How solid is the Olympic Village foundation?
We try to keep our reporting of rumours to a minimum here, but Jesse has been a reliable source before. Here’s his comment from the previous thread.
Of course you don’t need to delve into second hand rumors to find problems with this projects financial foundation. The front page of the Sun today reveals that the development was financed with currency swaps when the Loonies was flying high:
Just when you thought you’ve computed all the risks from the Olympic village crisis, here’s another. The $1.2-billion development has been financed using international “currency swaps,” one of the riskiest ways to borrow.
UPDATE: Mayor Robertson says the city is in process of negotiating a ‘much better deal‘ for the financing and doesn’t believe the city is at such a risk.
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February 3rd, 2009 at 11:23 am
On the Liberal/NDP politics: The NDP had never once called this housing bubble a bubble. The furthest they have gone in discrediting Liberal’s “golden decade” was attributing the strong economy to “high commodity prices”. In other words, it’s the “strong fundamentals” rather than Gordo’s “leadership”.
February 3rd, 2009 at 11:19 am
“This housing bubble, like all bubbles, has led to a displacement of competitive economic activity in favour of unsustainable RE investment and sales and it will take the province a long time to get back to normal.”
That goes further than tech industry. The aviation servicing industry, which Vancouver has inherent advantage in for being a logistic hub, was driven out of BC due to insanely high cost of both land and labor. The lost of 700 aviation service jobs happened in summer 2007, the height of the RE bubble. At that time, the lost of such jobs were not a big deal, as any major condo development site easily employs 700 blue-collar workers. However, when this building boom goes bust, the aviation industry, which would have provided desperately needed non-starbucks jobs and land lease income, can not come back overnight. This is why I expect the local recession to drag on longer than the general recession. World economy will eventually recover, but it will take Vancouver a VERY long time to get its traditional industries back, industries that are based on inherent advantages of BC, rather than RE speculation.
February 3rd, 2009 at 11:09 am
Deathspiral: Kelowna was not mentioned by Shiller, and had not received international coverage so far. It doesn’t have Olympics, so it’s not “world class”. Not comparable to Vancouver, which is world class and “different here”.
February 3rd, 2009 at 12:51 am
Dave:
Voters will recognize that this downturn is being led by the recession in the US and not a result of local leadership.
Thank you Dave, You have just revealed the main campaign plank of the Liberals’ election campaign, and I’m sorry to say it will probably work.
February 3rd, 2009 at 12:48 am
jesse:
By happenstance when the BC Liberals came in, the economic conditions worsened, and tech never really recovered. But that was more just coincidence I’m sure.
Do you think that one of the reasons why tech never recovered is that Vancouver is no longer attractive to tech professionals due to the insane cost of housing? Talk to a recruiter some time.
This housing bubble, like all bubbles, has led to a displacement of competitive economic activity in favour of unsustainable RE investment and sales and it will take the province a long time to get back to normal.
February 2nd, 2009 at 11:58 pm
Dave:
I would rather see the last 8 years of progress in BC continued.
The last 8 years of “progress” in BC have consisted simply of an insane housing bubble, an Olympic infrastructure orgy, and a consumer spending binge fueled by a -8% savings rate. The deindustrialization and loss of head offices during the Clark years have continued unabated. Not only is is not going to continue, it has been reversing since May, 2008.
Since you have been a housing bubble denier for the whole time you’ve been on the board your attitude that this is “progress” doesn’t surprise me a bit.
Vansanity, I would really like to see the Liberals called to account for their “fool’s gold” decade, but the NDP have not seen fit to point out the Emperor Gordo has no clothes, and I’m not sure whether there is really time for them to start now, if indeed they really want to. The NDP has just focused on hot-button issues like the carbon tax rather than pointing out that BC’s whole economic course is unsustainable.
February 2nd, 2009 at 9:33 pm
patriotz – Friendly wager? I’m from the interior originally with plenty of ties there and I can say they are pissed.
1) Closed hospitals;
2) Classrooms fuller;
3) Mill shutdowns (not necessarily to do with the liberals);
4) Tax dollars all being filtered to the lower mainland;
5) Olympics.
I could go on. They’ve lost jobs under the liberals, they don’t see them as being the cure all, more as the cause all.
Even politics are cyclical. Times have changed.
February 2nd, 2009 at 9:04 pm
In the local tech industry the late ’90s were decidedly good. By happenstance when the BC Liberals came in, the economic conditions worsened, and tech never really recovered. But that was more just coincidence I’m sure.
February 2nd, 2009 at 9:01 pm
People still remember what the 90s were like under the NDP. While the rest of North America was booming, BC was wallowing. Voters will recognize that this downturn is being led by the recession in the US and not a result of local leadership.
What do the NDP possibly bring to the table? Economic rejuvenation by giving unions more money?
I would rather see the last 8 years of progress in BC continued.
February 2nd, 2009 at 8:47 pm
Vansanity:
Liberals are going to get slaughtered outside of the Lower Mainland this election.
No they’re not, because the biggest issue in the next election is going to be the economy, and the Liberals have a 20 point lead with the public on the issue of economic management.
I’m not saying they deserve it one bit, but that’s the way it is.
February 2nd, 2009 at 7:48 pm
hmm this forum is starting to sound like a georox friday afternoon kegger….geotechnical engineering aside, if this rumour is true it will illustrate why pre-sales can be so risky. and why in the end, the biggest winners in this village will be the lawyers.
February 2nd, 2009 at 7:31 pm
“Stating anything less without actual information is irresponsible at best and potentially libelous at worse.”
And what would be the alternative? Keep the wool over the eyes of potential buyers? It is in the buyers’ best interests to know if the foundation is stable. It is only a rumour however it can be easily proved or disproved with a few simple inquiries and verifications by a knowledgeable journalist. If there is nothing to hide then there’s nothing to hide.
Saying that things were most likely done properly is great. A quick lesson: trust but verify.
February 2nd, 2009 at 6:45 pm
Garths Last posting on Kelowna pricing
http://www.greaterfool.ca/2008.....n-kelowna/
February 2nd, 2009 at 6:42 pm
An Unprecedented Upheval – Down 14% In Only 5 Months!!
According to OMREB, the Okanagan Mainline Real Estate Board, the Kelowna housing market hit an all-time high of $553,000 in April of 2008.
That means that the average home in Kelowna would have cost someone about $553,000 in April of 2008.
In the six months since then, until the end of October, 2008, this average price fell by $92,000; by far the highest raw dollar and percentage decline in all of Canada, and perhaps in all of North America for the five months following a market peak.
This is greater than Vancouver ($45K over 5 months), greater than Calgary ($62K over 16 months) and greater than Edmonton ($64K over 14 months). In effect, the owner of an “average” home purchased at the height of the Kelowna housing bubble has been losing over $15,000 per month, or about $500 per day of their home equity.
If we look at the percentages, this means home prices have falled a whopping 16.6% in the first six months of this market crash. This is more than any other market in North America, much less Canada, for the first six months following its peak.
Where it gets scary is when you “annualize” that rate of decline. Divide 16.6 by 6, multiply it by 12, and you get 33%. That means that as of the beginning of November, home prices are falling at a rate of 33% per year.
Where it gets even scarier is the fact that this annualized rate of decline is accelerating. The annualized rate of decline from April to August was 25%. As of the month of October (beginning November), it is 33% – a rise of 7% in only two months. At this rate of acceleration, it would not be unreasonable to see an annualized rate of decline in excess of 50% by some time in 1Q2009.
By April of 2009, this annualized rate will become the Year Over Year (YOY) rate, and it will probably be even higher yet.
Imagine that — home prices falling 50% or more inside of a single year. Shocking, isn’t it
AND THIS WAS ONLY OCTOBER, ANYONE KNOW WHAT PRICES HAVE SINCE OCT?
February 2nd, 2009 at 5:59 pm
Liberals are going to get slaughtered outside of the Lower Mainland this election. Within the LM it’s a bit of a toss up still for me.
February 2nd, 2009 at 4:56 pm
Dave:
Dave, isn’t it only libelous if the general public would be surprised or shocked by finding out the truth? I know that the truth is not a defense in libel unless you can prove that the statement was already known.
It would be a very embarrasing topic to bring into the public forum if somehow certain aspects of the engineering process had been “overlooked” in the headlong rush to complete within a unrealistic deadline by an incompetant and inexperianced contractor.
All this information would be tabled at the discovery, long before it hit the courtroom. Could libel be proven? Maybe not.
February 2nd, 2009 at 4:55 pm
Dave: You have a point, certainly enough money is being spent on this development to ensure that all structure and finishes are to the highest quality level.
I’m still not convinced that this project was in the best interest to city taxpayers, but it will be interesting to see what better deal the City is able to negotiate on financing.
February 2nd, 2009 at 4:52 pm
I’m sure the VCI grapevine will find someone to answer the aforementioned questions on how the Olympic Village site was prepped.
Richmond learned a few painful costly legal lessons re building below sea level. What I described earlier is now standard practice in Richmond.
February 2nd, 2009 at 4:45 pm
Can we have some civility? Beyond one outburst I know of Dave has remained civil and held off on insults, which is more than I can say for many of you. Lots of insults flying back and forth doesn’t really add to the conversation and gets boring quickly.
February 2nd, 2009 at 4:42 pm
The rock columns you refer to are still a form of piling. They became popular about 10 years ago and have been used extensively at the airport. Regular piles (steel pipes) are still used for foundations, but perhaps less so currently. Like anything, these things get evaluated on a cost benefit basis.
Dewatering has always been known to cause changes in soil stress which may result in settlement or shifting. That’s not a new discovery. It’s been known for a very long time.
As already stated, the soils at the Olympic Village and throughout False Creek include historically placed low quality fill. The natural soils beneath include a relatively thin layer of glacial till under which is bedrock.
I don’t know what the foundation design at the Olympic village was. I can say that, odds are, it was done properly and will function just fine. Stating anything less without actual information is irresponsible at best and potentially libelous at worse.
February 2nd, 2009 at 4:29 pm
Good to see Dave “Always wrong” is back.
Now go back to your hot dog stand
February 2nd, 2009 at 4:12 pm
# 7 DavE
True, it is simply a rumour.
However, I am curious as to the design of the foundation and the soil types for the Olympic Village.
Richmond, for example, is below sea level.
A given site is generally pre-loaded for several months to compact the soil under the footprint. The next step is generally firms like Geo Pac come and uses a column to hydraulically create a hole,and rock is poured into the hole.This appears to support the vertical load – bearing columns.
Pile driving is no longer used. Also, De- watering is no longer used, as it was found to change the soil hydraulics and nearby buildings were being impacted(ie foundations heaving, walls sagging etc.)
Foundations in such environments can be tricky, so I am now curious what Vancouver did re the Olympic village, given its proximity to the waterfront.
While the jury is out on what is a rumour, I would say moreso until proven “sound ” and signed – off on by the engineers etc. , I would take a pass on them just for this very Uncertain reason. If they try to go hi- end in the finishing, the problems will become more obvious in the detailed finishing work.
February 2nd, 2009 at 3:42 pm
Vanguy: Do note that for politicians at the provincial level, the salaries they receive are likely not a big deal in the grand scheme of things. Especially for the premier and cabinet ministers, who will likely have a lucrative job somewhere after their term is up, both right wing and the left wing. Gordo has made his campaign supports filthy rich, at least for the last few years. Much of this has to do with this global credit bubble, but I think he did deserve some credit for pushing so much infrastructure spending forward. Again, not saying he’s good or bad, just that he has done what his supporters wanted.
I also support the carbon tax, and find NDP’s tactic of targeting the carbon tax to be short-sighted. NDP has always claimed to be the “greener” party, but did not hesitate to jump on the band wagon when the wind changes.
February 2nd, 2009 at 3:19 pm
I would suggest that people be careful in speculating about the adequacy of the foundational design at the Olympic Village. Anybody qualified to make such an assessment would not be so haphazard as to make such statements on an internet forum, nor answer such questions to the media without having done an exhaustive inspection/analysis. Foundational shifting is not necessary a performance failure.
February 2nd, 2009 at 2:53 pm
Wow, more Olympic troubles. Too bad for all the specuvestors who really believed that prices would go up until 2010 because of the Olympics. Other specuvestor beliefs that have turned on them:
- Hurry or you will be priced out forever!
- Vancouver has many rich, rich asians
- Real estate is local
If you’re a specuvestor, you know that you fell for these bogus rumors and they are biting you back in the a** now. With the severe economic downturn we are facing, just cut price sell now before prices PLUMMET even further this year.
February 2nd, 2009 at 2:52 pm
umdesch4: further, they recently gave themselves raises, rather large if I recall correctly … and didn’t also backtrack on the gold-plated pension thing and sign themselves up for the plan. This budget stuff was in the making, most of us knew it was a world of denial. That October update was comical.
February 2nd, 2009 at 2:49 pm
“Hansen blamed falling prices and shrinking markets for lumber and natural gas, two of the largest exports for the province, for the decline in provincial revenues.”
hahahaha, the lumber prices were already toast, a long, long time ago.
February 2nd, 2009 at 2:48 pm
20% of what exactly? As one of my co-workers likes to say “If I had their money, I’d throw mine away”
February 2nd, 2009 at 2:39 pm
I’m normally not a Campbell supporter, but i agree with him on the carbon tax, and I’m impressed that the cost to him and his cabinet ministers personally for running a deficit. They take a 20% paycut…how many of us would champion something at work that would cost us 20%? I realize the cynics out there would add that his alternative is to lose his job completely in May but nonetheless I’m still impressed.
February 2nd, 2009 at 2:14 pm
In addition, perhaps the BC economy has not decoupled after all…..
http://www.cbc.ca/canada/briti.....ansen.html