LA2024: O’Farrell & Ryu Promise to Protect Tax Payers
Today’s vote came after the council was given more time to review bidding documents that were delivered to the city last week and after newly elected Council District 4David Ryu asked that the so called “joinder” agreement between the city and the United States Olympic Committee included a provision that the council could have veto power and review of the process along the way.
So far, a key issue has been whether the city should agree to pay, using tax payer dollars, for any cost overruns for the games, as is expected by the International Olympic Committee. The 1984 games, held under then-Mayor Tom Bradley, did not have such a clause and are widely seen as the most successful games in their history.
“I plan to remain vigilant,” Ryu told his fellow council members, that there be “iron clad language to protect tax payer money,” on the games.
The “joinder” agreement was requested by the United States Olympic Committee, which has until Sept. 15 to submit a proposed U.S. bid city to the International Olympic Committee.
Los Angeles initially lost the opportunity to bid to Boston but regained it after the East Coast city backed out over concerns about financial liability.
But some city officials and residents have urged caution in pursuing the bid, saying the city could be on the hook for cost overruns incurred by hosting the Olympics, which are estimated to be $4.6 billion to run.
But with the provision that the city council will decide what the city can take on, nearly every council member this morning said they were “enthusiastically” comfortable with entering into the agreement, now that the process includes an escape hatch.
“We will not allow the taxpayers of Los Angeles be on the hook for any overruns,” said Councilmember Mitch O’Farrell (CD13). This council should be prepared to walk away if any of the terms are unfavorable,” for the city.
Time has also been limited for Los Angeles, which has only a few weeks to review the pact before the International Olympic Committee’s Sept. 15 deadline to receive the bid.
City analysts said last week that based on the information given to the city so far, “it is difficult to determine the fiscal impact and risk to the city of hosting the2024 Games at this time.”
A preliminary review of the budget appeared to show that one of the major capital projects, the Olympic Village, “may significantly exceed the projected $1 billion,” Los Angeles City Administrative Officer Miguel Santana and Chief Legislative Analyst Sharon Tso wrote in a report Thursday. The analysts said more than half of the budget may go toward just remediation and relocation costs.
These and other questions have been raised as to whether the budget is an accurate estimate of the potential costs, and whether it is financially prudent for the city to agree to pay for any cost overruns. Other cities that have hosted the Olympic Games have routinely signed onto this promise to pay for overruns.
Supporters of the Los Angeles bid have said the city will more likely see a surplus, saying that unlike other cities, Los Angeles already has many of the needed sporting venues in place.
LA24 officials estimate the cost of hosting the 2024 Olympics in Los Angeles would be $4.1 billion, or $4.6 billion when a roughly $400 million contingency fund and insurance are included. They project revenue from the Games will bring in $4.8 billion, resulting in a profit of $161 million going to LA24.
The budget anticipates that the International Olympic Committee will contribute $1.5 billion or 31% of the revenue, with domestic sponsorships and ticket revenue makingup the other two-thirds.
The bid packet also included details about how the Olympics might be operated. The Olympic Village would be next to the Los Angeles River in Lincoln Heights–in a UnionPacific rail yard known as the “Piggyback Yard”–and calls for track-and-field and the opening and closing ceremonies to be held at a renovated Los Angeles Memorial Coliseum. The bid also designates sports venue clusters in downtown Los Angeles, Hollywood, the San Fernando Valley, coastal areas like Santa Monica, the area around UCLA and the South Bay.