Soaring costs threaten affordable housing in Olympic Village

Escalating costs are threatening the viability of a planned 250 units of affordable housing at Vancouver's Olympic Village site.

It means the city may need to find anywhere from $56 to $77 million extra if it hopes to "sustain affordable housing" in the troubled project, according to city staff.

The capital costs required just to build the project have ballooned to $110 million from $65 million in 2006.

"The impact of this 70 percent cost increase over the original estimate eliminates the ability to utilize the normal business model ... to allow affordable rents," reads a report released late Monday that details the soaring costs.

The report suggests it would cost the city $35 million to make the affordable housing work at average market rents with no subsidized units, according to estimates from B.C. Housing. That's on top of $32 million in city funds already committed to the project.

A price tag of $56 million extra would see half the units subsidized for "core need" renters - those who pay more than 30 per cent of their income on rent.

And $77 million would make all the units "core need."

Where that money might come from isn't clear. But the affordable housing component was a key part in original visions for the Olympic Village and Southeast False Creek sites. Today's news presents a significant roadblock to those plans.

"The impact on the affordable housing initiative is of significant concern as the viability of the business model for affordable housing has been compromised," the report continues.

The report lists several reasons for the escalating costs. Construction costs, while the largest single factor at 16 per cent of the increase, are by no means the sole reason.

• $8.4 million for added floor area to account for a less 'cookie-cutter' design for the buildlings.
• $5 million to meet LEED Gold building standards
• $3 million for high quality materials (swiss pearl panels, etched glass, stainless steel) to make the city's affordable housing buildings align with the rest of the market priced development.
• $9.75 million in escalating construction costs.
• $6.5 million due to limited time and the firm deadline demanded as hosts of the 2010 Games.
• $7.5 million in fees to developers Millennium, a price tag that wasn't part of the original budget.
• $4.85 million in fees to B.C. Housing

The report states that council approved $63 million in interim financing in an in-camera meeting in December 2007, meaning city hall was prepared to pay up to $95 million to complete the project more than a year ago, expecting the funds to be recovered.