought up – and I have now learned my lesson to avoid the topic altogether.

That being said, the inability to accept reality continues from some in that crew.  Take for example lone NPA Councillor Suzanne Anton, who has penned an oped for the Vancouver Province today that unsurprisingly glosses over the key details that caused Mayor Gregor Robertson to refer to the Olympic Village as a “train wreck” when he inherited the project last December.

Let’s break down Anton’s piece and her version of events.

“By 2005, when I was first elected, council was faced with designing and building 1,000 units of housing, and doing it fast. Several key decisions were made. Council unanimously agreed that the city would retain ownership of the land to guarantee timely completion, that Millennium would be the developer and that Fortress would be the lender.”

Doing it fast apparently means picking the third placed bidder – Millennium – after the first evaluation matrix with 57 individual criteria was compiled.  Expediency prompted a change in the evaluation after the first round of data was compiled so that the results could be changed.  So was the vote unanimous?  Absolutely.  Was the criteria and subsequently the placement of the bidders completely overhauled behind closed doors before heading to Council for a vote?  Without a doubt.

Please continue, Suzanne:

“Financing was challenging throughout. It reached a crisis at the end of 2008 with the global financial meltdown. Fortress had advanced $317 million but refused to advance any more under the existing terms. The city had to scramble and council (unanimous again) agreed to advance $100 million to keep the project moving forward. That decision became an election issue.”

Fair enough…Fortress was defaulting on its commitments.  But what about what happened before that point?

The NPA dominated Council gave Fortress Investment Group a rigid completion guarantee in June, 2007 that disallowed the city to adjust the terms of completion due to the dramatic shfit in the global economy.  Because it was an in-camera decision, the only reference to the completion guarantee came almost a year later in the fine print of auditors’ notes.  It is also known that both Vision and COPE voted against this provision.

How much of a closed shop was the NPA running at the time?  Well how about this question from the city’s former Chief Financial Officer Estelle Lo from last October:

“Do the contracts with Fortress/Millenium stipulate who would finance all the unplanned add’l costs or shortfalls and the City’s role re budget overruns?”

Because she was left in the dark on so many key decisions, Estelle Lo resigned from her post before the new administration took office.

I am also keenly aware of how badly behind schedule the project was as of last December/January.  Mysteriously, Jody Andrews, Vancouver’s Deputy City Manager & Project Manager for the Southeast False Creek, stepped down from his position and left the City on January 15, 2009.

Please carry on, Ms. Anton:

“In November 2008, the newly elected mayor renegotiated the financing and returned the $317-million external funding to Fortress. The new money was cheaper but 100 per cent of the risk was transferred to taxpayers. The $100-million loan has become a $650-million loan and the city has paid much more to build the social housing and public amenities, for a total of over $1 billion.”

But listen to former Councillor Peter Ladner, who contradicts his former colleague and admits that risk was taken on by the City long before becoming the prime lender on the project

“In retrospect, the key decision that exposed us financially was the internal Southeast False Creek Steering Committee’s agreement to heed our legal staff’s advice to give Millennium a ground lease instead of taking its $193 million and giving it title to the property. This was felt to be the only way we could guarantee delivery of the project on time.” – Business in Vancouver January 20-26, 2009; issue 1004

Requiring an emergency sitting of the provincial legislature to change the Vancouver Charter, the City of Vancouver was able to borrow the necessary money to refinance the loan to Millennium, step in as financier, and assume the risk in a transparent manner, which resulted in savings of $90 million in borrowing costs.

How about you encapsulate what you are trying to say, Suzanne:

“Unfortunately the mayor, until recently, continued to refer to all the hard work and heavy lifting done by the previous councils and staff as a “train wreck.” There are several problems with this characterization: The unseemly spectacle of his council colleagues disavowing their own previous decisions; the deplorable criticism of staff who worked on the file at the time; and the fact that the characterization was just plain wrong.”

Sorry, but for all the reasons stated above, staff, secret decisions by the the City Manager and the Mayor’s office of the day, and  the management of timelines were all aspects of the project worthy of scrutiny and indeed criticism.

I want to end off with the following quote from the KPMG report – a quote that perfectly details the lackadaisical attitude taken towards the Olympic Village by the previous administration:

“No points were allocated to the offer price in the Matrix. However, the scores developed using the Matrix were then re-evaluated by undertaking a sensitivity analysis and allocating between 0% and 90% to the purchase price. This indicated that once the price was allocated at least 14.5%  . . . Millennium Development Corp., which had the lowest score in the Matrix, would be the winning bidder.

“Detailed financial information was not included in the submissions from the three developers and, accordingly, there was a limited basis to assess financial ability.”

Anyone responsible for choosing a developer in this fashion needs to wake up and understand that a tone was set from that day forward.  In other words, the well was poisoned long before Gregor Robertson properly characterized the project as a previous “train wreck.”

And what about Anton’s claims that the comment hurt interest with potential buyers?  I say hogwash.  This neighbourhood is going to launch a feeding frenzy, and I firmly believe that all market housing put up for sale (that mix is not yet finalized as I detailed last week) will be sold extremely quickly.

Calling a spade a spade about poor management, oversight and vision before completion is unlikely to dampen enthusiasm for what has now turned into one of Vancouver’s most desirable neighbourhoods.

Instead, today will mark the beginning of an ongoing series of questions that I will put out there for Suzanne Anton, who is the only individual left standing after the NPA’s November evisceration, to consider.

Snatched from Anton's website banner, the NPA logo has been conveniently placed on a white background for easy Photoshopping after the release of the KPMG report

Not that I expect to get any kind of substantial answers until the KPMG report is publicly released.  Nonetheless, readers might also contemplate these queries and choose to ask them of Anton directly:

1) How can Anton state that the social housing doesn’t provide “enough bang for our social-housing buck” when her party’s original estimate for the scaled-back 252 units was $68 million, including free land? (the cost of Olympic social housing is now valued closer to $150 million – $110 million in construction plus $40 million in land)

2) If everything was so transparent and above board in your party’s dealings regarding the Olympics village, why was the city’s former Chief Financial Officer Estelle Lo asking questions like this as late as last October:

“Do the contracts with Fortress/Millenium stipulate who would finance all the unplanned add’l costs or shortfalls and the City’s role re budget overruns?”

3) Why are you asking questions like “How could a CFO not know what was going on?” when it was your party that shut her out of the process in the first place?

4) Why was the completion guarantee to the Fortress Investment Group so rigid, such that the city was responsible for the strict adherence to the construction standards in the original agreement – why wasn’t the city given the ability to shift the parameters if the economy took a downturn?

5) Is the NPA’s tendency to issue blank cheques of taxpayers’ money throughout this and many other capital projects still an official party philosophy/policy?

There are plenty more where these came from, but on a lazy Saturday morning, this should suffice for now.

My phone will be on all day in anticipation of Suzanne’s call.  Holla at me, Councillor!

A new sign of the times at Vancouver City Hall, where someone is finally taking some responsibility over spending

In consideration of the fact that the Whistler Athletes’ Village will be handed over to 2010 Games organizers with a $1-2 million surplus in the bank, it is amazing how Vancouver’s was originally conceived and managed during the heart of construction by the previous civic administration.

First to clarify, current Vancouver City Manager Penny Ballem has introduced some major changes with the way in which capital projects are funded – namely that they are going to have to face  “more oversight, due diligence, [and] rigour in terms of our original estimates.”

This is in stark contrast to the days of Sam Sullivan and Peter Ladner, who both offered lackadaisical attitudes towards a project that was to cost hundreds of millions and advertised as a jewel in the massive global profile that Vancouver was to experience both during and after the Olympics.

First, it was back in 2007 that the NPA majority council voted in a completion guarantee for the project (a decision opposed by both Vision Vancouver and COPE), in order to appease the financier Fortress Investment Group enough to prevent them from pulling out of the project altogether.  This is on top of the fact that right up until her departure, the city’s former Chief Financial Officer Estelle Lo was completely kept in the dark about the project, as detailed by this email sent while she was on vacation last October.

In the final weeks before the election, Peter Ladner offered his “distress” about the financing troubles of the project, and told CBC news that he “hopes that the private sector developers of the project will be able to finance the overruns.”

In a commentary offered after his term as Mayor, Sam Sullivan downplayed the importance of the cost overruns and whether the city would be on the hook for them because the “Southeast False Creek is just one development in the citizen’s real estate portfolio,” a statement which suggests that the size of the city’s Property Endowment Fund should somehow allow for the absorption of such losses.

All I can say is thank goodness we now have a City Manager that is willing and able to take the proper precautions to protect Vancouver taxpayers, and a Mayor that isn’t afraid to take on the private sector and work out terms that are favourable for the public good – in the case of the Olympic Village, a decision that saved the electorate $90 million in interest payments.

In times such as these, the nonchalant attitudes of the past just aren’t going to cut it anymore.