Archive for July, 2006

Growing the pool of risky debt

Monday, July 31st, 2006

Feds are making it easier to get interest-only mortgages

Ray Turchansky
Province

Canada Mortgage and Housing Corp. recently announced moves that critics say will drive many homebuyers to the poor house, as it were, and could leave Canadian taxpayers on the hook.

CMHC is offering mortgage insurance for interest-only loans and on amortizations of up to 35 years, while also scrapping the typical $165 application fee on high-ratio loan products for people with a down payment of less than 25 per cent.

With an interest-only loan, a borrower can pay interest only for the first 10 years, then pay both interest and principal.

Payments are initially low, but since the loan must still be paid off within the original amortization period, payments balloon as the principal starts being paid down, even more if interest rates rise.

The first issue is whether a government agency like CMHC should be competing with private companies in the business of offering mortgage insurance on interest-only loans. If CMHC has to pay out a rash of defaults, the money will come out of Canadian taxpayers’ pockets.

The argument has also been made that mortgage insurance protects the moneylender, not the homeowner.

A recent report by CIBC World Markets noted that outstanding residential mortgages rose by 10.9 per cent during the year ending this past April, adding that “the current wave of growth in mortgage outstanding is of a higher risk,” and that the moves by CMHC imply that “we will see increased default risk in the mortgage market.”

The second issue is the wisdom of making mortgages easier to get for Canadians who are already in a massive hole of debt, with a savings rate that has fallen from 16 per cent in 1985 to negative 0.5 per cent in 2005, meaning they are now spending more money than their current disposable income.

But a survey released this month by BMO Financial Group showed that while 80 per cent of baby boomers own homes and 19 per cent have a second house, only 30 per cent intend to sell their assets to fund retirement.

If a person spends 10 years paying down only interest, he or she saves nothing if the value of the house doesn’t appreciate during that period.

In fact, many people are now buying at the top of a housing boom, particularly in Western Canada, and face the likelihood of selling after the market has cooled off.

Said the Edmonton firm Hendrickson Financial in a recent commentary: “When home prices begin declining, homeowners who have recently purchased with 100-per-cent financing will have to come to terms with owing more than their home is worth.”

That’s when you get people walking away from their homes — when they have no equity to lose and can start all over with a cheaper house that will require smaller payments.

Ottawa bankruptcy lawyer Stanley Kershman, author of Put Your Debt on a Diet, said he’s seeing people declare bankruptcy for the second, third, fourth and fifth time, and cites a judge who over the years has had a father, son and now a grandson appear before him facing bankruptcy.

“They’re getting in too deeply, with too much debt, and as people go to either renew their mortgages or consolidate mortgages, they’re going to end up paying higher and higher interest rates,” said Kershman.

As happened in the early 1970s and late 1980s, people will walk away from their homes.

© The Vancouver Province 2006

 

Economic Indicators from CIBC World Markets

Friday, July 28th, 2006

Other

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Condo prices spark fears of ‘affordability crisis’

Friday, July 28th, 2006

Future supply also well above demand and market slowdown is predicted

Derrick Penner
Sun

Greater Vancouver’s condominium market is flashing warning signs, PricewaterhouseCoopers reports in its latest condominium market review, that have the consulting firm pondering whether it has reached a turning point.

Prices are reaching unaffordable levels in some areas, said Craig Hennigar, PricewaterhouseCoopers’ vice-president of real estate advisory and transaction services. In downtown Vancouver, for instance, prices hit an average of $700 per square foot.

He added that sales in some sectors have been “substantially above long-term demand,” such as the high-rise condo segment.

Hennigar said PwC has suggested Vancouver’s condominium market might slow down, “now we’re looking at the potential for a slowdown, not because of lack of demand, but the affordability crisis.”

The results are in PwC’s semi-annual review of Greater Vancouver’s condominium market, which is based on data derived from projects that are being marketed or projects for which developers are seeking development approval up to May 31.

However, Hennigar added that there are also a lot of “mixed messages” in the market.

Immigration to B.C., he said, was much stronger in the last year than the provincial government’s statistics agency BC Stats projected.

Hennigar said the Lower Mainland saw real wage gains in the previous year averaging six per cent, which give potential buyers more wealth to service mortgages.

Mortgage rates themselves remain at relatively low levels, he added, and the mortgage market has become more liberal.

Canada Mortgage and Housing Corp. will now insure 30-year and 35-year mortgages as well as interest-only loans, giving buyers the ability to borrow more money on the same income in order to get into the market.

Hennigar added that recent buyers have gained equity in their properties that gives them additional spending power, though he noted that those not in the market are “looking at a steep hill to climb” to get in.

“There are a lot of things going on in the marketplace that give us pause for thought,” Hennigar said.

PwC’s position is that the market has “reached an inflection point.”

“Momentum is positive, but we seem to be cresting a bit of a hill in many cases [and] the question is are we at an inflection and are we going to go down the other side.”

Hennigar added that B.C. is currently experiencing positive economic growth, which bolsters the housing market, and there are no signs of it slowing.

He added that Vancouver developers are “a pretty savvy bunch.”

“There aren’t that many of them, and they are very careful about what they do,” Hennigar said. “They don’t want to undermine their own marketplace.”

Neil Chrystal, president of Polygon Homes, said that while the PwC report might show the potential for a future oversupply of units, developers probably won’t build all of the projects contemplated or will build them at a slower pace than first indicated.

Chrystal added that condominium sales through the first six months of 2006 were stronger than sales during the same period of 2005, and very few units remain unsold among the projects that are under construction or in the pre-sales marketing phase.

“We remain bullish as long as the economy stays strong and we’re an attractive place to live,” Chrystal said. “We’re attracting people from many places around the world [such as] the Middle East, people probably looking for a safe haven.

“It just seems that Vancouver has a lot of things going for it right now.”

However, Tsur Somerville, director of the centre for urban economics and real estate at the University of B.C.’s Sauder School of Business, said there is potential for short-term shocks to the economy. Somerville said economic booms driven by infrastructure projects, such as the Canada Line rapid transit, tend not to last. He added that commodity prices tend to trend downward.

“We’re in a good [commodity market] now; that certainly won’t last,” Somerville said.

Somerville said the outlook for real estate “depends on your time horizon.”

“If my horizon [for holding an investment] is four or five years, that’s a problem,” he added. “If my horizon is ‘I’m buying a house, I have a job and I’m going to live in this market,’ then it’s not such a problem.”

Somerville said Vancouver’s long-term fundamentals: the desirability of its location and strength of its economy coupled with a land supply that is constrained by the Agricultural Land Reserve favours an “upward path” for prices.

“But you get ups and downs in there,” he added.

SUPPLY SIDE

Pricewaterhouse-Coopers’ latest review of the condominium market shows that, over the next 24 months, developers are planning to build more new units than population growth suggests Greater Vancouver will need.

- High-rise apartments

Population demand:

4,700 units

Projects in planning:

13,300 units

- Low-rise apartments

Population demand: 4,000

Projects in planning: 4,600

Townhouses

Population demand: 4,200

Projects in planning: 5,900

Source: PricewaterhouseCoopers

© The Vancouver Sun 2006

 

New-home sales fall for first time since February

Thursday, July 27th, 2006

USA Today

WASHINGTON (Reuters) — Sales of new homes fell more than expected in June to a seasonally adjusted annual rate of 1.131 million and the median home price fell for the second month in a row, the government reported Thursday, as the U.S. housing market showed more signs of cooling.

The 3% drop in new-home sales was the first decline since February, the Commerce Department said. Compared with a year earlier, new-home sales were down 11.1%.

Analysts polled by Reuters were expecting new-home sales to cool to a 1.160 million annual rate.

 

The government reported that the median price of a new home was $321,300 in June, which was up just 2.3% from a year ago and was down 1.5% from May.

It left the number of unsold homes at a record high of 566,000. At the June sales pace, it would take 6.1 months to sell the backlog of homes, a figure that is up sharply from the 4.3-month supply of unsold homes a year ago when the housing market was still booming.

Sales of both new and existing homes set records for five consecutive years as the housing industry enjoyed a boom powered by the lowest mortgage rates in four decades. But rates have been steadily rising this year as the Federal Reserve tightens credit conditions as a way to slow the economy and keep inflation under control. Analysts are looking for home sales to drop by around 10% this year.

Economists are looking for new-home sales to slow further as mortgage rates continue to rise, putting increased downward pressure on prices.

The big worry is that home sales will fall so sharply that it could send shockwaves through the entire economy, much as the bursting of the stock market bubble in 2000 contributed to the 2001 recession. But so far, economists said the decline in housing is contributing to a slowdown in the overall economy but they are not forecasting a recession.

Regionally, home sales tumbled 11.3% in the volatile Northeastern housing market to 55,000, the slowest pace since July 2004. New-home sales slipped 6% in the South and 7.9% in the Midwest, but they rose 8.2% in the West.

Restaurant listings For July 27, 2006

Thursday, July 27th, 2006

Critic’s Picks

Mia Stainsby
Sun

A list of restaurants recommended and anonymously visited by Sun restaurant critic Mia Stainsby.

Prices are per couple for three courses, with a glass of wine each, before tip and taxes.

$ means $50 or less

$$ means $50 to $100

$$$ means more than $100

- – -

WEST COAST

Aurora Bistro The first fine dining room on Main St. Inventive food, hip spot. 2420 Main St., 604-873-9944. $$

Bishop’s Consistently one of the city’s best. Almost 100 per cent organic foods. 2183 West Fourth Ave., 604-738-2025. $$$

Diner Great comfort food in contemporary setting. 1269 Hamilton St., 604-444-4855. $/$$

Feenie’s Comfort food with a modern tweak and quality ingredients. 2563 West Broadway, 604-739-7115. $/$$

Fiction Young crowd, great tapas dishes. 3162 West Broadway, 604-736-7576. $$

Nu A sophisticated version of casual dining. Beautiful flavours, great atmosphere. 1661 Granville St., 604-646-4668. $$

Parkside Handsome room in residential West End, richly flavoured food. Great spot. 1906 Haro, 604-683-6912. $$/$$$

Rare An impressive, unique menu. There’s passion here. 1355 Hornby St., 604-669-1256. $$$

ITALIAN

Amarcord Food from the Bologna and Emilia Romagna area of Italy, elegantly presented. Clear, natural flavours. 1168 Hamilton St., 604-681-6500. $$

Borgo Antico Tuscan looks. Fine Italian food. 321 Water St., 604-683-8376. $$/$$$

Don Francesco Ristorante Romantic, classic Italian restaurant with heart. 860 Burrard St., 604-685-7770. $$$

La Terrazza Knock-out looks, intelligent and friendly staff, traditional Italian food. 1088 Cambie St., 604-899-4449. $$$

Lombardo’s Pizzeria and Restaurant Serving pizza lovers for years. 1641 Commercial Dr., 604-251-2240. $

CHINESE

Hon’s Wun-Tun House Slurp noodles and chomp on delicious potstickers. Huge menu. 1339 Robson St., 604-685-0871. $

Sun Sui Wah Cantonese cuisine with light, finely tuned flavours. 3888 Main St., 604-872-8822. $$

Szechuan Chongqing An institution for those who love the incendiary fare. 2808 Commercial Dr., 604-254-7434. $$

Wild Rice Modern Chinese food in a sophisticated, hip setting. 117 West Pender St., 604-642-2882. $$

JAPANESE

1215 Japanese tapas. Experimentation rules in the kitchen. 1215 Davie St., 604-633-1215. $/$$

Ajisai Sushi Bar Small neighbourhood spot with sushi that sings. 2081West 42nd Ave., 604-266-1428. $

Chopstick Cafe/Shiru-Bay Great atmosphere, intriguing izakaya food, budget prices. 1193 Hamilton St., 604-408-9315. $$

En Japanese Restaurant Bucks the usual conformity of Japanese restaurants. Splendid food. 2686 Granville St., 604-730-0330. $$

Sushi Wabi Sabi Exciting contemporary Japanese food. 4422 West 10th Ave., 604-222-8188. $$

Tojo’s Restaurant The topper in this category. Japanese food at its best. 202 — 777 West Broadway, 604-872-8050. $$$

FRENCH/BELGIAN

Bacchus Restaurant Some classics, some nouveau. Expect the best. Wedgewood Hotel, 845 Hornby St., 604-689-7777. $$$

Cafe de Paris Traditional French bistro. Lots of character. 751 Denman St., 604-687-1418. $$

Cassis Bistro Low budget but mod interior. Delicious traditional French bistro fare. Good value. 420 West Pender St., 604-605-0420. $$

The Hermitage Beautifully controlled classic French cooking. Quiet atmosphere. 1025 Robson St., 604-689-3237. $$$

Lumiere Chef Rob Feenie redefines restaurants in Vancouver. Tasting menus. 2551 West Broadway, 604-739-8185. $$$

GREEK

Apollonia Well-prepared Greek food and very good pizzas. 1830 Fir St., 604-736-9559. $/$$

The Main Friendly, funky spot. Wonderful roast lamb. 4210 Main St., 604-709-8555. $$

Simpatico Thirty-plus years old; traditional Greek restaurant with the addition of good pizzas. 2222 West Fourth Ave., 604733-6824. $/$$

INDIAN

Akbar’s Own Mogul-style Indian cuisine. 1905 West Broadway, 604-736-8180. $$

Chutney Villa South Indian cuisine, with dosas, idli and vadas. 147 East Broadway, 604-872-2228. $/$$

Clove An alternative Indian restaurant, funky, cheap beyond belief. 2054 Commercial Dr., 604-255-5550. $

Clove Upscale sibling to Clove on Commercial. Modern Indian cuisine. 735 Denman St., 604-669-2421. $/$$

Indica Indian dishes with western tweaks. Charming. 1795 Pendrell St., 604-609-3530. $

Rangoli Vij’s casual and take-out next-door sidekick. Impressive. 1488 West 11th Ave., 604-736-5711. $

Vij’s Dishes are a symphony of wondrous flavours. 1480 West 11th Ave., 604-736-6664. $$

Yogi’s Hip, contemporary Indian food, perfect for The Drive. 1408 Commercial Dr., 604-251-9644. $

SOUTHEAST ASIAN

Montri Thai Restaurant Some of the best Thai food in the city. 3629 West Broadway, 604-738-9888. $$

Phnom Penh Largely Cambodian but includes Chinese and Vietnamese flavours. 244 East Georgia St., 682-5777. $

Pondok Authentic Indonesian dishes, freshly cooked. 2781 Commercial Dr., 604-872-8718. $$

Salathai Thai Dishes are freshly prepared and consistent. 3364 Cambie St., 604-875-6999. $$

Simply Thai On the A-list for Thai food. 1211 Hamilton St., 604-642-0123. $$

SEAFOOD

Bluewater Cafe and Raw Bar Handsome spot. Impressive seafood, impressive wine list. 1095 Hamilton St., 604-688-8078. $$$

C Chef Robert Clark takes seafood to a new level. 1600 Howe St., 604-681-1164. $$$

Go Fish Fab fish and chips and much more, dished out of a catering truck, made with fish from the adjacent Fisherman’s Wharf. 1505 West First Ave., 604-730-5040. $

AMERICAN

Memphis Blues Barbecue House Slow-cooked, southern style BBQ. Delish. 1465 West Broadway, 604-738-6806; 1342 Commercial Dr., 604-215-2599. $

VEGETARIAN

Greens and Gourmet Meals priced by weight. Flavours from around the world. 2582 West Broadway, 604-737-7373. $

Habibi’s Lebanese food. Not the same old, same old. 1128 West Broadway, 604-732-7487. $

The Naam Wide variety of vegetarian fare. Quiet patio in summer. 2724 West Fourth Ave., 604-738-7151. $

Raw Raw veggie and fruit dishes (preserves enzymes) as well as cooked. Food is 80 to 90 per cent organic. 1849 West First Ave., 604-737-0420. $

LATIN AMERICA

Banano’s No-frills Venezuelan/Colombian cafe. Delicious arepas. 1223 Pacific Boulevard, 604-408-4228. $

Baru Casually chic South American food for discerning diners. 2535 Alma St., 604-222-9171. $$

Mexico Rico A slice of Mexico. Very inexpensive, authentic Mexican cafe. 309 West Pender St., 604-688-7426. $

Rinconcito Salvadorean Restaurant Fresh Salvadorean cuisine. Lovely pupusas. 2062 Commercial Dr., 604-879-2600. $

MEDITERRANEAN

Circolo Italian, French, and a little bit of New York. Awesome wine list. 1116 Mainland, 604-687-1116. $$$

Provence Mediterranean Grill The menu is a marriage of French and Italian. Lovely flavours. 4473 West 10th Ave., 604-222-1980 and 1177 Marinaside Cres., 604-681-4144. $$

NORTH SHORE

Beach House at Dundarave Pier Spectacular setting for brunch by Dundarave Beach. West Coast cuisine. 150 25th St., West Van, 604-922-1414. $$$

Mythos Whitewashed walls, azure blue trim say “sun-drenched Greece.” 1811 Lonsdale Ave., North Van, 604-984-7411. $$

BURNABY/NEW WEST

The Hart House In Tudor mansion. Exacting West Coast fare. 6664 Deer Lake Ave., Burnaby, 604-298-4278. $$$

Orange Room Casual tapas. International flavours. 620 Sixth Ave., New Westminster, 604-520-6464. $$

RICHMOND

Bo Kong Restaurant Buddhist vegetarian cuisine. No alcohol. 8100 Ackroyd Rd., Richmond, 604-278-1992. $

Zen Fine Chinese Cuisine Multi-coursed tasting menus and personalized dinners. Excellent. 2015 — 8580 Alexandra Rd., Richmond, 604-233-0077. $$$

SURREY, WHITE ROCK, DELTA, TSAWWASSEN

Crescent Beach Bistro Rustic country spot. Straight ahead food. 12251 Beecher St., 604-531-1882. $$

La Belle Auberge In a heritage house in Ladner. Sublime French food. 4856 48th Ave., Ladner, 604-946-7717. $$$

© The Vancouver Sun 2006

 

Salt appeals because of the umami factor

Thursday, July 27th, 2006

Salt offers a classy version of a ploughman’s lunch. And, it’s the first of its kind in Vancouver

Mia Stainsby
Sun

Owner Sean Heather prepares a plate of cheeses and cured meats at the Salt Tasting Room

Too eager to wait, I went in only a week after Salt Tasting Room opened. It’s a new concept for Vancouver and Sean Heather, Gastown’s grand food poobah, has done a great job of it.

He already claims paternity to Irish Heather, Salty Tongue, Shebeen and Limerick, all popular, all easy-going and fun but with sibling differences. Salt would be the first that could be called sexy with its modernist lines, Alt Pop music and trend-setter moves.

I loved Salt and, really, I shouldn’t. As one who tries to appease the migraine beast, I tread gingerly around the specializations here — cheeses and cured meats. But as I say when I’m in France, mowing my way through the nation’s cheeses, I can’t let head-banger migraines keep me from life’s great pleasures now, can I?

I could say Salt offers ploughman’s lunches or deli plates, but that would be a lie. It’s a very classy version of them. Maybe the French charcuterie or Italian salumeria would be a more appropriate comparison.

Salt Tasting Room is like a guerrilla space-shuttle re-entry. It makes a bold first move into Blood Alley, where businesses have long departed, leaving an edgy drug-influenced culture behind. And there’s a lot more to follow with other new developments going in. (Salt is in a progressive, green building with grass roof and geothermal heating.)

One of the reasons Salt appeals is the umami factor — umami being that fifth taste we never knew we had until scientists affirmed it. It’s the savoury taste found in fermented and aged foods, as in cured meats and cheeses. Umami is seductive. At Salt, the naked, elemental flavours of cheese and thin sheets of cured meats, accessorized with condiments, reel you in quickly and mercilessly.

Coincidentally, it’s said that the glutamates behind this umami taste are intensified with salt — Heather had named the place Salt because the substance is used in making cured meats and cheese.

On the first visit, you learn the drill. On a giant blackboard, there are three columns. Cheese, Meat and Condiments. There are about 10 items in each column and they are fleet-footed — there one day, and not, the next. For $15, you order three items from each column and they arrive matched according to taste with a cheat sheet. For about $10 more, you can order a tasting flight of wines or sherries (the place is big on sherries), which also come with a cheat sheet telling you what’s what. It’s labour intensive for the service staff, writing down nine items per person but then, the kitchen gets off easily, doesn’t it.

Here’s the other thing — Heather scored a tag team of the city’s ace names in mixology — Chris Stearns (former Lumiere bar manager) and Jay Jones (former West and Nu bar manager), hired to run the front of the house as manager and assistant manager and as often as not, doing the waiter thing. They’re a dream team from the point of view of sales and for the customer too, with their contagious enthusiasm in promoting different drinks. All wines come by the glass and in taster size so you can make up your own flight.

I like the opportunity to try out new cheeses and artisanal cured meats. I don’t order cheese plates at restaurants because by the end of the meal, I’m usually too full for any more umami. Here, you make a meal or snack of a few lovely cheeses, meats and condiments with bread and wine.

Heather buys his meats from small producers like Oyama Sausage, JN&Z Deli, British Butcher and Seattle’s Salumi (celebrity chef Mario Batali’s dad’s shop). A little goes a long way since the food is so protein-rich. Sausages are sliced paper-thin and there’s just enough cheese to satisfy your curiosity.

Under condiments, you must try the Spanish pressed fig bread if it’s there. I loved the combination of St. Andre cheese with Similkameen honeycomb — for my husband it triggered flashes of honey and butter sandwich memories. Team it with the Spanish pressed fig bread and it’s heaven. The Jeff Van Geest cognac-flavoured terrine (he of Aurora Bistro) is lovely, as are the paper-thin sheets of smoked pork tenderloin.

There are a couple of desserts so far, made in the Irish Heather kitchen — the chocolate ricotta mousse is a like chocolate velvet.

Salt is the first of its kind, at least in Vancouver, and now I’m waiting for a cheese-only tasting bar, migraines be damned.

SALT TASTING ROOM

Overall: 4

Food: 3 1/2

Ambience: 4

Service: 4

Price: $/$$

45 Blood Alley. 604-633-1912. Open 4:30 p.m. to midnight every evening. (Open for lunch in future.) www.salttastingroom.com

Restaurant visits are conducted anonymously and interviews are done by phone. Restaurants are rated out of five stars.

© The Vancouver Sun 2006

 

Bridge costs escalate

Thursday, July 27th, 2006

Bridge will make $3.6 billion in ‘user benefits’ over its 35-year building, operating period: report

William Boei
Sun

Rachel Davis The TransLink report says the bridge will see more than 20 million vehicle crossings per year by 2012.

The $800-million Golden Ears Bridge will cost TransLink more than $1.1 billion by the time it is paid off in 2041.

However, the report concedes the bridge is a good deal because TransLink will collect more in tolls during the life of its 35-year contract than it pays the private operator.

TransLink staff calculated that as a public-private partnership, or P3, the project has a razor-thin financial advantage over a completely public project, and project director Fred Cummings said Wednesday that’s a conservative estimate.

NDP transportation critic David Chudnovsky was skeptical, saying that governments can always borrow money more cheaply than the private sector and that makes P3s more expensive.

The report says the bridge will generate $3.6 billion in “user benefits” over its 35-year construction and operating period.

The toll bridge, being built east of Barnston Island, will connect Surrey and Langley on the south side of the Fraser River to Pitt Meadows and Maple Ridge in the north. It is expected to spur development on both sides, cut driving times across the river and help ease the load on the congested Port Mann Bridge.

It is scheduled to open by the end of June 2009.

TransLink will collect the tolls on the bridge and make monthly payments to the operator to cover capital costs, interest, operating expenses and maintenance. The payments kick in when the bridge opens and will continue for 32 years.

TransLink will pay $1.126 billion over the life of the contract, the report says, but it will collect $1.229 billion, most of it in tolls and the rest from about $50 million a year it now pays to subsidize the Albion Ferry, which will be closed when the bridge opens.

“In . . . value terms, projected revenues exceed the costs by $103.3 million,” the report says.

Without the subsidy from TransLink — $160 million over 32 years — costs would exceed revenue by about $57 million.

Staff calculated that if TransLink built the bridge as a public project, revenue would exceed costs by between $92.6 million and $97 million, depending on the timing of the project.

Cummings said that probably understates the P3 advantage because construction inflation for a public project was estimated at six per cent a year, and actual construction costs will likely increase faster than that.

With a P3, the report says, TransLink is insulated from B.C.’s “overheated construction market” because the contract makes the operator responsible for construction costs.

“The value of obtaining a fixed-price, cost-certain contract in this market cannot be overstated,” the report says.

TransLink is directly financing $216 million in project costs such as property acquisition, planning and municipal road improvements. That is partly offset by a $50-million “licensing fee” paid by the contractor.

The rest is being financed by the operator through insurance companies, and the report says that arrangement has earned the project a triple-A credit rating, while as a stand-alone project it would be rated BBB. That resulted in attractive borrowing terms, it says.

But Chudnovsky insisted governments can always borrow more cheaply than private companies.

“Governments get those loans at the best possible rate, and when you talk about 800 million or a billion dollars, a difference of one or two per cent is tens of millions of dollars, which taxpayers have to pay,” he said.

“I continue to be skeptical about that.”

The private contractor is the Golden Crossing General Partnership, led by a Canadian subsidiary of the Bilfinger Berger Group, a German company that builds and operates major projects around the world.

Chudnovsky warned that the project could run into problems with toll rates. He said Toronto thought it had iron-clad guarantees that tolls on its privately operated Highway 407 would not increase, but the operator went to court and won a ruling that “it is the private procurer and not the government which controls the level of the tolls, no matter what was promised at the time of the deal.”

TransLink’s monthly payments will be ramped up from $500,000 per month when the bridge opens to nearly $4.8 million a month after July 2015. The low early payments allow time for traffic — and toll revenue — to generate.

Chudnovsky said that opens a possible conflict between the operator and public interest, because the more cars that use the bridge, the higher the revenue will be.

“The private procurer wants lots of cars to go across the bridge,” Chudnovsky said. “We as citizens probably want fewer and fewer cars to go across the bridge because the cars create pollution, global warming, congestion, all kinds of stuff.

“So there is a tension between public policy goals and the private goals of the company.”

The TransLink report says the bridge will see more than 20 million vehicle crossings per year by 2012. It says travel distances for bridge users will be reduced by an average of 12 kilometres, and trip times by 20 to 30 minutes.

Staff valued travel time savings over the term of the contract at $1.6 billion, vehicle operating cost savings at $1.4 billion and safety benefits at $600,000 for total user benefits of $3.6 billion.

The report predicts that by 2021, the bridge will “induce” the establishment of 735 new businesses on both sides of the river, construction of more than 7,000 new housing units, population increases of nearly 22,000, significantly more commercial floor space and property tax revenue hikes of more than $20 million.

THE INFLATION FACTOR

Because of inflation, the tolls drivers will pay for crossing the Golden Ears Bridge are already slated to increase, even before it opens.

TransLink set the toll for automobiles at $2.50 per crossing, double that amount for small trucks, triple for large trucks and half for motorcycles.

By the time the bridge opens in 2009, TransLink expects the tolls to be:

Automobiles: $2.85

Small trucks: $5.70

Large trucks: $8.55

Motorcycles: $1.43

© The Vancouver Sun 2006

Aspen: Homes so pricey you’ll be stunned

Tuesday, July 25th, 2006

Noelle Knox
USA Today

You may sound like Porky Pig once you hear the asking price of Prince Bandar bin Sultan’s house near Aspen: a hun-a-hun-a-hundred thirty-five million dollars! If it sells for that princely sum, it will be the most expensive home in America, trumping Donald Trump’s estate in Palm Beach, Fla., which is on the market for $125 million. Aspen, of course, has long served as a playground for the ultrarich, for such part-time residents as actor Robert Wagner, musician Don Henley and the late Enron chief Ken Lay, who died there earlier this month.

Home prices in Aspen have been rising steadily for 2½ years, says Rick Griffin, an agent at Coates Reid & Waldron. There are only three single-family homes now on the market for less than $1 million. Meantime, 35 homes are on the market for prices exceeding $10 million. Toto, we are definitely not in Kansas (where the median-price home costs $78,800). The prices force about half of Aspen’s 6,500 full-time residents — teachers, nurses, city staffers — to get some kind of housing assistance, according to the Department of Community Development.

“The majority of people are buying one of their multiple homes — it’s their second, third or fourth home,” Griffin explains. Buyers are often “top icons in business,” “musicians” or “old money.” And, no, rising interest rates don’t make much difference. “It’s pretty resistant, because 70% to 75% of what goes on here is done by cash,” Griffin says.

The most expensive

This 95-acre, 15-bedroom mansion in the exclusive Starwood neighborhood outside Aspen, Colo., is up for sale.

Price: $135 million
Bedrooms: 15
Bathrooms: 16
Size: 56,000 square feet
Features: Indoor swimming pool, elevator, dumbwaiters, tennis court, horse stables, trails, ponds.

Median-price home

Paul Chesley, a photographer for National Geographic, is selling this 7-acre property. The price was reduced last week from $5.7 million.

Price: $5.2 million.
Bedrooms: 4
Bathrooms:
Size: 3,100 square feet
Features: Zoning allows for the house to be razed and replaced with a home of up to 10,750 square feet. To the east is a national forest, which can never be developed, and to the west is the North Star Nature Preserve. The house has a fireplace, laundry room, patio and scenic views.

Existing home sales fall in June as price rise is lowest in 10 years; confidence up

Tuesday, July 25th, 2006

USA Today

WASHINGTON (AP) — Sales of existing homes fell in June for the eighth time in the past 10 months while home prices edged up at the slowest pace in more than a decade — more signs that the housing market has slowed dramatically.

The National Association of Realtors reported Tuesday that sales of previously owned homes and condominiums dropped 1.3% in June to a seasonally adjusted annual rate of 6.62 million units.

The median price of a home sold last month was $231,000. That was up 0.9% from June 2005 and represented the smallest year-over-year price gain since May 1995.

David Lereah, chief economist for the Realtors, said that housing continued to be a “tale of two markets” with previously hot areas experiencing declines and more modestly priced areas showing a boom.

Lereah said that while New York City, Boston, Chicago and Minneapolis had seen sales declines, cities such as Syracuse and Pittsburgh were experiencing rising sales.

By state, Maryland and Virginia were experiencing weakness while Texas, Georgia, North Carolina and Tennessee were enjoying sales increases, Lereah said.

The inventory of unsold homes rose to a record of 3.725 million units, which is a 6.8 months supply at the June sales pace.

Analysts believe that the growing level of unsold homes will further depress prices in coming months.

Lereah said he believes that the decline in housing sales is beginning to level out. Sales of both new and existing homes set records for five consecutive years, but economists believe sales this year will post a decline, reflecting mortgage rates that have risen to the highest levels in more than four years.

The big worry is that sales will fall so sharply that it could send shockwaves through the entire economy, much as the bursting of the stock market bubble in 2000 contributed to the 2001 recession.

Economists expect the decline in the economy to contribute to a slowdown in growth but not result in an outright recession.

Lereah said he believes price weakness will continue as sellers start cutting their asking prices in the face of weaker demand and rising inventories.

Separately, the Conference Board said its consumer confidence index rose to a better-than-expected reading of 106.5 in July from a revised 105.4 in June as consumers shrugged off higher gasoline prices and grew a bit more optimistic about the economy.

Analysts had expected the index to fall slightly to 104.

Consumer confidence has been volatile this year, with the index posting declines both in February and May amid pessimism about the job market. This year’s overall performance is in line with the rebound seen since last November in the aftermath of last year’s Gulf of Mexico hurricanes, however.

The present situation Index, which measures how shoppers feel now about economic conditions, rose to 133.0 from 132.2. The expectations index, which measures consumers’ outlook over the next six months, edged up to 88.8 from 87.5 last month.

“Consumer confidence continues to hold steady, with the prognosis little changed from last month,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Present-day conditions remain favorable, though not as strong as earlier this year. Expectations for the months ahead remain cautious and also below levels earlier this year.”

Entrepreneurs want to put urban data on the Net

Monday, July 24th, 2006

With GeoWeb, disaster relief workers could see the location of electicity lines or water pipes

Peter Wilson
Sun

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