The Olympic Village Gamble

Taxpayers at risk

By Steve Rhodes
|  Tuesday, Jul 28, 2009  |  Updated 1:19 PM CDT
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The Olympic Village Gamble

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Mayor Daley is walking a taxpayer tightrope.

Just as the city council is finally engaging the city's Olympic bid - and Mayor Daley's head comes closer to exploding - the city is about to put down real money on the first significant financial risk associated with hosting the 2016 Olympic Games: buying the property where the athletes village would be built.

Crain's today calls the plan "The Next Olympic Land Mine."

"As aldermen prepare to debate whether to put Chicago on the hook for any operating losses from the 2016 Olympics, the construction of a $1-billion athletes village poses a far greater potential risk to city finances," Crain's reports.

"With as many as 3,000 units, the proposed South Side housing complex is the single costliest item in the $4.8-billion Olympics budget. Chicago expects private developers to pick up the construction tab, betting that they'll profit by converting the buildings to apartments and condominiums afterward.

"But if Chicago is chosen to host the games, the city will have no choice but to cover any construction costs the private sector won't. That's what happened in London and Vancouver, which are slated to host the next two Olympics and had to write big checks when private funding for athletes villages collapsed."

The report follows by a day the Tribune's examination of the deal.

"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 Tribune reports in "With Reese Deal, Chicago Antes Up."

"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 paper reports.

"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."

A year ago, in a piece called "Magic Beans," the Reader's Ben Joravsky wrote:

"The city’s Olympic Village plan sounds like a work of genius, if not magic: close your eyes, leave it to Mayor Daley and his aides, and - presto! - 7,300 new housing units will be built on the south side without using one dime in public funds.

"But as I’ve learned over the years, when our esteemed leaders start conjuring visions of something for nothing, they’re usually trying to cast a spell on the taxpayers."

Joravsky has been nothing if not prescient about the bid.

According to a report earlier this month by Greg Hinz, the "Olympic Village is in at least some trouble. Translation: It might cost you."

How much? However much it will take.

"The IOC could come back," University of Chicago sports economist Allen Sanderson tells Crain's, "and say they don't like the village plan, and they will up the ante. Once you've signed on, there's almost nothing you can do except swallow it. And that means the taxpayers will swallow."

Steve Rhodes is the proprietor of The Beachwood Reporter, a Chicago-centric news and culture review.

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