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Who will replace Jody Andrews? That’s the next question

January 18th, 2009 · 18 Comments

Okay, now we have Penny Ballem locked in a room with Fortress trying to come to a deal on the financing.

Next, the mayor and Penny have to figure out who is going to take Jody’s place.

As I wrote for the Globe, the deputy city manager’s role in dealing with development projects is critical.

For the village, Jody Andrews acted as the liaison between all city departments and the project, to make sure that the development met all the city’s guidelines and that there were no city technical glitches hanging it up.


People in the development industry say they need to have one person to rely on when a project is ongoing and will sometimes call that person, typically the deputy city manager, a dozen times a day to help sort out problems.

 

“I would think they would have to replace him as quickly as possible,” said David Negrin, president of the Urban Development Institute that represents most of the province’s large developers. “That position is key.”
He said the city has asked the UDI to create an advisory committee to help steer the project through to completion. However, that committee could not do the job of a single project manager.

There had been speculation in the past that the city might bring in someone from the development industry to oversee the project. As well, with the current slump in the housing market, there are many underemployed development specialists who would be available. However, Mr. Negrin said he had no idea what the city might be doing to replace Mr. Andrews.

Since I wrote that, I’ve heard any number of rumours about who that person might be. Suggestions have included: Dan Doyle, the former deputy minister who is now with VANOC; one of the two quantity surveyors currently working on the project; someone from the development industry. (One more piece of arcane construction-industry knowledge for you — a quantity surveyor is a person who comes in and looks at how much work has been done and tells the lender whether it seems to match the amount of money being requested in the monthly construction draw. The village has two, one working for the city, one working for Fortress.)

As well, I’ve also heard that the UDI advisory committee will look at whether there is any way to cut costs on the project, although that will be hard to do, given how far along everything is. The sub-zero refrigerators are already sitting in warehouses and the fancy glass exteriors are sitting on the ground, waiting to be installed.

But costs have been a puzzle to everyone watching this project. I’ve heard everything up to $1,000 a square foot. A reliable source (oh-oh, there I go again) says it is $500 a square foot when other projects in the city are half that, for construction costs. Those quoting the $1,000 a square foot number may be including all costs. How developers typically break down the costs is

1. hard (construction costs). That’s $500 a square foot for the village.

2. soft (everything else — consultants, interest, etc). That’s usually $100-150 on a regular project, may be up to $300 here, especially with the cost of marketing.

3. land. It works out to $200 a square foot at the price they paid.

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  • city staffer

    All of those skills relate to the development side. There are equal challenges on shepherding the project through the City side.

    I’m not sure that they will find one person. Jody was unique in his knowledge of both sides of the equation.

  • Rebecca

    It will be very interesting to see who replaces Jody. Hopefully it’s a non political appt (would be nice for a change)..someone with lots of experience, wisdom and wanting to get this project finished on time.

  • Sophocles

    Don’t be too surprised if there aren’t A LOT of angles to this one. My guess is that the City Manager along with her Vision cohorts will continue to “call the shots” with the purse strings and the project management role will be more closely aligned with the Developer. That way the City is able to distance itself and exert more pressure on the developer to meet the deadlines they have made such a song and dance about. I can’t envision someone willing to take this role on without being seriously into “pain & punishment”, as I suspect they are going to get “spanked” frequently and by many.

  • Listen Close

    Interesting about Dan Doyle. Wonder what the armchair NPA will have to say about that? “The hiring of the respected and talented Dan Doyle is just a distraction from Vision’s plot to defeat the Campbell Liberals.”

  • Shepsil

    My question is, how is little’ol Vancouver going to avoid being compromised again by the massive Fortress Investment Group? I just read an interesting article in Vanity Fair about which of the biggest private-equity firms will go bankrupt first and the group of 6 firms mentioned, included Fortress.

    Quote:

    Which private-equity firm’s going bust first? Carlyle? Fortress? K.K.R.? Cerberus? Apollo? Could it even be mighty Blackstone, with its vast real-estate holdings?Which of these one-word-branded enterprises that make up what’s been called the world’s “shadow banking system” will collapse and, in the domino pattern of this financial crisis, take the other firms with it?

    snip/

    There’s an urgency to this question because no big firm has actually gone bust—yet.

    I was curious about the who the directors of Fortresswere and it turns out the majority of them used to work for either Goldman Sachs, Leheman Bros., Bear Stearns, CitiGroup, Deutz Bank or BlackRock. I think it is fair to say that these directors are some of the biggest players in the world’s financial markets and those markets, suffice to say, are still crashing and the Vanity Fair article goes on to say:

    Given the credit crunch, no private-equity deals are getting done now—chances are that what you’re doing with your idle hours as a P.E. man is trying to figure out who deserves to crash and burn before you.

    snip/

    The situation has just gotten more fluid—the banks don’t have money to give us, and God himself couldn’t turn a profit at most companies now. But somewhere, sometime soon, if we can just bluff it out, there is opportunity. Amazing opportunity.

    The other question should be, how can the City of Vancouver even enter into negotiations with Fortress Investments under the current climate of pending disaster?

  • T W

    More likely to be replaced by a committee

  • tommi

    And who are the “armchair NPA?” Anyone that doesn’t agree with everything Vision/COPE have done so far?

    News Flash: YOU WON THE ELECTION! The campaign is over. Time to govern. Not divide and conquer.

  • Scott

    Dan Doyle, now of VANOC, would make an excellent choice. Doubtful though, VV has now made the project tooooooooo political and most reasonable folk don’t want anything more to do with it.

    Way to go Geoff!

  • independent mind

    I understand that there were something like 17 heads of departments leave under Sam Sullivan and the NPA. That included Larry Beasley, Bruce Maitland, Brent MacGregor, Jamie Graham, Ann MacAfee, Syd Baxter, and Estelle Lo too name a few.

    I did not hear about people pulling their hair out over the loss of those staffers. Also some of those who left were world class and could have prevented the problem the city now finds itself in.

  • Shepsil–

    A very, very important that many, including most of the local market bounce-back backers, seem intent on ignoring…..

    In fact, I would be very surprised if, back in the fall, this wasn’t one of the concerns of a certain then City CFO, especially given the trouble Fortress was in at the time with its own backers of Intrawest.

    .

  • Dave

    And when the Mellenium Athletes Village is complete, the construction workers will be laid off. If there isn’t another building boom to take the place of the Olympics, then EI will kick in, and soon after that Welfare.

    EI….. Federal government coffers

    Welfare…… Provincial government coffers.

    There’s always been this game that the two senior governments play at……….

  • foo

    The best thing that could happen for the city is for Fortress to go bankrupt. In fact, the sooner the better. Remember, they have already advanced >$300m to the project, and if they went bankrupt, you can bet the lawyers would be out in full force trying to figure out how to stick that to them. I’m quite sure there are clauses governing default on Fortress’s side, just as there are on Millenium’s side.

  • foo–

    By sooner, I presume you mean…..before we give them more treasure?

    .

  • foo

    Ross,

    We haven’t given them anything yet. They’ve advanced the money to Millenium, and it only has to be repaid after the development is complete.

    The only way we give them any money is if the new financing powers allow us to borrow money from someone else, pay off Fortress (for the ~$300m they’ve loaned), and use the rest to complete the project.

    If Fortress goes bust before then, I imagine there’s some interesting legalities in play. Even if the city self-finances the project to completion, and then demands the remaining funds from Fortress (after all, the completion guarantee will have been satisfied), there could be some interesting legalities in play if Fortress can’t come up with the cash.

    The point is still, the best thing for the city is for Fortress to go belly-up. Especially now that the city can borrow money itself from wherever it can find it. (Which, quite possibly may include the Endowment Fund, which has $2.7b, I believe.)

  • Dave

    As Penny Ballem sits down in a locked room with Fortress I wonder if she remembers seeing this headline?

    “Lehman Brothers Holdings Inc. has filed for bankruptcy protection in the U.S.”

    It turns out that the Chief Executive Officer and Chairman of the Board of Directors for Fortress Investment Group is one Wesley R. Edens.

    A search on the internet comes up with this little “relationship map” of what other companies he sits on and his standing on them. eg.

    Aircastle Limited – chairman
    Brookdale Senior Living, Inc. – chairman
    Crown Castle International Corp. – director
    Eurocastle Investment Limited – chairman
    Fortress Brookdale Investment Fund LLC – chairman & CEO
    Fortress Investment Group – chairman & CEO
    Fortress Investment Trust II – chairman & CEO & trustee
    Fortress Pinnacle Investment Fund LLC – chairman & CEO
    Fortress Registered Investment Trust – chairman & CEO & trustee
    GAGFAH S.A. – director
    GateHouse Media – chairman
    Mapeley Limited – chairman
    Newcastle Investment Corp. – chairman & CEO
    Penn National Gaming, Inc. – director
    RIC Coinvestment Fund GP LLC – CEO

    Past relationships:

    BlackRock Financial Management Inc. – partner & managing director
    Global Signal Inc. – CEO
    Lehman Brothers Holdings Inc. – partner & managing director

  • Don

    foo and others,

    re: property endowment – it’s just like the name says, a property endowment. it’s property, not cash in the bank. i think a small part of the 2.7 billion is cash but most of it is the value of cold, hard … ground.

    don

  • Hans Goldberg

    May I suggest Michael Geller

  • not running for mayor

    You could, but it’s too late, I think Michael would’ve been a great choice as well but for some reason I don’t think he made the short list. Can’t quite put my finger on it.