VANCOUVER - The troubled Olympic Village in Vancouver was put into receivership on Wednesday and city taxpayers won't know for several years whether they'll get back the millions of dollars the city put into the project.
Ernst & Young assumed control of the $1-billion waterfront project that hosted athletes during the February Games and has now been rebranded Millennium Water.
"It'll be very difficult to recoup all of the investment for taxpayers on this, that will only happen if the market is very strong in the months and years ahead," Mayor Gregor Robertson told reporters at city hall, only blocks away from the Olympic development on Vancouver's waterfront.
The village's troubles began even before the 2010 Winter Games, when the developer's original lender stopped paying its loan, forcing the city to step in and secure hundreds of millions of dollars to finish the project in time.
Following the Games, units in the eight-block, 25-building village were to be turned into a mix of luxury free-market condos and social housing.
But sales failed to meet expectations and in September, Millennium Development Corp. came up short on a $200-million loan payment. Millennium made up for the shortfall several weeks later, but admitted it didn't expect to finish selling the more than 400 remaining units for another two and a half years.
Robertson stressed that the move for the city to take the project management over was mutual.
"It has not been easy to get to this point and it's not going to be easy on the long road ahead," he said.
"However, I'm confident that the decision that we made, based on extensive expert opinion, is the right one today and it will result in renewed confidence and stability in the village for the months ahead."
Vancouver city councillor Suzanne Anton called it "a sad day for the taxpayers of Vancouver."
"It's not a good news story," she told reporters. "The project has lost value and now the taxpayers are on the hook for all of that lost value — unless of course people actually go down and see that it is a nice project and start to buy it. There's no reason those units shouldn't be selling right now."
The city spent two months negotiating a two-part plan with Millennium that includes a revised marketing strategy and a plan for settling the loans, for construction and the land, totalling approximately $740 million.
Over the coming weeks, the city will work with the developer on the specifics of transferring its assets.
City manager Penny Ballem said the exact value isn't clear, but the unsold condos themselves comprise the "biggest piece." Millennium also has provided other guarantees of security, both corporate and personal, she said.
Neither Shahram Malek or Peter Malek, the principal owners of Millennium, were invited to the news conference and they have signed non-disclosure agreements about the deal, Ballem said.
She wouldn't comment on whether the city was preparing to sue had they not reached an agreement, but she said Millennium wasn't going into bankruptcy and will be permitted to continue doing business with the city.
In a statement issued by the city, Peter Malek said he was proud of the partnership.
"We have completed the project; the neighbourhood is world-class, the recipient of multiple awards, and delivered memorable experiences for the athletes who lived there during the 2010 Winter Games," he said.
"The agreement we've reached with the city is the best case scenario for all of us — a clear, stable path forward that will ensure the success of the project."
The deal means the new management can make immediate decisions about moving forward on a marketing strategy.
Bob Rennie remains the Vancouver developer charged with that task. A lawyer for the city said there will discussions on whether or not to drop unit prices, as Millennium planned, over the next several weeks.
The social housing component of the property, meant to serve as a legacy to the Games, remains as promised.
