L.A. Mayor Eric Garcetti and the City Council seemingly deferred a critical decision about accepting financial responsibility for cost overruns and agreed to become the official U.S. bidder for the 2024 Olympics.
L.A. replaces Boston, which dropped out after critics questioned city taxpayer liability for potentially more than $1 billion should expenses exceed estimates or revenues fall short. Past summer and winter Olympics have cost cities dearly.
Montreal lost $1.5 billion putting on the 1976 Summer Games, back when a billion dollars was a billion dollars. Sydney, Australia, taxpayers probably got dinged for $1 billion in 2000 and some folks think the 2004 games in Greece started that country down the road to ruin and may have cost the average household $50,000.
But optimists in L.A. point to the existing municipal infrastructure, including sports venues, already in place and the city’s successful experience with the 1984 games. Los Angeles also famously hosted the 1932 games and would be refurnishing the L.A. Coliseum, which played a central role 83 years ago. The stadium looks its age and there is some question as to whether the cost of sprucing it up has been vastly underestimated.
Garcetti, like his mayoral counterpart in Boston, led the charge for getting the USOC bid, but was also faced with a reluctant city council. The mayor quickly dusted off the original plans that had not been impressive enough to beat out Boston the first time around in January, and retooled them a bit for critics sobered by the East Coast political uprising.
On a 15-0 vote, the council approved a plan Tuesday to pay for the $6-billion games using around $4.7 billion raised by Olympic organizers. That money would cover most costs, pay for a $150-million insurance policy and supply a $400-million rainy-day fund.
Another $1.7 billion would come from yet-to-be-identified public-sector investors, providing a $161-million surplus. The council took an extra week to ponder the numbers and try to craft an escape hatch should the financial and/or political landscape change markedly before the bid is awarded by the International Olympic Committee (IOC) in September 2017.
Mayor Garcetti reached an agreement with the USOC later that day and at a reception attended by former Olympians and other celebrities said, “This city is built for this quest.” Although councilmembers expressed skepticism about the finances, Council President Herb Wesson said, “We are L.A. and we're here to compete.”
A skeptical report (pdf) last week from Los Angeles City Administrator Miguel Santana and Chief Legislative Analyst Sharon Tso said that based on available information from the IOC, the USOC and the nonprofit L.A. organizing committee that is spearheading the effort with the city’s support, “it is difficult to determine the fiscal impact and risk to the city of hosting the 2024 Games at this time.”
They singled out plans to build an Olympic Village for athletes along the Los Angeles River at a potential cost of $1 billion. But the site is “currently owned and operated by Union Pacific Corporation as the Los Angeles Transportation Center, one of the region’s primary goods movement facilities.” And the owners “currently have no plans to vacate the site.”
Garcetti adamantly said no public money would be spent on the games, with no real way to assure that. But the standard IOC host contract requires that the city be liable. Some on the council said that was unacceptable and demanded to be involved in the final decision. They got that, but it might be a tad harder to back out of the games in two years than it is now.
Of course, that might not be a choice they have to make. The competition includes Rome, Hamburg, Budapest and Paris, perhaps the favorite for being, well, Paris, and a sentimental choice for having hosted the Olympics 100 years before.