The Vancouver Olympic Village scandal continues to worsen. During construction, the City of Vancouver was forced to take over financing of the project, as the developer’s initial lender backed out due to cost overruns. At the end of last August, the developer fell behind its payment schedule, and the City placed the property into receivership in November. The development has been a spectacular failure, with fewer than half of the 737 units being sold. The outstanding debt to the city is $743 million. To make things worse, a quarter of the tenants are now suing the City.
One might expect that a billion dollar development for Olympic athletes would be pretty posh. Prices ranged from $530,900 for a 566 square foot studio, to $4.8 million for three bedroom units. Even in unaffordable Vancouver, you’d expect that to come with a bedroom big enough to fit a bed. According to tenants, they didn’t even get that. What they did get was bizarre leaks, cracking ceilings, and inadequate heating. The project sounds like something out of Arrested Development, or as the tenants’ legal counsel put it, “It’s like they were sold a BMW and they got a broken Toyota. And even if they manage to fix everything, it’s still a Toyota.” The units are far from the luxury accommodations buyers were lead to believe they were getting.
In short, the lawsuits seem perfectly legitimate, and are likely to cost the City another $50 million dollars. It’s also hard to imagine this quagmire will help the value of the units on the market. Even before the horrendous conditions of the condo units were made public, reports claimed that the development was worth $150-200 million less than what was owed to the city. It is hard to imagine a scenario where the city isn’t stuck with hundreds of millions of dollars of losses.
Of course, none of this should come as a surprise. Government housing projects generally fail. And if governments can’t build adequate housing for the poor, it’s hard to imagine them building upscale housing at a price that the market will bear. Hence the shoddy work. The lesson here is a simple one, that history proves again and again: governments make bad landlords.