Bruce Constantineau
Sun

Going, going, gone.

The half-billion-dollar Ritz-Carlton hotel-condo project in downtown Vancouver is officially dead — a victim of the global recession.

Buyers who purchased luxury condos in the 60-storey tower that was supposed to be built at 1155 West Georgia are getting a letter this week telling them the project has been cancelled.

The letter from lawyers representing developer Holborn Group states that “worldwide economic turmoil” has had a significant negative impact on the sale of units in the project, as it has with most other Metro Vancouver developments.

“As a result, sales have not met the developer’s expectations,” the letter states. ” … We hereby give you notice that the vendor cancels and terminates the contract due to the fact that the vendor has not entered into binding contracts of purchase and sale for at least 75 strata lots in the development.

“As a result of this termination, the contract is now at an end.”

Holborn had sold about 62 of the 123 condos in the Arthur Erickson-designed twisting tower. Buyers will get their deposits back.

Condo prices in the project — called The Residences at the Ritz-Carlton — ranged from $1.4 million to $28 million.

Vancouver realtor Bob Rennie, who marketed the project, said the developer had the right to cancel the project if fewer than 75 units were sold by the end of this month.

“It was a tough decision for them because there were sales in place, but the 75-sale threshold was out there and they had to decide,” he said. “They’d need to see a lot of strength in the luxury market to proceed with a project like that now.”

Construction on the West Georgia site was halted last fall, supposedly to give Holborn Group time to redesign the parkade portion of the project.

But months of inactivity on the property, combined with a global recession and a slowing Metro Vancouver real estate market, prompted widespread speculation the development would not be resurrected.

A 127-room luxury Ritz-Carlton hotel was supposed to occupy the first 20 floors of the building, with condos taking up the top 40 floors.

It would have been only the third Ritz-Carlton-branded hotel in Canada if it had opened in 2011 as planned. There is a Ritz-Carlton hotel in Montreal and a new Toronto Ritz-Carlton is scheduled to open next year.

Ritz-Carlton was to manage the entire building, with condo owners having access to hotel amenities like 24-hour room service, a concierge, housekeeping service and staffing for special entertainment events.

Renowned Canadian interior design firm Yabu Pushelberg was to design the upscale hotel, with company co-founder Glenn Pushelberg envisioning a West Coast hotel that would be “sophisticated and a little bit glamorous.”

The $28-million price tag for a 7,400-square-foot penthouse on the 59th and 60th floors of the tower was believed to be a record asking price for a Vancouver penthouse — $10 million more than the $18 million paid by a U.S. businessman for a 48th-floor penthouse in the Private Residences at Hotel Georgia, set to open in 2011.

Rennie said the West Georgia site, between Bute and Thurlow, still represents an excellent development opportunity in the right market conditions.

“It’s one of the most amazing sights left downtown,” he said. “We just don’t have a lot of properties like that left.”

Holborn Group bought the West Georgia property from Cadillac Fairview about four years ago and demolished a partially built concrete structure that sat derelict for years.

The site has had more than its fair share of development bad luck, after a decade of failed attempts to build a private members’ club and a strata-title office building.

© Copyright (c) The Vancouver Sun

Buyers to get deposits back as high-end condos fail to sell

Wendy Mclellan
Province

The economic chill has frozen another major development in downtown Vancouver.

The $500-million Ritz-Carlton hotel, with a twisting tower of high-priced condos planned for an empty hole on West Georgia Street, has been put on ice by local developer Holborn Group, and buyers will get their deposits returned, said Joon Kim Tiah, president and CEO of the privately owned company.

“We are going to step back and decide what would be best for the property,” Tiah said yesterday.

“Of course it’s the economic situation, and we don’t know how much longer it will be or whether it will get worse.

“Right now we have no intention of selling that site. We are committed to doing something with it, and if I knew what it was, I would tell you.”

Tiah said the contract with buyers included a clause stating that if fewer than 75 condos were sold by the end of February, the developer could either cancel the sales agreements or it would have to complete the project on schedule and with the same design plans.

The development was supposed to be a 127-room hotel managed by Ritz-Carlton hotels, with 123 luxury condos, priced from $1 million to $28 million.

It was to be ready for occupancy in 2011.

“Because we didn’t reach 75 units — to be honest, it would be unlikely to reach 75 any time soon — we decided to exercise the right to cancel,” he said. “We don’t know at this point what exactly we’ll do. It may be best to wait a bit.”

The future of project, designed by Vancouver architect Arthur Erickson, has been uncertain for months. Last October, the advertising signs disappeared from the construction site at 1133 West Georgia and there was speculation it had been abandoned.

But Tiah said workers have been shoring up the deep construction pit in preparation for building, and that work will be completed and the site secured.

He said the hotel-management contract with the Ritz-Carlton remains in place as well.

“This happens in business — it happens a lot,” Tiah said. “I’ve heard people say that Holborn is going under and that our projects aren’t going through, but I want to dispel all those rumours.

“It’s unfortunate when a project has to be put on hold but we are committed to completing things we’ve started. We are not highly leveraged, we’re in a good position. We are not going broke.”

© Copyright (c) The Province

 

USA Today

NEW YORK (AP) — A widely watched index shows home prices tumbled by the sharpest annual rate on record in the fourth quarter and in December.

The Standard & Poor’s/Case-Shiller U.S. National Home Price Index was down 18.2% in the fourth quarter from a year ago, largest drop in its 21-year history. Prices are now at levels last seen in third quarter 2003.

In December, the Case-Shiller 20-city index was down 18.5% from December 2007, while the 10-city index dropped 19.2%.

Prices in the 20-city index have plummeted 27% from their peak in the summer 2006, and the 10-city index has fallen more than 28%.

HOME PRICES DROP AGAIN

Dec. 2008 Change from Nov. Change from Dec. 07 Atlanta 113.87 -2.30% -12.10% Boston 153.05 -1.30% -7.00% Charlotte 122.41 -2.50% -7.20% Chicago 137.16 -3.00% -14.30% Cleveland 105.21 -2.10% -6.10% Dallas 115.63 -2.30% -4.30% Denver 125.74 -1.50% -4.00% Detroit 80.93 -3.00% -21.70% Las Vegas 131.4 -4.80% -33.00% L.A. 171.46 -2.50% -26.40% Miami 165.01 -2.70% -28.80% Minneapolis 127 -4.60% -18.40% New York 183.5 -1.70% -9.20% Phoenix 123.93 -5.10% -34.00% Portland 158.5 -2.50% -13.10% San Diego 152.16 -2.10% -24.80% S.Fran 130.12 -3.80% -31.20% Seattle 160.19 -3.60% -13.40% Tampa 156.04 -3.00% -22.00% Washington 176.34 -2.20% -19.20% 10 cities 162.17 -2.30% -19.20% 20 cities 150.66 -2.50% -18.50%         Note: index=100 in 2000 Source: S&P, Fiserv

 

Recession hits Ritz-Carlton West Georgia project

Bruce Constantineau
Sun

Prolonged inactivity at the $500-million-plus downtown Vancouver Ritz-Carlton hotel-condo project has fuelled speculation the ambitious development is all but officially dead.

Holborn Group president Joo Kim Tiah said buyers who purchased condos in the project will receive letters this week updating them on the project’s status but wouldn’t provide further details.

“The buyers take precedence over the media and I don’t want them reading something in the paper before they hear it from me,” he said in an interview Monday.

Construction of the 1133 West Georgia site was halted last fall — supposedly to give Holborn Group time to redesign the parkade portion of the 60-storey, Arthur Erickson-designed twisting tower. But the subsequent global recession and downturn in the Metro Vancouver real estate market have combined to put several proposed condo projects on temporary or permanent hold.

About half of the 123 Ritz-Carlton condos were sold in the tower that was scheduled for completion in 2011. Condo prices ranged from about $1.4 million to $28 million — a record Vancouver condo asking price for a two-level unit that was to occupy 7,400 square feet of living space. A 127-room luxury Ritz-Carlton hotel was supposed to occupy the first 20 floors of the building, with condos taking up the top 40 floors.

When Ritz-Carlton announced plans to enter the Vancouver hotel market about 18 months ago, company vice-president Michael Beckley said the hotel chain had considered the Vancouver market for several years.

“Toronto and Vancouver have been in our sights for quite a long time, so we’re very happy to have such a great location,” he said at the time.

Ritz-Carlton was to manage the entire building, with the condo portion to be called Residences at Ritz-Carlton. Condo owners were to have access to hotel amenities like 24-hour room service, a concierge, housekeeping service, and staffing for special entertainment events.

Holborn Group bought the West Georgia property from Cadillac Fairview about four years ago and demolished a partially built concrete structure that sat derelict for years.

The site is essentially an empty hole now following a decade of failed attempts to build a private members’ club and a strata-title office building.

© Copyright (c) The Vancouver Sun

Katrina Goggins
USA Today

IRMO, S.C. — Tucked into the economic stimulus package signed by President Barack Obama this week was $2 billion to expand a nascent and controversial program to help cities and states buy and fix up foreclosed homes.

Last month, the Department of Housing and Urban Development signed off on hundreds of grants to all 50 states totaling almost $4 billion. The Neighborhood Stabilization Program, as it’s known, was passed last year as part of a housing rescue plan that was regarded at the time as the most significant housing legislation in a generation.

But critics have assailed the program for the lack of money it will send some hard-hit communities, a dearth of oversight and the discontent stirring among residents who want a say in what happens to their neighborhoods.

“What houses are gonna be involved? We still don’t know that and we’re a month away from the funds arriving,” said Mike Aaron, president of the Livingston Avenue Area Commission, a group in a foreclosure-ridden area of the Columbus, Ohio. “That’s what’s making us uneasy right now.”

The total amount coming into Ohio, for example, is $258 million, and Columbus is getting $23 million of that. Those figures do not include new money from the stimulus package and HUD has said it has not yet decided what the guidelines for the new grants will be.

Aaron said Columbus has rebuffed his group’s attempts to talk about the best ways to use money, which has already been awarded to the state.

“We need to be involved in the process,” said Aaron, who is pressing for an oversight board comprised of city officials and residents.

And then there’s back biting about who gets how much.

The first round money is being divvied up based on the number and percentage of foreclosures, number and percentage of homeowners behind on their mortgages, and the concentration of subprime mortgages.

While the formula sounds fair, some of the results aren’t. California and Florida are both getting more than $500 million in federal help, even though California has 500,000 foreclosures — around twice the number as Florida.

Vermont, meanwhile, is getting the minimum of $20 million, even though the state had less than 150 foreclosures last year and the lowest foreclosure rate in the nation, according to RealtyTrac Inc.

Some city and county officials are also questioning the government’s math.

Almost one in 10 houses in Merced County, Calif., are in foreclosure, one of the highest rates in the country. Yet the county will get just $2 million of the money going to California.

The city, which has a foreclosure rate of 12%, will get just $1.4 million.

“Someone stopped me on the street and said, ‘Oh good you got the funding. So what can you do with this money? Buy like four homes?”‘ city housing manager Masoud Niromaud said, adding that there are more than 1,300 homes in foreclosure in Merced. “Seems that they (HUD) could paid more attention to the formula — ran it a couple of times. They didn’t do that.”

Economists say lenders will surely benefit from the plan, though it doesn’t include enough money to be considered a significant backdoor bailout for banks.

“In terms of bailing out lenders it’s hardly the biggest thing out there but surely there will be cases where the land purchases will be in least in part to help politically connected lenders,” said Dean Baker, co-director of the Center for Economic and Policy Research, a Washington-based thinktank.

In many cases, government officials plan to dole out the money to nonprofit organizations and smaller government entities that will purchase homes.

Critics and local housing officials are shaking their heads over the carte blanche grantees have in how they spend the federal funds. One South Carolina county said it would consider proposals to put homeless or HIV/AIDS patients in foreclosed homes eligible for the grant, while officials in Florida‘s Miami-Dade County said they plan to snap up foreclosed apartments with grant money despite staunch public comment against it.

Many of the proposals called for renting out the homes to low- to moderate- income families.

On the streets of neighborhoods pockmarked with vacant houses, many residents said they’d welcome new neighbors no matter how they got into the homes.

“I would want to put somebody in it, whether they’re renting it or not. That’s a house that somebody could be in,” said Cheryl Poole, a 51-year-old Irmo resident worried about home values and the empty house across the street from her one-story ranch.

On the other extreme is Debra Oakley, a 55-year-old woman who said she isn’t so sure she wants a new neighbor.

The two houses to the left of her home are vacant, including one that nonprofits are being encouraged to buy using stabilization grant money.

“I’ve often wondered about what kind of people would move over there,” said Oakley. “I like it just like that: vacant.”

Susan Popkin, a researcher at the nonprofit Urban Institute, said many homeowners have grave concerns about their changing neighborhoods and how that might affect their already declining property values.

In major cities nationwide, tensions have risen recently as federally subsidized renters move from housing projects and violence-ridden neighborhoods to nicer communities in suburban areas.

“The fear is real. The reality isn’t,” Popkin said. “The thing they’re anxious about is what’s already happening in their neighborhoods.”

That’s true in Columbus, Ohio, where 84-year-old Walt McKinley said he’d welcome any help to rescue their neighborhoods.

McKinley, who lives in the city’s downtrodden Linden neighborhood, said he worries the spread of foreclosures in his neighborhood will drive up crime and wants the city to use the grant to demolish the house next door to his, which has been vacant since it was foreclosed upon and the owners abandoned it over the summer.

“I told ‘em at work that if possible, I would even drive a bulldozer myself and bulldoze it,” McKinley said. “I would be happy to.”

But critics say there’s no guarantees that McKinley’s neighborhood or other hard-hit communities will benefit from the grants. No one is tracking just how the money will be spent and grantees have been tightlipped on their plans.

HUD will monitor how states and cities spend neighborhood stabilization money, but leave it to local governments to monitor how passthrough grants are used by nonprofits and other, smaller government groups.

Many Republicans opposed the first round of stabilization grants and don’t want to increase the program. They say additional money will just give more slush funds to disreputable nonprofit groups.

“Instead of trying to work out troubles in the existing funds, we’re basically doubling the size of the program and potentially doubling the size of the problem, said Frederick Hill, spokesman for the Republican Oversight and Government Reform Committee, about the House’s plan to double neighborhood stabilization grant money.

Some economists also have expressed concerns over a lack of oversight.

“The record of housing authorities are not very good. It’s certainly reasonable to be concerned that the money will end up going to politically connected lenders and developers and not do very much for communities,” Baker said.

Associated Press writers Meghan Barr in Columbus, Ohio; Adrian Sainz in Miami, Fla., and Wilson Ring in Montpelier, Vt. contributed to this report.

Copyright 2009 The Associated Press.

It’s now up to the mayor to deal with the costly dilemma

Miro Cernetig
Sun

Where’s bankruptcy court? I want to get in line.

Not because I’m actually going broke. I’m just thinking it might be a way to move closer to Vancouver‘s downtown waterfront.

Yes, I’m musing about getting on the Olympic Athletes’ Village social housing list. It’s quite the deal.

A few days ago, I had a tour of the $1-billion Olympic village. Sadly, I’ll never afford the $6-million penthouses. But the City of Vancouver‘s brain trust has managed to build us some of the slickest social housing on the planet.

As you may have heard, Vancouver‘s taxpayers now face a $110-million bill for 252 units of “affordable housing.” That’s $77 million over budget — or about $436,000 a unit.

But it’s more, really. Add in the approximately $40 million in free city land and you can pretty much count on Olympic social housing costing $595,000 apiece, or about $540 a square foot. That’s at least double normal cost.

As you might expect, our Olympic social housing is something to behold. I viewed a south-facing, one-bedroom on the ground floor, with 12-foot ceilings and panoramic windows looking out onto a street 100 metres from the water.

Its exterior was sheathed in what my guide described as “Swiss pearl” panels and etched glass.

The pad I had my eye on was the epitome of green living, too. It’s “LEED Gold,” meaning “thicker walls, high performance glazing, solar shades, ‘hydronic‘ or water based heating, a radiant heating system and green roofs.” There are even sky-gardens, plots on the roof to grow veggies as you take in the view.

All of those “elements” add $32,000 a unit, according to a city report. That’s about $180 a month to the taxpayer, if the city financed it over a 30-year mortgage at today’s rates.

Now, I’m not suggesting we don’t need more social housing in the city. A healthy society invests in helping less fortunate. But the budget was blown sky-high on this one.

Here’s some more sobering math: Assuming the cost of Olympic social housing is $150 million ($110 million in construction plus $40 million in land), each unit would have to rent out at $3,200 a month to pay out that 30-year mortgage. Clearly that’s unsustainable when social housing’s monthly rents are measured in the hundreds of dollars.

So we now have a defining moment for Mayor Gregor Robertson.

He campaigned on the worthy ideal of ending homelessness.

Yet city administrators have told him the city’s highest-profile social-housing development might break the city budget. Inside the mayor’s office, the debate is now how to squeeze out of the Olympic social housing quagmire.

The likely plan is to sell off the social housing or perhaps turn it into market rentals.

The mayor’s idea is the sale will pay for the enormous cost overruns. Leftover dollars would be earmarked for building replacement social housing, at a more realistic price, perhaps in nearby areas of False Creek or elsewhere in the city.

How does Mayor Robertson sell that hardball without creating a revolt within the hard-left elements of his coalition? They are the vocal minority who so often spout the nostrum that the poor must have the right to live on the waterfront, just like the rich.

Perhaps by showing he understands that such mushy, utopian thinking — and the past politicians of the left and right who felt pressured to put green-plated public housing in a high-end waterfront development — is what got us into this hobbling financial mess.

Mayor Robertson needs to get the city out of the Olympic social housing, fast. It’s an indefensible sinkhole.

Then he should take a non-partisan breath. Real-estate prices are falling. So are construction costs. Time will be on the mayor’s side. He’ll be able to build more homes for the poor if he — unlike our last city hall’s leaders — does his homework and uses the public purse judiciously.

© Copyright (c) The Vancouver Sun