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Vancouver, Was it Worth It?


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A $1 Billion Hangover From an Olympic Party

By IAN AUSTEN

Published: February 24, 2010

VANCOUVER, British Columbia — Josie Lombardi came downtown this week for a taste of the Olympics accompanied by a friend rather than her husband, because he is on an Olympics boycott.

She was thrilled to see the Olympic caldron up close, she said, but after being told she would have to wait five hours to see an exhibit of Olympic medals, Mrs. Lombardi began to think her husband might have a point.

“O.K., are the Olympics worth it?” Mrs. Lombardi said while stopping for lunch at Murchie’s, a venerable tea and coffee shop. “I don’t want to be too negative because there’s good and bad, but I have to agree with my husband. All he can talk about is the debt. I’m worrying about what’s going to happen next.”

While hundreds of thousands of people have streamed onto the streets to enjoy (some of them to excess late at night) the Olympic party, there is still an undercurrent of crankiness and apprehension in the city.

Vancouver was always an odd choice to become the world’s winter sports capital for two weeks. Among Canadians, it is best known as the nation’s winter avoidance capital. But the misgivings among residents began even before this winter’s unseasonable warmth and sunshine bathed the city’s renowned parks and gardens, bringing daffodils and flowering trees bursting into glorious February bloom.

Well before the Games began, the global recession pushed several of the Games’s sponsors, including Nortel Networks and General Motors, into bankruptcy. Whistler Blackcomb, the resort that is hosting the Alpine skiing events, will soon be sold at auction.

Security costs, first estimated at $165 million, are now headed toward $1 billion.

Still, organizers insist the operating budget will break even. But that forecast includes $423 million in emergency money from the International Olympic Committee, and detailed financial information will not appear until after the Games are over.

As for Vancouver’s municipal government and the taxpayers, the bad news is already in. The immediate Olympic legacy for this city of 580,000 people is a nearly $1 billion debt from bailing out the Olympic Village development. Beyond that, people in Vancouver and British Columbia have already seen cuts in services like education, health care and arts financing from their provincial government, which is stuck with many other Olympics-related costs. Many people, including Mrs. Lombardi, expect that more will follow.

While the mood in the city has picked up since the start, when many people were suffering a severe case of buyer’s remorse, the looming budget realities make it unlikely that all will be forgiven or forgotten.

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I support the Games, and think it was worth it, but articles like these do not ease the concerns of future bids from city residents. Especially coming from the U.S.

What are your thoughts. What could VANOC done better to offset the unexpected? Sorry, I know this was probably hammered to death before, but since the main party is over, I thought it would be good to reexamine some of these things.

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The problem I have with these coming out this early is that we don't know the revenues yet. That athlete village is going to be a relatively short term debt; those are waterfront condos in a city that really didn't lose any value in 2008/2009. They will sell. I heard on the radio this morning a 22 million dollar penthouse sold last weekend to somebody from Europe who loved the city; he wouldn't have been here otherwise and already he's added $20,000 to the provincial coffers in property transfer tax, and he'll be dumping more money here on his visits to his condo. And I also find it really odd that people complain about the cost in the same breath as crowds, those crowds are spending money, generating sales tax that wouldn't be there otherwise, generating income for businesses that will again be taxed, causing increased staffing at tea shops like murchies which will again generate more tax....but none of those will be included in the revenue; yet the critics love to include things like the Sea to Sky Highway as a purely olympic cost when at best it should be amortized; I pursonally think getting that deat trap of a highway fixed is a major benefit of this event. Other things like the Canada Line were aproved before the games were a certainty; but you often see it in the expenses. You also never hear how much the corporate sponsors have contributed. Most of the things built for the olympics were desperately needed and we wouldn't have gotten any help from the feds or McDonalds if it wasn't for these games.

Anyways, do I think it was worth it? Absolutely. I think when the final accounting comes in it will be much less than people are fearing because those fears don't include the revenues.

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Most of the notion surrounding "debt" is spurred by anti-Games activists/protesters and cynical/negative media. Chris Shaw, a large figurehead anti-Games activist, has constantly said to the media that the Games will cost $6-10-billion. That's a ridiculous statement, the Games don't cost anywhere as much. And he has said this lie so many times that it has become a truth. And wanting a good story, the media used this and sensationalized it to the locals. That's why there was so much local apathy towards the Games in the months and weeks before they started.

Chris Shaw has included EVERY transportation infrastructure expenditure from 2003-2010 as if Canada's third largest metropolitan region and its largest seaport was going to stop building infrastructure for a decade but had to just for the Olympics. Many of these projects were need and/or planned regardless of the Games.

However, there have been some set backs. Vancouver was on the verge of being one of the most financially successful Olympics before the recession hit. Fortunately, VANOC had attained record sponsorship commitments before it hit but it had to take precautions and cut out "things they absolutely didn't need" from the Games plans. For instance, virtually all of the $17-million VANOC look/decorations budget was cut. Fortunately, the economy in Canada made a turn around and the sponsors came back especially after the torch relay began. VANOC had so many sponsorship offers 3-months before the Games started to the point they had to turn some away. VANOC has said that their bid book domestic sponsorship target was $460-million....but then they were able to get $760-million...and recent numbers have domestic sponsorship at well over $800-million. And it turns out that in hindsight, they didn't have to cut from their budget...i.e. city decorations....nor would the IOC have to bail out VANOC as the IOC knew VANOC did an amazing job but was a victim of the recession, not incompetence.

The recession also caused Fortress, a Wall Street company, to back out of its financial committment to the Vancouver Olympic Village. The City of Vancouver had to pick up the tab and fund the Village themselves. And they got a lot of heat over that, mainly because the story was soooo ridiculously sensationalized by the media. They kept throwing around the figure that the Village will cost taxpayers $1-billion to build. But that's only if not a single condo unit is sold after the Games. The media has left out the part that the "$1-billion debt" is the absolute worst case scenario. It was completely overblown.

And over the years, the media has also overblown sports venue construction cost overruns. The overruns were $110-million for an original $470-million budget, now totalling $580-million. But these overruns weren't caused by incompetence, rather by unexpected rapidly inflating constructional materials and labour costs. At the time, China was still building its Three Gorges Dam and its massive Olympic venues...it caused global concrete and steel prices to rise rapidly everyday. In addition, locally in Vancouver there was a huge building boom for condos which increased labour costs. There were housing and condo projects in Vancouver that were canceled because costs rose too quickly for the project to be profitable. And skyscrapers like the Shangri-la hotel Vancouver cost $100-million more because of the same reasons. Every public and private project was costing more. And even then, Vancouver's $110-million cost overrun is miniscule compared to Athens and Torino and especially London. That's where locals lack perspective.

The only real but necessary inflated cost was on security...I'd be scared if security stayed at $175-million.

In conclusion, many Vancouverites live in a bubble. They don't know how good they have it here, and complain. They lack a global perspective on what's out there in the world. And much negativity and the notion of debt surrounding these Games is media fueled and sensationalized, just like all the negative international bad press Vancouver got during its 17-day party. If you know what's going on and are educated on the issues, it's not that bad...the Games will cost Canadian taxpayers about $3.5-4.0-billion. Being the largest host city to ever host the Winter Games, Vancouver is the most capable city to host the Games yet. But costs are blown out of proportion and sensationalized, just like the bad British press for instance.

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I think the thing with the security budget is it was well worth it in another way. The RCMP has taken an absolute beating here in the past few years. We had a young man shot in the back of the head in their custody, the taser death at the airport, and the drunk driver from the airport incident who killed a man and basically got a slap on the wrist. I have to say it was WONDERFUL seeing them act so well and up to what we were used to in the past during their crowd control, and especially in their handling of the protesters who were basically baiting them. I think it will improve the public perception of the RCMP a little; I know Vancouver has its own police force but they brought in a lot of mounties to help who did beautifully.

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The problem I have with these coming out this early is that we don't know the revenues yet. That athlete village is going to be a relatively short term debt; those are waterfront condos in a city that really didn't lose any value in 2008/2009. They will sell. I heard on the radio this morning a 22 million dollar penthouse sold last weekend to somebody from Europe who loved the city; he wouldn't have been here otherwise and already he's added $20,000 to the provincial coffers in property transfer tax, and he'll be dumping more money here on his visits to his condo. And I also find it really odd that people complain about the cost in the same breath as crowds, those crowds are spending money, generating sales tax that wouldn't be there otherwise, generating income for businesses that will again be taxed, causing increased staffing at tea shops like murchies which will again generate more tax....but none of those will be included in the revenue; yet the critics love to include things like the Sea to Sky Highway as a purely olympic cost when at best it should be amortized; I pursonally think getting that deat trap of a highway fixed is a major benefit of this event. Other things like the Canada Line were aproved before the games were a certainty; but you often see it in the expenses. You also never hear how much the corporate sponsors have contributed. Most of the things built for the olympics were desperately needed and we wouldn't have gotten any help from the feds or McDonalds if it wasn't for these games.

Anyways, do I think it was worth it? Absolutely. I think when the final accounting comes in it will be much less than people are fearing because those fears don't include the revenues.

I agree.

Private and corporate sponsorship revenues you speak of have paid for 98% of VANOC's $1.7-billion operations budget. 2% was partially paid by taxpayers for two items: the torch relay and the Opening/Closing Ceremonies. When it comes to VANOC's $580-million venue construction plan, that was entirely paid for by taxpayers.

The Canada Line was 30-years in the making, and almost got built in 1994 until there was a change in government parties. It a desperately needed piece of transport infrastructure in the region.

Then there's the expanded convention centre...it was planned by the previous NDP government since the mid-1990s long before the Olympic bid was ever thought of. Three sites were looked at for the convention cenre project. One included a site next to BC Place to include the stadium as part of the convention centre, another would have been located east of Canada Place at the SeaBus terminal free of charge to the taxpayer funded by the Wynn Casino chain as a casino-hotel-convention centre project (but was denied by the city due to the casino element), but ultimately the NDP chose to build a publicly funded facility at where the new facility stands today.

With regards to the Sea-to-Sky higwhay, improvements and expansions were planned regardless of the Games for 2012/2013. But the project was accelerated a few years because of the Games. There's a reason why the highway was originally built with 4-lane bridges but 2-3 lane roads: it was meant to be expanded. And being a safety hazard, the improvement was necessary.

I'm confident the Olympic Village will break even...worst case scenario, Vancouver will lose a little on the project. But keep in mind that this is prime waterfront real estate, these are beautiful condo complexes. And above all, the Olympic Village is 1/5th of a much larger project to redevelop the entire Southeast False Creek neighbourhood into more condos and parks. The Village will be home to 4,000 people after the Games, but the entire new neighbourhood some 15-years from now will be home to 20,000 people.

We also wouldn't have received so much federal government funding for such projects if it weren't for these Games.

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