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Crunch Time for Oval Financing
Not Everyone's Convinced Sale of Oval Lands Will Pay for Venue

Matthew Hoekstra

Richmond Review

February 18, 2006

[Note: This material is copyright by the Richmond Review in British Columbia, and is reproduced here as a matter of "fair use" for non-commercial, educational purposes only. Any other use may require the prior approval of the Richmond Review.]

City council’s confidence the development of lands surrounding the oval will pay for the $178-million Olympic venue is days away from being tested, as city staff put the finishing touches on a request for proposals.

Project spokesperson Ted Townsend said details are still being hammered out, but the long-awaited RFP will be released by the end of the month.

The sale or lease of seven land parcels on the 13-hectare (32-acre) site is expected to be the largest source of revenue for project construction, adding to the $60 million from the Vancouver Organizing Committee and the $50 million expected from casino revenue.

Developers will have the opportunity to bid on some or all of the parcels, which vary in size. Land closer to the river will be developed first, while parcels directly adjacent to the oval likely won’t be developed until after the 2010 Games, as the area is needed for oval construction support and Olympic overlay during the Games.

Some parcels will be sold, while at least one will be leased. Townsend said the city has identified an eastern site as a prime spot to lease for a restaurant.

“We’ll take a look at what’s best for the city. Obviously we have some financial objectives, but we also have some objectives in terms of the type of community we want to develop.”

Ninety days after the RFP, including addendums, is released, the city will undertake a “rigorous and complex review and selection process” to determine the best value for the city, according to Olympic Business Office director Lani Schultz.
Council used a similar strategy in the late 1990s to pay for city hall by selling city-owned lots in Odlinwood to residential developers.

In a report to council Monday, Schultz said the success of the RFP is not only critical to the financing of the project, but to reaching the overall planning objectives for the entire city.

Richmond is banking on the oval to be, in part, a catalyst for change in the city centre, by incorporating the waterfront into the downtown.

Schultz said the oval neighbourhood is planned as an “international destination” with a mix of amenities and services. It could include a hotel and other retail shops in among a larger mix of commercial and residential buildings.
All that traffic will help drive up operating revenues for the oval, Schultz noted.

According to the city’s cost estimates of August 2004, $54 million is expected to be generated from land development, and another $20 million in development cost charges.

Townsend said the city isn’t releasing a number around the expected income from the site, citing a competitive bidding process. But he said based on the interest the city has had to date, he’s confident the city will meet its financial goals.
Coun. Derek Dang, a realtor, agreed. He said there are a host of new multi-family developments coming on stream in Richmond, but the oval site has special draws: the waterfront, the oval and University of B.C. Rowing Club.

“It will be an activity hub. It will be a unique situation for residential development to be around that.”

Dang said as long as interest rates hold, he doesn’t see any change in the positive growth in the province.

Ron Bagan, managing director for Colliers International Vancouver said there’s no lack of desire from developers for multi-family sites.

“There’s still very heated activity in the multi-family market and mixed-use market if it’s the right location.”

But Urban Development Institute director Bob Ransford is skeptical the oval lands will sell to meet expectations, noting he hasn’t seen a refinement of Richmond’s projected revenues since its oval bid.

“They allocated $32 million in sponsorship revenue as one of the revenue sources. We know they haven’t come through with that. We don’t know how much they’ve revised that down to now.”

Meanwhile construction costs continue to rise between 0.75 and 1.5 per cent each month and land prices continues to soar. That’s driving home prices upwards and decreasing the pool of qualified buyers.

“I know a lot of the bigger developers are saying we better temper some of what we’re doing, because with the cost of land and the cost of construction going up we can’t get selling prices. We can set them, but incomes are just not high enough to justify those kinds of selling prices.”

Because of that, Richmond isn’t entering the marketplace at the best time, Ransford contends.

“If they’d gone into the marketplace eight months ago, they would probably be in a better position. I don’t know what kind of special appeal they think this land has. I think that’s in the eyes of the dreamers that came up with this whole dream for the oval.”

Ransford added developers will be charged a premium in development cost charges in the oval neighbourhood.

“That’s just another cost factor that will affect what value they can get for that land.”