Thursday, June 18, 2009

Daley to put taxpayers on hook for Olympic financial losses
June 17, 2009
Mayor Daley finally sounds ready to give the International Olympic Committee the financial guarantee it is seeking.

The mayor told reporters in Switzerland that he’ll sign a host city contract with the committee putting taxpayers on the hook for any financial losses if the city wins the summer 2016 games — even as some aldermen grumbled Daley is exceeding his authority.

Daley and an entourage of Chicago Olympics boosters are in the lakeside city of Lausanne, making their pitch for the games on the committee’s home turf.

Back in Chicago, mayoral press secretary Jacquelyn Heard stressed that Chicago 2016 has come up with a series of guarantees and private funding formulas for the proposed $4.8 billion game plan, so taxpayers won’t be footing the bill.

“Obviously the mayor understands that neither he nor Chicago 2016 can go to taxpayers and essentially expect them to guarantee or be responsible for long- or short-term Olympic financing,” Heard said today. "When he said he was prepared to sign the host city contract, it was with knowledge that Chicago will only sign it under the new approach that does not require us to go to the taxpayers beyond what we already promised."

She's referring to today's announcement that an added $500 million in insurance will be part of a $2.5 billion safety net for the Chicago games.

The net already includes: a $450 million “rainy day fund;” as much as $375 million in IOC cancellation insurance; an additional $500 million in insurance coverage, a state guarantee of $250 million and a “last-resort” $500 million guarantee of taxpayer money from the city of Chicago.

Daley initially vowed that not a dime of taxpayer dollars would be spent on the 2016 games, but after the last election — and a prod by the United States Olympic Committee to “put some skin in the game” — the City Council approved the financing.

Daley insisted at the time: “If everything fails — an earthquake, tornado, everything comes down — this is your insurance policy.”

Lori Healey, President of Chicago 2016 issued a written statement from Switzerland saying the new insurance “will further reduce risk to the City of Chicago and its taxpayers.”

“This new development will ensure that at the required time — two days prior to the October 2nd decision — the Mayor of Chicago will be able to sign the host city agreement,” she saidt. “The cost of this solution will be funded entirely by Chicago 2016."

Chicago 2016 officials say they're heartened by IOC president Jacques Rogues repeat of an earlier assurance that Chicago's financial guarantees are strong.

Mike Moran, a sports consultant formerly with the United States Olympic Committee , says the mayor signing this document doesn’t necessarily mean Chicago can’t work out something with the IOC to make sure city isn’t on the line for losses.

That’s what happened when Moran worked on the successful bid for the 1984 Summer Olympics in Los Angeles.

“We had $25 million in guarantees (in largely privately dollars) against a shortfall and Mayor Tom Bradley signed it,” Moran said of the traditional host city contract calling for L.A., in this case, to cover any losses. “But there was a quiet nod by the IOC, that if there was an overrun the city wouldn’t be liable for it.”

The money issue arose as Chicago, along with competing cities Madrid, Rio de Janeiro and Tokyo, made brief, closed-door presentations today before 93 IOC members — about 10 shy of the full Olympic committee that will decide in October which city will host the 2016 games.

Chicago was first at bat today, using the start of the 45-minute presentation to talk about how its $4.8 billion game plan would be financed. Chicago is the only finalist city in the pack not to have 100 percent government guarantees, standard for American cities because the federal government traditionally doesn’t pony up for guarantee money for the Olympic games.

Pat Ryan, head of the Chicago 2016 effort, said in a news conference in Switzerland today that he believes the Chicago’s plan to layer guarantees with private and corporate donations is the best financial approach in these recessionary times.

“We believe that it’s responsible [in] changing times. And it’s very important because it spreads the risk among public and private sources. We also believe this combination of public and private guarantees [that] could be as much as $2 billion is not only better for host city taxpayers, but we believe also offers stronger protection for the Games than government can do alone.”

With another layer of insurance protection, Daley intends to sign the host-city contract — without returning to the City Council for authorization, Heard said.

“We are not exceeding the authority granted by the City Council. We remain within the financial boundaries they set” when they approved the $500 million Olympic guarantee, she said.

Several aldermen strongly disagreed. They argued that Daley has “no authority” to sign the host-city contract without Council approval.

“This is a big deal. He’s planning to sign an agreement that puts the city on the hook for an unlimited amount of money,” said Ald. Joe Moore (49th).

“Let them come before the City Council and explain to us why this is a safe bet for taxpayers. They can tell us they have insurance. They can make all the arguments they want to make. But, as elected representatives closest to the votes, we need to have a say in this. This is something that recent events have made all too clear. We need to exercise our authority as a check and balance on the mayor’s office.”

After the fiasco caused by Daley’s $1.15 billion decision to lease Chicago’s 36,000 parking meters, aldermen can’t afford to sit back, according to Ald. Scott Waguespack (32nd).

“They made guarantees, and none of those guarantees have come true on the parking meter deal. I don’t think the Council will buy his guarantee of, ‘Don’t worry. There’s multiple layers of guarantees here,’” Waguespack said.

“The Council needs to be part of this process. The mayor’s office and 2016 needs to show us what those guarantees are and what taxpayers are on the hook for ... .I have no information right now that proves to me these backstops are genuine.”

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