CommentsLA WATCHDOG--City Council President Herb Wesson likens the Los Angeles’ bid to be the Host City for the 2024 Summer Olympics as the “engagement. It is not the wedding. And now it’s time to work on the pre-nup.”
But it is also reminiscent of the family that decides to have their daughter’s wedding at home to save money, but ends up taking out a third mortgage to finance the wedding and the sprucing up of their house.
The Los Angeles 2024 Bid Committee and its supporters in City Hall tell us that the Olympics will generate a profit of over $150 million on revenue of almost $5 billion.
This “conservative” profit projection also includes a contingency fee of $400 million as well as a payment to the City of $200 million to reimburse it for expenses such as police, fire, and traffic control.
But this projection does not include any funds for over $2 billion of capital expenditures needed to construct the Olympic Village and the International Media Center and to renovate the Memorial Coliseum and other sporting venues. This amount may be short by a $1 to $2 billion as the cost for the Olympic Village may be seriously understated according to Zev Yaroslavsky, the former County Supervisor and City Councilman who is respected for his long record of fiscal responsibility.
The City will also use the Olympics as a reason to “accelerate” spending on selected infrastructure projects, including extending the Purple Line to Century City and UCLA by 2024 and completing the revitalization of the Los Angeles River, Mayor Garcetti’s pet project.
While this multibillion dollar construction boom will fuel our local economy, at least temporarily, the City may be on the hook for billions as a result of its agreement to indemnify the International Olympic Committee against any losses.
For example, if the City was responsible for a $1 billion shortfall, Angelenos would be tagged for $130 million a year for the next ten years. This would require about a 3% increase in our real estate taxes ($130 for the average home valued at $500,000). Alternatively, the City could propose to slap us with a parcel tax ($160) or a quarter of a cent increase in our sales tax.
But why should the Angelenos absorb 100% of the potential losses while 6 million other County residents derive significant benefits from the Olympics? And why should Angelenos absorb 100% of the risk when any profits would benefit the State’s eight southernmost counties as is the case with LA84 Foundation? And why should the City take on this financial obligation when it cannot eliminate its Structural Deficit, balance its budget, or repair and maintain our lunar cratered streets?
If the County of Los Angeles were to protect the IOC from a $1 billion loss, Angelenos tax liability would drop by 60%, where the average homeowner’s liability would be decreased to $50, down from $130 a year.
Mayor Eric Garcetti and City Council President Herb Wesson are eloquent in promoting the City’s bid to be the Host City for the 2024 Summer Olympics. Unfortunately, the City’s track record does not inspire confidence.
Rather than going it alone, the City should team up with the more efficient and fiscally responsible County. And while that may limit Eric and Herb’s bragging rights, Angelenos will sleep better knowing that the County is working with the City to oversee the finances and operations of the 2024 Summer Olympics.
And even though 80% of Angelenos support hosting the Olympics, we still have our doubts when it comes to footing the bill for potential losses.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected])
-cw
CityWatch
Vol 13 Issue 92
Pub: Nov 13, 2015
LA Olympics Wedding Switcheroo
