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Vancouver faces cold reality for Olympics

Amid global downturn, organizers for the 2010 Games say they'll cut

February 12, 2009|Helene Elliott

VANCOUVER, CANADA — Vancouver is where sky and sea meet in stunning harmony, where homes with lush, English-style gardens sit a few blocks from sleek skyscrapers that jostle for slivers of million-dollar views.

This idyllic spot is also where ambitions for a grand and green Winter Olympics are combating a global recession, which has organizers watching every penny and might turn the Vancouver Olympic Village into a costly souvenir for taxpayers.

Uncertainty over the state of the world's economy a year from today, when the XXI Winter Games will open, is darker than any cloud that ever dumped rain on Vancouver or snow on Whistler, two hours north, where skiing and sliding events will take place.

"We'll be the first organizing committee to face a phenomenon like this that anybody can remember. You can't find two people who describe this the same way," said John Furlong, chief executive of the Vancouver Organizing Committee, known as VANOC.

"So it is what it is, and we just have to face up to it. We have a project to deliver, so we're doing the best we can to manage," he said.

The budget calls for 74% of revenue to come from private funding such as international and domestic sponsorships, ticketing, merchandising, TV rights, licensing and International Olympic Committee contributions. The remaining 26% is from public funding.

Partly through changes in how some costs are accounted for, the budget has grown to $1.43 billion from $1.32 billion. It won't grow again, Furlong said.

"We won't spend it if we don't have it. We will run the Games with the budget we have," he said. "That isn't to say we're not going to look under every rock for every dollar we can find, but we will run the Games for the resources that we have and not a penny more. That's the promise we've made."

Ticket sales are robust -- Furlong said the value of orders received during the initial sales period exceeded that for the entire Beijing Games held last summer -- but some anticipated revenue hasn't materialized. Some corporations are providing in-kind services instead of cash. Furlong said no one had reneged on any sponsorship commitment.

Still, to economize, planned medal ceremony plazas in Whistler won't be built and cuts were made in behind-the-scenes areas.

"I think the public expects us to make the tough choices, but they don't want the experience diminished, so it's a tough challenge," Furlong said. "People have bought tickets, they're traveling here from all over the world, they expect to have a good time. It is a bit of a balancing act."

The biggest money pit is the athletes' village at False Creek. It wasn't a VANOC project, but it has become the committee's headache -- and a potential nightmare for the city.

It seemed like a good idea at the time. The city made an agreement with a developer, Millennium Development, and a backer, Fortress Investment, for high-end, high-rise condominiums to house athletes during the Games and later be sold to the public.

But a souring real estate market and costs that soared from a projected $603.7 million to $704.3 million led Fortress to stop advancing money in September. The city had to step in with more than $80 million to continue work. Taking that risk -- a commitment made in 2007 by a city council turned out of office last year -- dented its impeccable credit rating with Moody's Investors Service and led Standard & Poor's to put the city on "credit watch."

The province of British Columbia gave Vancouver permission to borrow $368 million to finish construction to meet a Nov. 1 deadline.

"We are refinancing the project and expect to have a better deal for Vancouver taxpayers and put the project back on solid footing," Mayor Gregor Robertson said.

"We're going to get the village built. There's no question about that. There's time constraints with the deadline, but the whole city is focused on getting this done now. I'm confident we're going to get it done. It's not a worry."

Not now. But in a down economy, the condos might not sell for enough to cover the city's costs.

"Ultimately, we're at the mercy of the market. Particularly with luxury condos, there's risk," Robertson said. "But it's a beautiful neighborhood. Eventually it will be a highly desirable, green neighborhood. Waterfront, big views. And I'm sure it will attract investment.

"But right now we've got to get through the current economic conditions and see where we end up in terms of the bottom line for taxpayers."

Fear that Olympic-related projects will become a burden to taxpayers and reduce spending for social programs has sparked sporadic protests.

Most notably, three protesters trashed the Vancouver office of British Columbia Premier Gordon Campbell in May 2007 in response to his support for the Games. That same year, a group estimated at 60 interrupted a three-years-out ceremony outside an art gallery by throwing eggs and rocks, leading to seven arrests. More recently, police broke up a protest in downtown Vancouver in November, making several arrests.

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