The $100 million sum that the
municipality is borrowing for the athletes’ village may not be the project’s
only source of funding.
The Whistler 2020 Development
Corporation (WDC) is also looking at borrowing from conventional banks, charter
banks, or credit unions.
Mayor Ken Melamed, who sits
on the WDC board, said commercial
lending institutions might actually be able to match the Municipal Finance
Authority (MFA) interest rate.
“That was not the reality
when we developed the business plan, there was a clear and fairly significant
spread in the commercial rate to the MFA rate, and it wasn’t assumed at that
time that the commercial lending institutions would be interested in
discounting their rate down to the level of the MFA,“ said Melamed.
“There is that suggestion
Melamed cited changing
interest rates and more volatile markets as reasons for possibly reducing
borrowing rates from banks.
He added that setting up
private mortgages with the purchasers of the athletes’ village property units
is also a consideration in choosing who to borrow money from.
“Obviously the MFA doesn’t do
private financing…. And that is where this concept came in that there might be
some discounting available from commercial institutions in the interest of
picking up the post-construction and post Games mortgages.” said Melamed.
When the athletes’ village
business plan was approved in 2006, borrowing from the MFA over a commercial
lender was calculated to save about $8 million dollars.
According to Melamed, that
figure has probably changed.
Eric Martin, chair of the
WDC, added that even if municipality ends up borrowing $100 million from the
MFA, the corporation may opt not to use it.
“It is not a loan,” explained
Martin. “It is just basically a credit facility that is established. They
basically reserve the money so it can be borrowed. But there is no obligation
to actually draw the money down. That is a very important distinction.
“The $100 million is
available, and it is the absolute maximum, but it will not necessarily be borrowed.
I would be very surprised if we actually ever borrowed close to the maximum.”
The WDC has not yet decided
how much of the MFA money they would use to finish construction of the
athletes’ village, and how much they would borrow from a commercial lender.
“We are not really in the
position where we have to borrow any money until sometime in the summer or
fall. We are still working out of the cash which has been received already
through VANOC,” said Martin.
“So probably in two or three
months we’ll be talking at our board meetings and deciding what we need, and
how we are going to access it.”
VANOC gave the WDC more than
$35 million to go towards to $131 million village project.
The June 2006 business plan
for the athletes’ village was budgeted to borrow money to bridge the gap
between when the neighbourhood is constructed in 2008 and 2009 and when the
housing units are sold after the Olympics, by 2011.
However borrowing $100
million from the MFA has drawn public criticism, including a recent letter from
former Whistler Councillor Ted Milner that was addressed to council.
The letter said that by
borrowing the $100 million from the MFA, the municipality may be putting risk
on the taxpayers. If WDC borrowed the money instead, the risk would be moved to
“The project (WDC) should
borrow the money. And if the project doesn’t work out, then the bank or who
ever the lender is would work with the project to fix it as best they can, and
there would be no risk to people paying property taxes,” said Milner.
“My point in the letter was,
if you are going to take all the risk and put it on the backs of taxpayers who
are paying property taxes — they are not paying real estate speculation tax —
they should reconsider. And clearly they are,” he said.