It’s the only way to find out what happened, to avoid similar mistakes as city moves forward with development of other property
Only in some parallel, political universe where land-sale prices are “aspirational” and only with some bookkeeping sleight of hand does it seem possible to conclude that Vancouver lost only $50 million on the Olympic village and not at least four times that.
In the seven days since journalists’ first technical briefing with city manager Penny Ballem and Coun. Geoff Meggs on the loss and since a follow up briefing a few days later, a great deal has been written about the numbers. But what’s lacking is certainty and trust in any of them.
Here’s a brief synopsis.
The city wrote off the nearly $180 million owed for the land cost — the so-called “aspirational” price that developer Millennium Developments contracted to pay.
It justifies that on the basis that years ago the city paid $27 million for the land and recovered $29 million from the bankrupt developer.
Missing from the city’s calculation is money spent on ground preparation, legal costs related to construction deficiencies, holding costs and infrastructure including sewer, water, shoreline improvements, walkway and community centre. Assessing the value of that, however, is controversial since some of those costs will be recovered when the city develops the remaining two-thirds of the site.
Suffice to say, no homeowner would call it a wash if they got $150 million less than the agreed price even if they’d inherited the property and paid nothing for it. And far from being soothed by city officials’ insistence that there won’t be a tax increase because the money will come from the property endowment fund, most citizens recognize that the money’s gone regardless of which pot it’s taken from. Seven days on, what’s clear is that this is one great mess. It has echoes of Montreal’s Olympic debt that took 30 years to repay, only this one lacks the tidy benefit of being able to place the blame on a single politician as Montrealers did with Jean Drapeau. What needs to happen are not more rounds of technical briefings, nighttime Twitter duels among the political cognoscenti or ill-informed debates.
What’s needed is transparency and that now seems only possible with an independent financial inquiry separate from both the city’s administrative and political wings, which seem of a single mind on the idea that the shortfall is no more than $50 million.
It cries out for the sort of forensic accounting done at the provincial and federal levels by the auditors-general and it raises the question of why Vancouver doesn’t have an auditor-general like some other big cities including Montreal.
If Vancouver balks at a full-time, independent auditor-general, the provincial government ought to consider other options because even though Vancouver has the most spectacular fiscal fumble, it’s far from the only one to have them. West Vancouver citizens, for example, might have liked to know exactly how their community centre ended up costing more than double its original estimate. One option is to expand the provincial auditor-general’s mandate to include municipalities. Another option would be reinstituting the inspector of municipalities office, which was eliminated years ago in an early round of provincial government cost-cutting.
The municipal inspector had broad powers to investigate and even overturn council decisions. However, there were some flaws in the legislation that ought not to be repeated if the office is reinstated. The inspector ought to be appointed by, and report to, the legislature so that s/he is fully independent of both the provincial cabinet and the municipalities.
But a financial audit of the Olympic village alone is not enough. There needs to be an independent inquiry into the decision-making process that spanned three councils, two city managers and involved dozens of senior staff both past and present.
The second inquiry’s goal would not be to apportion blame, but to take an objective look at what decisions were made and why. Among the questions that should be addressed is whether it is appropriate for the city administration to directly oversee development projects like this one or whether development of city land ought to be done at arms’ length as Vancouver did successfully with the Fraser lands and Champlain Heights. But other decisions that also ought to be reviewed include: Larry Campbell’s Vision council determining that it would be a low-rise rather than highrise development aimed at one-third low-income, a third middle-income and a third, high-income earners; Sam Sullivan’s Non-Partisan Association council’s choice of Millennium’s high bid over Concord Pacific’s cash offer; and, Gregor Robertson’s Vision council’s decisions not to sell the social housing or go after the private assets of the developer.
With the results of both inquiries, Vancouver could then develop a best-practices guide to help ensure that the mistakes made on the 1,100 units in the Olympic village aren’t repeated as the city moves forward with the development of the remaining 23.8 acres of adjacent city-owned land or on any other land left in the property endowment fund.
Cat: Vancouver Real Estate, Vancouver Olympic Village
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