Updated: Tue Oct. 06 2009 20:48:00

ctvbc.ca

Vancouver taxpayers may be forced to accept a diminished return on their investment in the controversial Olympic Village project, according to a long-awaited audit report.

The city-commissioned report, produced by KPMG, suggests the city will recoup the hundreds of millions invested in the project only if the region's depressed real estate market picks up.

"The current state of the real estate market makes forecasting the city's financial exposure with any degree of precision extremely difficult," the report states.

The report shows cost overruns jumping to at least $105 million, according to estimates by the developer.

The city admits that, including financing, the budget could skyrocket from an original $750 million projected in 2007 to $996 million by 2013.

The report cited a litany of problems in the earliest planning stages of the project. It said the city didn't fully investigate the ability of developers to build the village at the price promised. Regular reports weren't made updating financing or construction progress. And a variety of costs weren't included in original budget estimates.

"Obviously the city will have to manage this project very carefully in the years to come to gain back what was invested by taxpayers," said Mayor Gregor Robertson.

Robertson said the city would wait until next spring to sell the majority of the project's 750 housing units.

"The strategy now is to hold until next May, to let the project get the massive exposure of the 2010 Games," Robertson said.

The city was forced to finance the project last fall after the original lender stopped payment on its loan to the developers.

The project will house 1,100 athletes during the Games before being converted to private housing.

Affordable housing units

The Olympic Village was to have included about 250 affordable housing units.

But Deputy Mayor Geoff Meggs said Tuesday that it's not certain the city will be able to keep that promise to create affordable housing.

"We, council, can't agree to remain true to it at any cost," Meggs said.

"The cost for the social housing and the overruns on the social housing are much worse than they have been on the market housing. So the problems we're left with there are even more acute on that part of the project."

Fears social housing will be passed over in efforts to break even are a great concern to the Impact on Community Coalition, a non-partisan Olympics watchdog.

"We were supposed to be doing things differently here in Vancouver," said chairman Am Johal, noting the 2010 Games were touted as the first to be socially-sustainable.

"But what's become clear is that by following a cookie-cutter approach to organizing these Olympic Games, the impacts are virtually going to be the same as they are in other places."

With files from CTV British Columbia's Stephen Smart and The Canadian Press