Games could skin taxpayers $500 mil.
Plan satisfies Olympic panel -- nightmare odds slim, officials say
Chicago taxpayers will be on the hook for $500 million if Mayor Daley's Olympic dream turns into a nightmare -- but there's a layer of protection in between, top mayoral aides said Friday.
The city would be left holding the bag only if the mayor's Olympic planners are dead wrong in what they call their "conservative" assumption that a 2016 Summer Olympic Games in Chicago would generate a $525 million surplus.
If the Games lose money, there would still be a $200 million cushion. That would come from the sale of 117 luxury seats at a temporary Olympic stadium in Washington Park and from an equity payment to the city from developers chosen to built a $1.1 billion Olympic Village on air rights over a truck staging area for McCormick Place.
(John H. White/Sun-Times)
Chief Financial Officer Dana Levenson does not think it will come to that. "That gives us approximately $725 million of protection before we'd have to look to the City of Chicago. We think the chances of that happening are practically nonexistent," Levenson said.
Pressed on where the $500 million city contribution would come from, Levenson said, "If we had to go there, it would either be cash on hand, or we would bond it out." The city expects to close the books on 2006 with an unreserved fund balance of $57 million.
Chicago 2016 Chairman Patrick Ryan said operating profits for the last 10 Olympics have averaged $627 million.
"All of the Games have been profitable. ... Nobody's ever lost money on that operating line. We would have to be the first really incompetents to do that," Ryan said.
The USOC issued a statement saying Chicago's promise "substantially satisfies our requirements with respect to financial guarantees. This is a responsible, balanced approach reflecting commitments from both the private and public sectors, which we believe is critical for an internationally competitive bid."
For months, Daley has promised that "not a dime" of local tax dollars would be used to bankroll his Olympic dream. That's even though the International Olympic Committee has long required a guarantee against operating deficits.
The mayor's promise went out the window earlier this week when the USOC demanded that the city "put some skin in the game."
Daley has been under fire for being cagey about Olympic costs until after the election. But Ryan, the mayor's longtime friend, categorically denied that.
Chicago had hoped to satisfy the mandate with "private market guarantees," Ryan said.
"While they were here, they said, 'We want to see the city have skin in the game.' When we realized ... we need an aggregate dollar amount that will convince international voters that this is equivalent to what they get from national governments [everywhere but the United States], we emerged with this plan," he said.
It should be smooth sailing. Most aldermen said they're willing to take that $500 million leap of faith.
"The city needs to do anything that is necessary to demonstrate to the Olympic Committee that the people of Chicago are four-square behind the concept. ... The potential that exists for the city to host the 2016 Olympics is so great that it would rival the 1893 World's Fair and the 1933 Century of Progress in importance," said Finance Committee Chairman Edward M. Burke (14th).
Police Committee Chairman Isaac Carothers (29th) said, "I don't believe, from what I saw, that there's anything at risk for the taxpayers of Chicago. . . . The structure looks sound."
Said Ald. Billy Ocasio (26th): "What the Olympics wants to see is that there's a pot of money there, just in case. That doesn't necessarily mean the pot of money has to be used."
The $78 million indoor/outdoor swimming facility was originally set for a University of Illinois at Chicago site. In January, Ald. Ed Smith (28th), chairman of the City Council's Black Caucus, threatened to gum up Mayor Daley's Olympic plans if the West Side did not see some Olympic-related improvements.
Doug Arnot, director of sports and operations for the Chicago 2016 committee, denied that Smith's threat played any part in the move. Instead organizers said they were motivated by the chance to leave a legacy of the Games in a neighborhood park that could be used by families and perhaps inspire future Olympic swimmers.
The Chicago Park District would kick in $15 million, with the remaining cost covered by revenue from private developers of an Olympic Village to be built near McCormick Place and fees for the right to name the aquatic center.
"We feel our $15 million investment to get an $80 million facility -- which will be used for less than a month by the Olympics but will be used for decades by the community -- was a valuable opportunity," said Park District Supt. Timothy Mitchell.
The 180,000-square-foot building would include a 50-meter competition pool, a diving well and tower. The existing outdoor pool at Douglas Park would also be replaced, said Arnot.
After the Olympics, local officials envision the center serving not only the neighborhood but used for regional and national competitions. "This will be the state-of-the-art aquatic center in the nation," said Chicago 2016 Chairman Patrick Ryan.
A parks official said construction hinges on Chicago winning its bid to host the 2016 Summer Games.
Ryan said he showed a U.S. Olympic Committee evaluation group visiting here this week plans for both the original UIC site and Douglas Park and that the scout team preferred Douglas Park.
If the local Olympics group felt it was better to build the aquatic center elsewhere, "that's fine with us," UIC spokesman Mark Rosati said. "We'd still have boxing."