Could the Olympics bankrupt the City of Vancouver, or put it in a financial straitjacket for decades to come?
I've never even considered that as a remote possibility. Until now.
The basic numbers (at least the ones I can wrest out of the cone-of-silly-secrecy at Vancouver city hall) are these:
A few weeks ago, in a closed meeting, city councillors unanimously agreed to "help" Millennium Development Corp., which is building the Olympic village. The city will lend up to $100 million to Fortress Investment Group, a Wall Street hedge fund manager, which in turn will be lending about $700 million to build the athletes' village on the south shore of False Creek.
Fortress, its stock price now trading at under $4 from its 52-week high of $19.50 -- it dropped 12 per cent Thursday -- has also been given $190 million in loan guarantees from Vancouver taxpayers. The executives at Fortress and Millennium probably feel pretty happy about how it's working out. In the current financial meltdown, they're backed by an entire city.
Taxpayers should be less thrilled. Total exposure per ratepayer? Probably in the range of about $2,000 apiece.
The city might face huge penalties. In the unlikely (though not impossible) event the whole house of cards collapses -- with Fortress's funding evaporating or Millennium pulling out of the athletes' village -- the consequences would be dire.
I suspect this means there won't be any money left over to address the homeless crisis.