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Vancouver Sun Shades of Truth
I'm not completely sure what the Vancouver Sun's motivation
was, but they ran an article on Saturday April 22, 2006 praising Kingswood
Properties', Lorne Segal, as an Olympic philanthropist. I'm going to share
the entire story with you (again) and you tell me if Mr. Segal is the
philanthropic savior he is portrayed through self effacing posturing,
courtesy of the Sun.
The following story was originally posted here on OlyBLOG in September
of 2005, so consequently the story the Sun told in April 2006 seven months
later, is old news, but also, as you will see, new news too.
Here's a condensed overview of a
few crucial details they didn't report;
The Vancouver Sun and Lorne Segal claim Mr. Segal is an Olympic philanthropist
because he sold property "below value" to the city of Vancouver
so they in turn could lease it to VANOC to use as office space. What the
Sun failed to mention was that according to "Business in Vancouver"
the property had been on the market for an "extended" period.
It seems it remained unsold because it was mired in legal controversy
regarding a flooded underground parking garage below it. When they pumped
out the groundwater it caused buildings in the immediate vicinity to sink,
which caused adjacent property owners to sue. It appears Mr. Segal could
not sell his "Florida glade" so instead he dumpe... I mean he
sold it to unsuspecting taxpayers. Too bad we aren't hosting the Summer
Games. At least then we could turn VANOC's parking garage into an Olympic-size
swimming pool, but I digress.
Before you revisit the background from September 2005, I have one more
small interesting point; Jeff Lee, the Sun scribe who wrote the article
claims that "the office space will be in high demand when Vanoc (sic)
leaves after 2010."
We obviously use different sources, because mine tell me that when the
Games leave town it usually leaves a huge swath of unwanted rental space
throughout the region. Rental costs and property values often take a nose
dive, which means Lee's prediction of "high demand" is a stretch
to say the least.
Here's the background missing from the April 05 version.
Excerpt from OlyBLOG September 2005 . . .
In the August 16-22, 2005 issue of Business in Vancouver (the Real Estate
Section) Andrew Petrozzi filled us in on VANOC leasing two buildings for
their offices between Boundary and Highway One. According to the article
VANOC got quite the deal.
Unfortunately, what he doesn't make clear is that it's at taxpayers' expense.
Petrozzi tells us that two buildings were leased by VANOC from the City
of Vancouver. The lease officially starts in January of 2006, but they
get possession in September in order to prepare the space. I wouldn't
raise an eyebrow if anyone but the city owned these buildings, but considering
that taxpayers actually own the property, I'm thinking, WOW! That's pretty
generous. Four months free rent on our tab.
Yeah, it's common for landlords to make deals that allow tenants in early,
but not four months early in a city lacking office space. (Remember all
those commercial buildings converted to condos?) VANOC has been looking
futilely for a long time. 230,000 square feet is hard to find.
You might be wondering, why quibble over a few months free rent when it
concerns the Olympics? Well for starters, that's exactly what Athens thought,
and almost every Olympic city that went before them thought too. Everyone
in the early stages is so wrapped up in how good they mistakenly think
the Games will be that they tend to let things slide.
Not only are taxpayers footing the bill for four months rent, the land,
which is valued at between $11-16 per square foot has been leased to VANOC
for $5 a square foot. Guess who will absorb the difference? You got it
-- municipal taxpayers. Another generous offer by the city on your behalf.
Rob Peter to pay Paul. Are you still with me? There's more to this than
what Mr. Petrozzi probably knows or is sharing.
One of the most common complaints of absolutely all taxpayers in Olympic
regions is how adept Olympic organizations are at hiding or deferring
costs. They brag about the benefits of the Games, but never reveal what
it actually costs -- much like a gambler. You always hear what they won,
but never what they lost. Well, unless I'm missing something here, this
is either a brazen picket-pocket boost or it's the sloppiest attempt at
hiding costs I've ever seen. It's like John Furlong, CEO VANOC, walking
up to us and saying, "OK, I'm going to slowly reach into your pocket and
remove hundreds of thousands of dollars from you over the next five years
and I want you to be cool with it. OK? Let's pretend that the property
is actually owned by private enterprise and they cut me a sweet deal.
OK? Pretend there are no strings attached. OK? Don't flail around and
don't make any noise. OK? I am now reaching into your pocket. OK?"
Mr. Petrozzi, you report it like it is a good thing. Your headline was,
"VANOC finally finds a home" and you closed the opening paragraph with,
"thanks to a helping hand from Vancouver City."
I won't have a problem with it as long as the difference in what we (the
city) could have rented the space for is included as a cost for hosting
the Games. VANOC and the city also have to guarantee that taxpayers won't
get stuck with any extraneous legal fees or costs associated with said
properties. Are ya still with me? Cause it gets better.
The property was purchased from Kingswood properties Ltd. for what was
described by Bruce Maitland who is Vancouver's director of real estate,
as a "very, very fair price." Apparently Kingswood knew that VANOC had
their sights on it so out of the goodness of their hearts in true Olympic
spirit they made a very, very fair deal. This is the part where you have
to count your fingers after the handshake, and I'm sorry to keep doing
this to you, but it gets even better.
According to Petrozzi's article, when you read all the way through to
the third last paragraph of his article you'll discover that the property,
quote -- "had been on the market for some time and had been mired in various
legal problems including lawsuits from neighboring businesses for complications
arising from land sinkage (sic) related to water being pumped out of surrounding
ground after it leaked into the building's five-storey underground parkade"
-- unquote. Come again? Did you say the building leaks and that in order
to fix the leak you have to cause buildings in the immediate vicinity
Apparently we stole this 230,000 square foot "leaky" palace
(in total) for a measly $24 million.
The Sun published a similar story on July 29, but interestingly Jennifer
Miller failed to report any of the leaky basement info, purchase details
or cost. Or maybe she tried and her boss axed it -- we will never know.
Renee Smith-Valade of VANOC did assure us in the Sun article though that
the building is very solid, and it has a cafeteria, fitness centre and
large atrium. Thank goodness for that stuff. (No mention of a diving board
I know that what I'm writing here is barely holding your attention. In
fact many of you might have skipped to this paragraph, but I will guarantee
that in June of 2010 when the invoice for the Games rolls in you're going
to be incredibly interested in what is defined as a legitimate or a hidden
cost. It will mean all the difference when it comes to deciding how the
federal, provincial or municipal governments will divvy up the overrun.
Considering the billions of dollars in promotion that sponsors will leverage
out of the Games maybe you're thinking Bell, HBC, RBC, Rona or one of
the others will kick in a little extra to cover lost rental revenue. Don't
count on it.
above article was originally posted in OlyBLOG in
September 2005, under "Media Stacking Deck."
* We invested almost three years and a six-figure budget researching
Olympic organization relationships with sponsors, contractors, suppliers,
partners, etc. The results surprised us too -- mouseover below
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Olympic organizations are
BIG BUSINESS MACHINES that attract corporations like CocaCola,
McDonald's, WalMart, etc. Consequently, VANOC (Vancouver Organizing
Committee) will be stretched thin trying to also develop ways to assist
small and midsize businesses leverage Olympic momentum. Surprisingly,
many people don't realize the event can also be lucrative for smaller
businesses, including agriculture producers, manufacturers, entertainment,
technology, retail & obviously tourism, even when they don't have
products or services that appeal to Olympic fans or serve a direct Olympic
The information we share here is invaluable in helping
small and midsize businesses leverage Olympic momentum.
If you have to pay for it?
Shouldn't you benefit too?
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