Re: Municipality to borrow $100 Million for Athlete Village construction
I am very concerned that the RMOW has approved taking a loan to finance the Olympic Athlete Village project from the Municipal Finance Authority (MFA). Whistler 2020 Development Corp was formed specifically to finance, design and build the athletes’ village. The whole idea was to contain the risks of financing and building the project and not allow any risks to impact the municipality and its taxpayers.
VANOC’s equity contribution of $37.5 million, plus free Crown land and a market-priced sale component, easily allows for conventional and safe project financing with no municipal guarantees. Then, if there are delays, increased construction costs or a shortfall in sales to resident buyers, the lender can look to only the project itself for repayment…not the municipality and its taxpayers.
By borrowing the $100 million directly, Council puts all the risks directly onto the backs of Whistler property taxpayers.
Council notes that the MFA direct loan has a lower interest rate than standalone project financing. That is true, because interest rates are lower when there is less risk. The MFA will have all Whistler property taxpayers on the hook, because we are way surer than a housing project. MFA need not review the Athlete Village project because, as the MFA manager pointed out, Whistler has $50 million in revenues every year.
The trouble is that to get a couple of percentage points in lower interest the municipality has become a real estate speculator. And, of course, that makes every Whistler taxpayer a real estate speculator, too.
So what? Well, if the U.S. has a recession deeper and longer than planned and resort business is affected, maybe the Whistler Housing Authority’s pre-approved list shrinks way faster than expected. And maybe there’s a $25 million shortfall when the loan comes due. So we just send the MFA the extra money?
The tough answer is provided by Council, which has approved a six per cent tax increase. All Whistler revenues are already earmarked for other purposes. There is no extra money to wager on a very large real estate venture. In fact it would be extremely inappropriate to use any property tax money for such a purpose.
I’m not aware of any Whistler Housing Authority projects to date that have relied on property taxpayer money. The municipality should not start now.
Council should reconsider this loan and do standalone financing as was always planned.
That’s “save” Garibaldi