Report: Olympic risk real estate, not financial

August 26, 2009 4:40:19 PM PDT
An independent, watchdog group is out with its long-awaited analysis of Chicago's Olympic bid. In a report just released to aldermen, the Civic Federation crunched the numbers and concludes the Olympic budget is fair and reasonable.

The Civic Federation hired an internationally known consulting company to put the books of Chicago's Olympic bid under the microscope. They give Chicago 2016 a clean bill of health but also offer insight into what could go wrong.

The old Michael Reese Hospital is the site of the proposed billion-dollar Olympic Village. It's is the most risky part of Chicago's Olympic plan, according to an analysis by the Civic Federation now being distributed to Chicago aldermen.

"All the risk can't be eliminated. There is risk to the city for staging any event - let alone one as large as the Olympics," said Laurence Msall, Civic Federation.

London and Vancouver are learning that lesson the hard way. Both have had to have government bail-outs of their respective Villages because of the tanked real estate and credit markets.

The Civic Federation says Chicago is lessening that risk by spreading the work between several developers "and" and a just revealed insurance policy.

Essentially, Chicago 2016 has found an insurer who will pick-up the tab for construction if developers can't.

"The 2016 bid - and program for Chicago - includes more insurance than has ever been purchases for an Olympic city and it is aimed at protecting taxpayers," said Msall.

South Side Alderman Toni Preckwinkle's ward includes the proposed village.

"The problematic issue always is on the Olympic Village - how particularly in this real estate market - are we going to get it built? The fact insurance will minimize that risk is a good thing," said Ald. Toni Preckwinkle, 4th Ward.

The Civic Federation report includes phrases like "fair and reasonable" to describe construction budgets and concludes insurance reasonably protects taxpayers.

Another section concludes "revenue estimates are optimistic" but goes on to say "none of these posed significant risk to the financial viability fo the 2016 Games."

The Civic Federation - and others - say if Chicago gets the Games, the City Council needs to step up and exercise some oversight.

"I remain very concerned about the management of the Games starting day one," said Ald. Manny Flores, 1st Ward.

The Civic Federation warns the fastest way to put taxpayers at risk would be to have people without Olympic experience put in charge of the run-up to the games. In another words: ward hacks, cronies, cousins and campaign contributors need not apply.

Bid chairman Pat Ryan told ABC7 on Wednesday night he has given the IOC assurance that he will run Chicago's Olympic efforts until he's confident the groundwork has been laid for the games to be delivered on time and on budget.

Report summary

The 90-page report finds "(the) operating budget is fair and reasonable and provides adequate protection against financial risk to Chicago taxpayers." NARRATIVE SUMMARY | PRESS RELEASE (PDF)

To deal with the issue of real estate, the report recommends:

  • The Organizing Committee for the Olympic Games (OCOG) that will replace the Bid Committee must be led by a professional and experienced management team that executes the proposed Chicago 2016 plan. Employees and contractors must be chosen based on non-political criteria.
  • The City Council of Chicago must exercise its oversight role and require regular reporting on the status of the Games.
  • The proposed insurance coverage must be purchased, including capital replacement insurance for the Olympic Village.
  • (From civicfed.org)

    The Civic Federation is a 115 year-old independent, non-partisan government research organization based in Chicago.


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