March 14, 2007
March 14, 2007
BY FRAN SPIELMAN City Hall Reporter
The City Council today kept Mayor Daley’s Olympic dream alive by putting Chicago taxpayers at risk — to the tune of $500 million — in the event that a 2016 Summer Games here loses money.
Beating a U.S. Olympic Committee deadline with 17 days to spare, aldermen also approved a series of intergovernmental agreements that put local tax dollars on the line, even if the games turn a profit.
The vote was 45 to 5.
Among other things, the agreements require the Metropolitan Pier and Exposition Authority to transfer to the city ownership of air rights over a truck staging area for McCormick Place that will be used to build a $1.1 billion Olympic Village.
Corporation Counsel Mara Georges disclosed last week that the air rights would be transferred to the Olympic organizing committee known as Chicago 2016 and sold to private developers for $100 million.
Half of that money will be used to build the 5,000- to 15,000-seat amphitheater that will be left behind in Washington Park after a temporary Olympic stadium there is torn down. The other half will be used to build an aquatic center in Douglas Park. The Chicago Park District has also agreed to contribute $15 million toward the aquatic center it will inherit.
So much for Daley’s promise to bankroll a Chicago Olympics with “not a dime” of taxpayers’ money.
The mayor has likened the $500 million guarantee from Chicago taxpayers to earthquake insurance.
The city would be left holding the bag, only if Olympic planners are dead wrong in, what they call their “conservative” assumption that a Chicago Olympics 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 skyboxes at the Washington Park stadium and from an equity payment to the city from Olympic Village developers.
Chicago taxpayers come next on the financial totem pole — to the tune of $250 million. The five-layered approach then envisions $250 million in “third-party” guarantees--either from other public agencies or from private money, possibly insurance. After that, the city would be on the line for another $250 million.
Voting no were: Aldermen Dorothy Tillman (3rd), Toni Preckwinkle (4th), Shirley Coleman (16th), Arenda Troutman (20th) and Howard Brookins (21st).
Prior to the final vote, Preckwinkle blasted Daley for waiting until after the mayoral election to come clean about the need for the $500 million guarantee. “It’s very hard to believe that nobody knew prior to the election that $500 million would be required...and those same people want us to trust them that using these guarantees is a very remote possibility. It’s hard to believe,’’ said Preckwinkle, whose no vote came even though the Olympic Village would be located in her ward.
Ald. Leslie Hairston (5th) supported the guarantee but only after putting the mayor’s Olympic planners on notice: “We are a multiracial city and that should be reflected at every level in the planning of these Olympics. We need to err on the side of inclusion, not just smoke and mirrors,’’ she said.
Ald. Ed Smith (28th) took the $500 million leap of faith with his fingers crossed.
“I’m a little bit about shaky about this one. Actually, I’m ....really trepidacious about this one because we really don’t know what lies ahead. We could end up with some major financial problems. I understand that ‘nothing ventured, nothing gained.’ I just don’t want to end up with a lemon on my hands. ‘’
Several times during the more than hourlong debate, there were shouts from the gallery and banging on the glass that separates the third-floor balcony from the chamber. There were several threats to clear the chamber if order was not restored but only a few people were escorted out.
Ald. Pat O’Connor (40th) warned that the “acrimony’’ of the debate could send the wrong message to the U.S. Olympic Committee, which is scheduled to decide between Chicago and Los Angeles on April 14.
Today’s City Council vote in favor of the city’s share of a $1.47 billion financial guarantee marks a pivotal moment in Chicago’s heated competition against L.A. for the right to advance to the international stage. Without a guarantee against operating deficits by a March 31 deadline, Chicago’s bid was doomed.
Chicago 2016 Chairman Pat Ryan and Dana Levenson, the city’s chief financial officer, have said repeatedly that the chances of actually tapping Chicago tax dollars are “practically nonexistent.”
Daley agreed on the eve of the City Council’s historic vote.
“This is in case . . . everything breaks down completely…This would be like an earthquake. If an earthquake takes place and I doubt if it’s going to take place,” the mayor said.
Chicago taxpayers are on the line only because the federal government has refused to assume the risk, the mayor said.
“The U.S. Olympic Committee requires an insurance policy. In other countries, the federal government steps up and says, `We’re the insurance policy.’ Here in the United States, they’ve never done that. And that’s been a real question by the International Olympic Committee. Why wouldn’t the United States stand behind the Olympic movement?” he said.
If the USOC chooses Chicago over L. A. and Chicago is the International Olympic Committee’s choice in 2009, Levenson has said, the city could start building up cash reserves to cover any Olympic shortfall.
Ryan has said he expects to further insulate the city by raising more private money — on top of the $32 million in contributions already in the bank.
“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 last week.
“If we’re in the red — if we do something nobody’s ever done before — we have $200 million ahead of [the city]. We’re going to add to that…in private capital raising. We’ve got nine years to do this. We’re just at a point in time…where we have to have this in order to get to the next step. But once we win it, we’re going to move the city back” even further in the pecking order.