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catman
Joined: 18 Jul 2004
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 Posted: Mon Jan 12, 2009 7:50 pm Post subject: Vancouver seeks charter change to borrow $458M for Olympic V |
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Surprise Surprise.....
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Vancouver city council unanimously passed a motion Monday to ask the province for permission to borrow $458 million to fund the completion of the 2010 Winter Olympics Athletes Village in False Creek.
Mayor Gregor Robertson said Monday council will ask the premier to convene an emergency sitting of the B.C. legislature to amend the Vancouver Charter, giving the city the borrowing authority it requires.
Under most circumstances, the city borrows large sums of money only after seeking approval from taxpayers in an election-day plebiscite, but the current circumstances are extraordinary, Robertson said. The charter is a provincially enacted piece of legislation that outlines how the city governs itself.
"In this case, due to the emergency and the financing that is required to complete this project, we are going to be asking for authority to borrow in order to complete this project," he said.
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Jan 17, 2009 10:09 am Post subject: |
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Here is a longish but absolutely excellent summary:
http://futronomics.blogspot.com/2009/01/olympic-sized-depression-hitting.html
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Olympic Sized Depression Hitting Vancouver
Western Canada had a lot going for it during the recent credit boom. Not only were debt spigots open wide like nearly everywhere else in the world, pushing up asset prices along with them. But the provinces of BC, Alberta and Saskatchewan all had their own commodity booms at the same time, further fueling the demand for housing. In BC the mining (and to lesser extend forestry) industries underpinned a robust economy. In Alberta, the rising price of oil made previously uneconomical tar sands projects profitable. And in Saskatchewan, skyrocketing fertilizer, grain and uranium prices created their own boom in major cities.
More so than anywhere else, the boom story in Western Canada felt legitimate. So even if the rest of the world were to undergo a contraction of sorts, this region would be supported by it's "strong fundamentals." This relative feeling of safety provided the boom mentality even more fuel than elsewhere. Unemployment got as low as 3-4% in some areas, redefining what most economists thought was "full employment."
But Vancouver had yet one more factor providing wind at it's back. They had "won" the right to co-host the 2010 Winter Olympics with Whistler (a nearby ski resort town). The resulting inflow of foreign investment was going to put the city "on the map" in terms of major cosmopolitan international cities. Tokyo, London, New York, Milan, Vancouver. Yes. It was ordained. The International Olympic Committee had declared it so. The provincial government even began an advertising campaign with the slogan "The Best Place On Earth." Old license plates bearing "Beautiful British Columbia" are now exchangeable for new ones with the olympic logo and the new slogan - for a fee of course. All of this is symbolic of a peak atmosphere of social mood. People were made to feel extremely lucky just to be part of such a place. As such, property values needed to reflect this newfound prestige. And of course, "there is only so much land."
Or so went the story.
Unfortunately, Vancouver residents have been shocked to learn over the last few months that gravity does indeed apply to them also. Sure as the sun rises, boom has turned to bust. And perhaps nowhere in the world has it manifested so spectacularly as in Vancouver. Where social mood was highest; it has furthest to fall. Here are the recent happenings:
BC Legislature to be Recalled for Special Session
The B.C. Legislature will be recalled for a special session to deal with Vancouver's request for permission to borrow more than $450-million to complete the troubled Olympic Village project.
Without legislative action, the city would have to hold a referendum to approve the borrowing - an option Mayor Gregor Robertson said would cause costly delays in dealing with the situation.
"They need a tool right now that they don't have without a legislative amendment," the Premier [Campbell] said.
"We will bring that in as soon as it's drafted. We'll bring it in. We'll take it to the House, and hopefully it will pass as quickly as possible."
Mr. Campbell said he hopes members will get beyond "traditional politics" in order to deal with the matter.
Vancouver's Credit Placed On Watch Due to Olympic Village Project
An independent credit rating agency has placed Vancouver on a credit watch and may even downgrade the city's AA+ rating as a result of potential debt coming from the beleaguered Olympic Athletes Village project.
Standard & Poor's on Tuesday issued a bulletin about the city's finances, saying the impact on the city's debt could be significant if it borrows money to fund the remaining construction of the village.
"We believe that there's going to be an event in the next three months that will have a negative impact on the city's credit profile," Stephen Ogilvie, an analyst with the agency, told CBC News.
Nortel Woes Could Hurt Olympic Sponsorship
Nortel Networks was already financially flailing when it signed on as sponsor of the 2006 Winter Olympics in Torino, Italy.
It was laying off workers in 2007 when it became a major sponsor for the 2010 Games in Vancouver and struggling to stay afloat when its deal with the 2012 Summer Olympics in London was announced last July.
Now that the company has filed for bankruptcy protection from its creditors, Nortel's sponsorships at the next two Olympics could be in jeopardy.
Only through incredible incompetence or incredible arrogance could a struggling company think it is a good idea to spend millions on sponsoring a circus every few years.
The olympics in Vancouver-Whistler are turning out to be an unmitigated disaster. All of the planning going into the preparations assumed that economic expansion was a given. There was no contingency for a worldwide business slowdown. Surely, the economists they had hired assured them that no such thing had any statistical probability of occurring, and therefore wasn't worth planning for. This arrogance was prevalent regardless of numerous olympic experiences gone awry over the decades (the Montreal 1976 summer games had debts only repaid 30 years later, in 2006).
I'm guessing the attendance figures the olympic committee have assumed will also turn out to be wildly optimistic and revenue for the games and small businesses alike will turn out to be far lower than expected.
I'll give my readers two guesses as to who will be paying for this financial disaster, but you'll likely only need one.
Elsewhere, the global credit unwind and commodity collapse have real estate prices reeling in Vancouver. Vancouver is the former home of the TSX-Venture Exchange. It is the largest collection of junior mining exploration and development companies. Most of those companies are still based in Vancouver. During the commodity boom, these companies absolutely exploded in value. Very few of them actually made any money. But the prospect of finding a huge resource deposit was enough to give many of those companies significant value. Now, with commodity prices 70% lower and credit markets basically closed, many of these companies are gravitating toward zero. Cash in the bank is disappearing fast and without financing, they are essentially holding companies for mining permits that have little hope of ever being used. The wealth lost in the collapse of these shares has been exceptional, especially when you consider much of it is contained to one city.
During the boom, company executives, investor relations representatives, even secretaries were paid modest salaries plus stock options. The tremendous wealth effect this had was a contributor to Vancouver's housing boom. Now it too has all but disappeared.
In only 8 months, home prices have fallen 19%. And the massive amount of speculative supply that was bought in anticipation of flipping it post-olympics is awaiting the market for the spring. This has all the ingredients for a spectacular crash of epic proportions. Already, wise property developers are trying to front-run the market.
On Sale: $350M of Real Estate in Lower Mainland
A Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland.
The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.
About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.
Only time will tell whether those discounts will be sufficient to draw enough buyers. Judging by the absolute collapse in social mood, I don't know where the buyers are going to come from. Nearly everyone who could come close to affording a condo (and many who couldn't, to be sure) already bought one in the fright campaign of run-away prices. "If you don't buy now, you'll never be able to afford one," was common advice.
Prices of nearly everything got so out of control, that there is no telling where the bottom is on this market. The chart above traces out some very clean Elliott Wave patterns, which would suggest prices are heading all the way back to their "Wave 4" trough of '98. That would be a 50% decline from the peak - surely even more for condos in super-speculative areas (the Olympic Village, for example). How will the forthcoming property tax hikes affect prices? Will the inevitable post-games service cuts by the city make Vancouver an undesirable place to live in the future?
We are once again confronted by a region that thought, "It's different here." It wasn't. It never is. Speculative booms precede busts, just as inhaling precedes exhaling. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sat Jan 17, 2009 11:23 am Post subject: |
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| So, mises, who is going to pick up the bill, Federal (Canadian) taxpayers or just B.C. taxpayers? Or both? |
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On the other hand
Joined: 19 Apr 2003
Location: I walk along the avenue
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| Posted: Sat Jan 17, 2009 12:03 pm Post subject: |
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| Kuros wrote: |
| So, mises, who is going to pick up the bill, Federal (Canadian) taxpayers or just B.C. taxpayers? Or both? |
I don't know how that would work. But I do know that the federal government held a lottery in the 1970s to help pay for the Montreal Olympics. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sat Jan 17, 2009 12:22 pm Post subject: |
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| On the other hand wrote: |
| Kuros wrote: |
| So, mises, who is going to pick up the bill, Federal (Canadian) taxpayers or just B.C. taxpayers? Or both? |
I don't know how that would work. But I do know that the federal government held a lottery in the 1970s to help pay for the Montreal Olympics. |
How do taxes normally work in Canada? I know there's some sort of distribution done by the Federal gov't, but are any taxes collected at all at the local/provincial levels? |
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catman
Joined: 18 Jul 2004
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| Posted: Sat Jan 17, 2009 7:35 pm Post subject: |
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| Now the men's hockey team better win gold to make this all worth it. |
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On the other hand
Joined: 19 Apr 2003
Location: I walk along the avenue
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| Posted: Sun Jan 18, 2009 4:31 am Post subject: |
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| Kuros wrote: |
| On the other hand wrote: |
| Kuros wrote: |
| So, mises, who is going to pick up the bill, Federal (Canadian) taxpayers or just B.C. taxpayers? Or both? |
I don't know how that would work. But I do know that the federal government held a lottery in the 1970s to help pay for the Montreal Olympics. |
How do taxes normally work in Canada? I know there's some sort of distribution done by the Federal gov't, but are any taxes collected at all at the local/provincial levels? |
Taxes have always confused me, but I do know that, in SOME provinces(including my own), there is a provincial income tax. Plus, a lot of provinces have their own sales tax, over and above the federal one.
That about covers my knowledge on the subject. Mayve someone else can chime in here. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Jan 18, 2009 9:37 am Post subject: |
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There are federal and (some) provincial income taxes, and same for all other levels of taxation.
The games will be bailed out by the Feds, I assume. And soon, too. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Jan 18, 2009 9:44 am Post subject: |
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http://www.nationalpost.com/news/story.html?id=1191361
The province is helping the games secure more debt. Just what Van/BC/Canada needs now. More debt.
The bond markets are going to punish us for our profligate ways. It is going to be very messy.
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VICTORIA -- The B.C. government gave emergency borrowing powers Saturday night to the City of Vancouver -- allowing it to negotiate at least $458 million more to ensure the Athletes Village is built in time for the 2010 Olympics. |
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JBomb
Joined: 16 Oct 2008
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| Posted: Mon Jan 19, 2009 1:16 am Post subject: |
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| what I am also concerned about is the rewriting of the city's charter. Vancouver already has excessive powers thanks to the emergency powers it was granted back in the 1890s when it literally burnt to the ground. Those emergency powers have not gone away over a century later and has resulted in the city becoming the third largest in Canada, but with a large amount of zoning, planning, and authority beyond that of the other cities and municipalities in BC. Now as it faces yet another "emergency" and gets even more power as a result of said "emergency," I can guarantee you these powers it will be getting will not be going away either anytime soon. What this means is more of the spending powers of the city will be kept away from messy things like elections and referendums, which is kind of sad in terms of democratic rights of the electorate. Interestingly this is also fast turning into an Expo like land grab as well as I for see things. The province and the city will be rendered desperate to unload the Olympic Village once the games are done in order to recoup losses as soon as possible before they begin bogging down taxpayers with more of the financial burden, which will inevitably happen, but it will nevertheless save them the trouble of a physical representation in which rage can be directed at. This will once again allow for cheap wholesale buying up of what will no doubt be sought after land by real estate firms who will be able to get large chunks of these assets on the cheap, which is what happened with Expo. Now though, they won't even have to erect the condos and make even more profit selling a piece of Olympic heritage to urbanite yuppies willing to pay out the nose. In other words not much changes around here except Vancouver gets more political punch, the Provincial Government pulls a fast one, real estate guys get rich, and the tax payers get the shaft. |
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mises
Joined: 05 Nov 2007
Location: retired
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catman
Joined: 18 Jul 2004
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| Posted: Thu Feb 19, 2009 11:20 pm Post subject: Olympic security estimated to cost $900M |
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The federal and provincial governments have revealed their revised estimates for 2010 Olympic Games security, now pegged at $900 million, or almost five times the amount initially estimated.
Under the new agreement, B.C.'s total contribution will be $252.5 million, which includes $165 million in new money that was announced Thursday.
The province's new funding will be go toward infrastructure and will involve capital spending spread over three years.
"This allows us to take what was going to be a pressure on our operating budget and cap it, so that we didn't have to divert dollars away from other programs in the province, such as health care and education, to live up to our Olympic security obligations," Colin Hansen, Minister Responsible for the Olympics, said Thursday.
The federal government announced in a news release that its total contribution will now be $647.5 million and also, that it will pay for any unforeseen costs that may arise.
"It would be nice if we could do it for less, but our approach has not been to set a budget and then deliver security for that budget," said Peter van Loan, the federal minister in charge of Olympic security.
The province initially estimated its contribution for providing security for the Games would be $87.5 million. As recently as last July, Hansen announced the entire security budget would be $175 million.
Subsequent estimates, including one from the federal government, suggested the entire cost of providing security for the Games could cost as much as $1 billion.
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Thu Feb 19, 2009 11:56 pm Post subject: |
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| On the other hand wrote: |
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I don't think its irrational for a city to wish to host the Olympics; its only irrational to believe it will be a net profit.
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All I'm saying is that I, personally, would hate to live in a city that was hosting the Olympics. If other people think it's a great idea, so be it. That wouldn't change my vote in a referendum, though. |
I lived in Calgary during the Olympics and thought it was fine.
In fact, didn't Calgary turn a profit from them? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Feb 20, 2009 2:05 pm Post subject: |
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| Captain Corea wrote: |
| On the other hand wrote: |
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I don't think its irrational for a city to wish to host the Olympics; its only irrational to believe it will be a net profit.
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All I'm saying is that I, personally, would hate to live in a city that was hosting the Olympics. If other people think it's a great idea, so be it. That wouldn't change my vote in a referendum, though. |
I lived in Calgary during the Olympics and thought it was fine.
In fact, didn't Calgary turn a profit from them? |
If you assume the cost of the games stop the exact moment the games end, then yes. The Calgary games turned a profit. However, if you factor in all the long term costs, then no. It did not. If you build a property that will last 20 years for a 3 week event, you cannot act like that property has no costs following the event. |
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CA-NA-DA-ABC
Joined: 20 Jun 2006
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| Posted: Fri Apr 17, 2009 2:14 am Post subject: |
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| at least the Olympics has been triggering improvements to the third-world-isque infrastructure of the Lower Mainland. For that reason alone I would already consider it a mild success. |
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