Will the public pay for the Olympics in 2016? That's the question
taxpayers are trying to understand after a flurry of Olympic-related
news hit newsstands this weekend. Here's a brief run-down:
The confusion started Friday, when Mayor Daley made his first public
Will the public pay for the Olympics in 2016? That's the question taxpayers are trying to understand after a flurry of Olympic-related news hit newsstands this weekend. Here's a brief run-down:
The confusion started Friday, when Mayor Daley made his first public appearance in Chicago since assuring Olympic officials in Switzerland that taxpayers would cover costs overrun associated with the 2016 summer games beyond the $750 million level the city and state already have agreed to finance. In what the Tribune called an "often bewildering news conference," Hizzoner asserted to reporters that he hadn't made a blanket guarantee. "I just said I will sign an agreement, I didn't say which one." This flies in the face of Daley's previous statements, in which he told the Trib that he agreed to sign the host city contract "as is." IOC President Jacques Rogge agrees. "The mayor said he will sign the host city contract, " he said last week. "We have only one host city contract."
Part of the confusion likely stems from Daley's newest proposed compromise. On Saturday, the mayor said he wants a deal in which private insurance money would be tapped before the city's $500 million guarantee was used. Daley did not mention specifically how he could achieve that goal. But he did hint that the $2.5 billion insurance policy the city has developed may need to be $1 billion larger than initially expected, a strange admission coming from an administration that has been adamant the games will generate $20 billion in new economic activity.
What's more, just three months before a host city is determined, the city is moving forward with a risky acquisition of a site for the Olympic Village. The Tribune has the details:
Chicago taxpayers will be locked into the city's first financial commitment related to its 2016 Olympic bid on Tuesday if the scheduled closing on the $86 million purchase of the Michael Reese Hospital site goes as planned. [...]
The acquisition of the Olympic Village site carries substantial risks, given the moribund state of the credit markets, which has created wrenching problems for Vancouver and London. Both cities have had to bail out their respective Olympic Village projects, which, like Chicago's, were supposed to have been privately financed.
And for Chicago, those struggling projects hover like specters, raising any number of questions. Will the lending spigot have opened sufficiently by 2012, when work is slated to begin? Will the city's glut of new housing units have been absorbed by then? Will Chicagoans line up for condos and rental apartments that won't be available until 2016, and only after they have been crash pads for several weeks for about 16,000 visiting athletes and coaches?
John Pletz asks similar questions in a story today for Crain's. The 3,000 unit Reese complex is "the single costliest item in the $4.8-billion Olympics budget." If the private sector won't cover construction costs, taxpayers will be asked to open their wallets once again. "Once your name's on the paper, you're hooked," says Philip Owen, who was mayor of Vancouver when it launched its bid for the 2010 games. "You better get your checkbook: You're going to need a lot of cash. There are always a lot of surprises." Currently, Vancouver has chipped in over $600 million. While they expect to be reimbursed, Standard & Poor's already downgraded the city's credit rating.
The city is taking small steps to inform the public about the games' finances. Chicago 2016's Valerie Waller tells Chicago Public Radio that officials will set up shop at the Taste of Chicago to "make sure we have the opportunity to touch as many of the citizens of Chicago as possible, and talk about the bid, answer questions they might have and let them show their support for Chicago bringing the games here." Unfortunately, it's going to take a whole lot more explaining than that.