VANCOUVER - The city of Vancouver has taken over full financial control of the athletes village for the 2010 Winter Olympics.
City officials say they've bought out the building loan for the project in order to control costs.
The buy out cost the city $319.5 million, on top of the roughly $400-million worth of construction remaining on the village.
The original lender, Fortress Investment Inc., had stopped payment on the loan in September and since then the city had been covering construction expenses to keep the village construction on schedule.
It is due to be turned over to the Olympic organizing committee at the end of October.
The city will now act as the banker on the $1-billion project, which will house 1,100 athletes and officials during the Games and will be converted to private housing afterwards.
"We have gone from an agreement that was clearly not in the interests of taxpayers, to an agreement that puts Vancouver's taxpayers first," Vancouver Mayor Gregor Robertson said Wednesday.
City manager Penny Ballem said the Fortess completion guarantee was driving the city and developer to finish and sell the units in a tough economy.
Their exit from the deal "does now open up a number of different options," she said.
Among them is the ability for the city to negotiate lower interest rates on the money it needs to borrow to complete the village, which could save the city $90 million.
To buy out the loan, the city took out a line of credit from BMO and added $260 million worth of its own capital.
It will negotiate a separate agreement to finance the remaining construction costs.
But the village's problems aren't over -- the city is now grappling with massive cost overruns for the social housing component of the village, which has finances separate from the rest of the project.
A report prepared by city staff says the costs of the social housing component of the village is over budget by as much as $77 million.
Council policy requires that 20 per cent of units in new neighbourhoods be developed as affordable housing.
In the initial agreement with the Vancouver Olympic organizing committee, or VANOC, the city received $30 million from organizers and planned to have 252 units in the village dedicated to affordable housing after the Games.
Council in 2006 projected spending $65 million for the affordable housing. A year later, council approved an interim increase to $95 million.
That cost has now climbed as high as $172 million, said the report sent to the mayor and council last week.
The deal to take over financial responsibility for the project means that the city now has the entire village as an asset, not just the land it sits on.
Ken Bayne, general manager of the city, said the project is still not risk-free.
"But certainly we need to acknowledge that the assignment of this loan, actually owning this loan and removing Fortress significantly enhanced our security because if things don't go well, then that asset includes all those buildings," he said Wednesday.
The costs of the $1 billion project breaks down into $193 million for land, $750 million for construction and $125 million for cost overruns.
The developer, Millennium Development Corp., will have to pay the city back the money it is borrowing to build the village, but the terms of that deal have yet been negotiated.
