Blog by Mark Longpre

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Sell Olympic Condos at market price...

It has been painfully obvious for more than a year that social housing at the Olympic athletes’ village is a non-starter. When Vancouver city council voted in June 2009 to shovel another $22 million into this project, it raised the cost of the so-called “affordable” housing component of the development to $110 million, nearly double the original $65 million budgeted in 2006.

At that point, common sense should have prevailed and the hard political decision taken to sell all the units at the highest prices the market could command. Instead, Mayor Gregor Robertson holds firm to the notion that social housing be part of this luxury waterfront development, now called Millennium Water.

Robertson and his Vision party councillors campaigned on a pledge to help the homeless, but their stubborn refusal to acknowledge the changing — and challenging — economic circumstances they face jeopardizes their lofty ambitions.

Last week’s news that a scheduled $200-million loan payment to the city by developer Millennium Development was $2 million short should have raised a red flag that a default is possible, putting both the city’s credit rating and taxpayers’ investment in the project at increasing risk.

Sales figures to date are not encouraging. More than half of the unsold units are priced above $1 million. Only 35 per cent of the units purchased are done deals, and many would-be buyers who paid deposits in the pre-sale phase are demanding their money back, complaining of shoddy workmanship, unappealing architecture and the absence of promised amenities, such as shopping, schools and green space.

Now, the city is vowing to manage the social housing units and find an operator on its own after the provincial government deemed all the applicants unsuitable to operate the project. Taxpayers will be on the hook for another $46 million if Robertson goes down this road.

About 40 per cent of the rental units sit empty. That puts the kibosh to a plan that calls for units to be rented out to cover the cost of debt service. In any case, the rents would have to be well in excess of market rates for the numbers to work. The alternative is that taxpayers would subsidize lower rents for many years to come.

If Millennium fails to sell out the project, it will be unable to repay the $560 million it still owes the city, leaving taxpayers liable for the entire amount.

Meanwhile, the cost of the so-called “affordable” housing is now about $600,000 per unit, roughly three times the cost developers suggest is appropriate for this kind of housing.

Of course, to care for the homeless is virtuous, and politicians who champion the cause are to be applauded. However, remaining wedded to a project that carries so much risk for so little gain is wrong-headed. For the cost of one unit of social housing at Millennium Water, the city could provide three units elsewhere. Shouldn’t the goal be to house as many as possible of those who need housing?

To insist that social housing continue to be part of the development on False Creek reduces the number of needy who could be helped otherwise, while placing an unreasonable burden on Vancouver taxpayers.

All the units in the development should be sold over time to the highest bidders, and social housing should be built where it makes more sense — on less expensive land.

A decision to do the right thing may not be popular with a small contingent of Vision supporters, but the alternative is to encumber future city councils and generations of taxpayers with unsustainable debt.

And debt, not chickens or bike lanes, will be the lasting legacy of Mayor Robertson’s administration.

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