Vancouver's credit rating downgraded over Olympic Village bailout

Vancouver Mayor Gregor Robertson says Moody's Investors Service has downgraded the city'sdebt rating, and that could cost taxpayers more money as theyfinance the Olympic Athletes Village project.

The downgrading,to AAA from AAA,could make it more expensive for the city to secure credit for the village bailout by as much as three-10ths of apercentage point,Robertson said.

The downgrading itself was linked to the additional financial risks associated withVancouver's Olympic Village project, he said.

Earlier this month another credit rating agency, Standard & Poor's,placed Vancouver on a credit watch and hintedit may alsodowngradeitsrating for the city as aresult of potential debt coming from thevillage project.

Fortress Investment Group, a New York based hedge fund, was originally supposed to lendMillennium Development Corp. $750 million to build the condominum project that will houseathletes during the 2010 Winter Olympic Games.

But it stopped payments to Millennium in September, after it had provided $317 million, because of the ongoing turmoil in global financial and real estate markets.

Since then, the city has covered construction costs with a $100-million bailout loan and has proposed to take over theproject financing by borrowing moneyto lend directly to Millennium to complete the project.

Overruns have pushed the project's cost to $875 million. The development site is on city-owned land worth $200 million, putting the value of the whole development at more than $1 billion.