As of late last week, the International Olympic Committee received
Chicago's bid book and is now busy reviewing it. While the Chicago 2016's estimated price tag ($4.8 billion) is astronomical,
the city has repeatedly claimed that the public won't pay a dime for
As of late last week, the International Olympic Committee received Chicago’s bid book and is now busy reviewing it. While the Chicago 2016’s estimated price tag ($4.8 billion) is astronomical, the city has repeatedly claimed that the public won’t pay a dime for the games. But of course, the city council has already agreed to partly cover the Olympic Village construction with Tax Increment Financing dollars, as well as cover up to $500 million of potential operating shortfalls.
Chicago 2016 says the likelihood of tapping into the $500 million guarantee is “virtually impossible," citing the fact that no Olympics has experienced an operating overrun since 1972. But this a red herring. After all, it's the construction costs -- not the operating budget -- that we should be worried about.
As the Community Media Workshop’s Curtis Black reminds us, Daley’s track record of predicting (and sticking to) project budgets is miserable. Here are a few highlights:
Soldier Field: Original cost of $587 million, final cost of $655 million
Millennium Park: Original cost of $150 million (no public financing), final cost of $475 million (more than half public financing)
O’Hare expansion: Original cost (first phase) of $6.6 billion, final cost of $8 billion
Block 37 superstation: Original cost of $213 million, spending has reached $320 million (project now stalled)
To understand why the distinction between operating and construction overruns is important, just look to Vancouver. The host of the 2010 Winter games is currently facing major difficulty building their Olympic infrastructure because a Wall Street investment group helping to finance the games toughened restrictions on construction loans.
Mechanics’ Bob Quellos talked to Chris Shaw, author of the book “Five Ring Circus: Myths and Realities of the Olympic Games,” about the ramifications:
Vancouver finds itself on the hook for almost a billion dollars to finance the construction of the Athletes’ Village. They are unlikely to recover the money by selling the units in the near future. They also face nearly another $500 million, or more, for other Olympics costs. We were promised by a former mayor that hosting the Games wouldn’t cost Vancouverites one penny. Clearly, he was wrong by a spectacular amount, and that is only the direct costs for Vancouver and not the costs to the province or the federal government. The total price tag is now well over $6 billion; we had been told in 2002 that it would only be $600 million. London’s bid has gone from about $4 billion to $18 billion. At the same time as Vancouver’s costs go up, we suddenly find that half of the City’s property endowment fund has vanished. Could the city go bankrupt? Yes.
Someone should ask Mayor Daley this simple question: If Chicago overshoots its construction budget, as it has on so many projects in the past, where is the extra money going to come from?
Image of the proposed Olympic Village courtesy of Chicago 2016.