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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 to sink?

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 though.)

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.

The 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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