Editorial 

Taking care of taxpayers’ money

Last week’s comments in this space on the additional funding that the RMOW is being asked for to help build the athletes’ village elicited a call from Mayor Ken Melamed, who — quite rightly — pointed out some statements that were off the mark and required clarification.

The topic last week was the athletes’ village and the financial challenges it presents, to Whistler and to VANOC. Only a handful of the buildings in the $130 million project have been issued development permits but the estimated cost to build some of them has ballooned. More ominously, developers of two buildings, VANOC and the Whistler Housing Authority, have requested or will be requesting Whistler council pony up more money, after the projects have been issued development permits.

Whistler agreed long ago to put $2 million into the gymnasium in the high performance athletes’ centre because the facility will be available to local sports groups. After the development permit was issued VANOC found costs had climbed and asked Whistler for an additional $1.65 million.

And last week, when the housing authority was before council requesting a development permit for a $6 million apartment building, which will provide much-needed rental housing for Whistler employees after the Games, councillors asked how the WHA planned to fund the building. They were told that the WHA would be coming to council with a request for $1 million.

While the mayor is concerned about the rising costs at the athletes’ village, what he took issue with was my characterization that the $1 million for the WHA building and the $1.65 million for the gymnasium would be coming directly from Whistler taxpayers. I wrote: “But the incremental increases — if millions of dollars can be considered incremental increases — that Whistler taxpayers are now expected to pay for have got to stop.”

Melamed made the point that Whistler taxpayers are not being asked to pay for the increases. The $1 million the municipality will provide for the WHA building will come from the employee housing reserve, which was generated by development cost charges assessed to developers. The extra $1.65 million for the gymnasium in the athletes’ centre will come from the hotel tax, paid by visitors.

“Financing the athletes’ village has been challenging but a number of contingencies are in place,” Melamed said.

“But none of the $130 million athletes’ village is taxpayer money. It’s all budgeted to come from the sale of the buildings to Whistler residents following the Games and from partners brought in to the project, like the WHA, and the hostel association.”

We could argue over whether hotel tax funds, the employee housing reserve and in fact all municipal spending is “taxpayers’ money” but the point is the additional $2.65 million Whistler council has agreed to put into these two projects is money the municipality already has. It will not require going to taxpayers for more money.

The point was also made in last week’s column that: “One of the innovative ways Whistler and its 2020 Development Corporation have tackled (the financial challenge of building the athletes’ village) is by bringing in partners, including Hostelling International and the Whistler Housing Authority.” Melamed believes this point is not well understood, so a little further explanation may be in order.

“Before we adopted the $130 million business plan the 2020 Development Corporation did a lot of due diligence, we looked at a lot of models,” the mayor said. “The big breakthrough was taking the marketing and sales risk of all the athletes’ village units out of the equation by bringing in partners.”

Trying to sell all the units that will be built in the athletes’ village after the 2010 Games are over was always going to be a problem. Bringing so many employee-restricted units on to the employee housing market at one time would have made it tough to recover building costs. In the vernacular, the “absorption rate was always aggressive.” But with partners like the WHA and Hostelling International taking ownership of some of the buildings, the absorption rate is reduced.

Melamed is still concerned by the rising construction costs but said: “It looks like our business plan has protected Whistler taxpayers.”

Good point, and perhaps more credit should be given to the work the 2020 Development Corporation has done.

But in a climate where construction costs are rising so rapidly, a deadline looms and innovative approaches are required, the development corporation and others involved in the athletes’ village might also look at improving communications. We’re all in this together, but as the WHA building showed, not even all councillors have the same information.

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