Chicago Tribune Editorial: Who pays?/Olympics funding: City Council in no mood for games - Aldermen rush in to criticize Daley's about-face on funding

Chicago Tribune Editorial: Who pays?
Copyright © 2009, Chicago Tribune
June 18, 2009
http://www.chicagotribune.com/news/opinion/editorials/chi-0618edit3jun18,0,1133950.story


Whoa! What did Mayor Richard Daley just do?

The mayor, in Switzerland for an International Olympic Committee meeting on Wednesday, promised that Chicago will take full financial responsibility if the city gets the 2016 Summer Games.

That removes a big IOC question about Chicago's bid -- but at what potential cost to Chicago taxpayers? Did the mayor just commit his citizens to write a blank check?

The mayor's spokeswoman, Jacquelyn Heard, says no. The financial commitment, she says, will fall on the Chicago 2016 committee, the group that's organizing the city's bid.

The city's potential liability would be capped at the $500 million guarantee the City Council has already approved, Heard told us. The IOC understands that the city's pledge won't "include an unlimited government guarantee."

Chicago 2016 promised a new $500 million private insurance policy and that will actually reduce taxpayers' risk. It would kick in to cover operating losses before the city was tapped.

Well, hold on a minute. If the Olympics lose money, the IOC wants somebody to pick up the cost. So if the Games are a bust and the losses blow through the public and private guarantees, the Chicago 2016 committee will pay the rest of the tab?

How? By taking up a collection among its members?

The mayor hasn't actually signed anything. He won't have to until just before Oct. 2, when the winner of the 2016 Games will be announced.

That's good. He has plenty of time to come home and explain to city taxpayers -- they're a little raw these days, you know, because of the city's parking meter fiasco -- just how they're still protected.

Chicago's three competitors -- Madrid, Rio de Janeiro and Tokyo -- have an edge because their national governments have promised to cover any losses. The U.S. has never done that. But lets start that conversation now. Valerie Jarrett, senior adviser to President Barack Obama, said this week the White House is "fully committed" to the Olympic Games. So how about pushing for a financial guarantee from Congress?

Meanwhile, Mayor Daley, when do you arrive at O'Hare? Your city has some questions about your trip.






Olympics funding: City Council in no mood for games - Aldermen rush in to criticize Daley's about-face on funding
By Hal Dardick, Philip Hersh and Kathy Bergen
Copyright © 2009, Chicago Tribune
June 19, 2009
http://www.chicagotribune.com/business/chi-olympics-19-jun19,0,626633.story


Mayor Richard Daley may have smoothed the waters in Switzerland this week by dropping his refusal to sign the International Olympic Committee's standard host-city contract. But his abrupt -- and unilateral -- decision to place the full financial responsibility for the 2016 Summer Games on the city has touched off a storm at home.

Daley may not have anticipated the local reaction, because a day after he asserted that there was no reason to consult with aldermen on this commitment, his spokeswoman said the mayor would indeed meet with the City Council.

Aldermen and civic leaders are railing against a perceived lack of information on how Daley could make that pledge and still say the city's liability will not exceed the $500 million guarantee agreed to earlier.

Until Daley's about-face Wednesday, the city had been pursuing changes to the standard host-city agreement that would recognize its limited-guarantee package.

"I don't know where he gets the authority to do that," said Ald. Brian Doherty (41st). "We're supposed to be the watchdogs of the budget, and they've been very arrogant in doing whatever they want and not consulting us."

Ald. Manny Flores (1st), who plans to introduce an ordinance prohibiting the city from spending more than $500 million to cover any operating losses, said that "there has to be greater transparency on this."

On Thursday, Daley responded.

"The mayor understands the City Council is a critical partner in this endeavor," said Jacquelyn Heard, Daley's spokeswoman. "They've raised concerns. They have questions. So we will put the matter before the council again."

Whether the session will be strictly informational or will involve another vote "would be a determination that the City Council members would have to make," she said.

A negative vote would have the potential to derail the $4.8 billion proposal, but the mayor rarely fails to sway a majority of aldermen on key issues.

Daley and bid officials say they can offer the full guarantee because they plan to add another insurance policy worth a minimum of $500 million to existing guarantees, for a total of more than $2 billion -- enough, they say, to create an sufficient buffer for taxpayers.

In an interview with the Tribune on Thursday, Daley reiterated that the city's portion of the guarantee package is $500 million. "We go to $500 million and that's it," he said.

But in a crisis situation, if the city blows through the city and state guarantees and private insurance policies, the city would be on the hook, the bid team has acknowledged, though it says that's a far-fetched scenario.

On Thursday, the bid team declined to provide any significant details about the additional private insurance, or another $500 million in private insurance already in the city's guarantee package. Both would be financed through the Olympic organizing committee.

"Please be aware that ultimately such insurance placements would be subject to a broader procurement and placement process, so we cannot be definitive as to whom the carrier or details of the coverage might be at this time," Richard Ludwig, chief financial officer for the Chicago 2016 bid team, stated in an e-mail to the Tribune.

This lack of definition rankled some observers, who say the team has a civic obligation to lay out the details of the insurance, given that the policies are being touted as the safety net for taxpayers.

"This insurance, that they've been talking about for a year now, always seemed pretty mysterious to me," said Larry Bennett, a political science professor at DePaul University.

Typically such coverage insures against catastrophic loss. "It's not insurance for the faint of heart, and the premium is fairly expensive," said Mike Price, president of Entertainment & Sports Insurance Experts in Atlanta.

Daley said he would provide the City Council with evidence of a binding commitment for the new insurance policy before leaving for the host-city election Oct. 2 in Copenhagen.

Aldermen want answers now on Daley's moves.

"The whole thing needs a public hearing, no doubt about it," said Ald. Robert Fioretti (2nd). "In light of ongoing scandals and corruption issues, it erodes the confidence of citizens of this city in its government and the aspect of having the Olympics."

Tribune reporters Mary Ellen Podmolik, Dan Blake and David Heinzmann contributed to this report. hdardick@tribune.com

phersh@tribune.com

kbergen@tribune.com




Chicago Tribune Editorial: An Olympic accounting
Copyright © 2009, Chicago Tribune
June 19, 2009
http://www.chicagotribune.com/news/opinion/editorials/chi-0619edit1jun19,0,1133950.story


Mayor Richard Daley insisted Thursday that Chicago has not committed taxpayers to cover unlimited losses if the city holds the 2016 Summer Olympics. "We go to $500 million, and that's it," the mayor told the Tribune during Olympics meetings in Switzerland.

A $500 million commitment would be nothing new. The City Council approved that two years ago. It's part of a complicated deal involving private insurance and city and state promises to cover more than $2 billion in losses if the Olympics go deep in the red.

But the mayor also said this week that he will sign an agreement with the International Olympic Committee that assumes the responsibility for any losses incurred by the Games. Every Olympic city has done that since 1984.

So what really is the city's commitment? Is it $500 million? Or bottomless?

Yo! City Council! Step in. The city's entire Olympic bid needs a slow and careful vetting in your chambers.

This financial commitment is an extremely critical issue. The Chicago Olympic bid has a $4.8 billion budget for construction and operations, and it projects a profit. But recent experience in other cities shows that Olympic costs can skyrocket in stunning fashion. The 2012 Games in London are expected to cost nearly three times as much as first budgeted.

Daley says he doesn't have to go back to the council for approval before he signs the host-city agreement in October because the city's liability hasn't increased.

Maybe it's the distance -- he's over there across the Atlantic, and we're all back here -- but his assurances of the last two days just don't ring true.

So the aldermen need to air all this at a hearing. A thorough hearing. And if the city is on the hook for more than the $500 million already approved, they need to insist on a vote. Ald. Manny Flores (1st) said he will propose an ordinance to limit the city's exposure to what has already been approved. If the mayor hasn't changed the terms, he should welcome that ordinance as a confidence boost for taxpayers.

Aldermen, you say you got burned on the city's parking meter deal because you didn't have time to learn about all the details. You had no chance, you say, to analyze what turning over 36,000 parking meters overnight to a private company would mean for Chicagoans, or to explore alternatives.

Well, you have time on this deal. The city won't sign the Olympic agreement until shortly before the Oct. 2 decision by the IOC to award the Games. You have about three months to figure all this out.

We have supported the Olympics bid. We have supported it on the terms and conditions set forth by the city -- including promises that venue construction would be privately financed and the city's exposure for a loss would be capped at $500 million.

Everybody needs to be absolutely certain that those terms haven't changed.