village:Olympic Village:
It is impossible to eliminate all risks associated with any real estate endeavor including the Olympic Village. As has been recently observed in Vancouver, host of the 2010 Winter Games, turmoil in the global capital markets leading to the loss of developer financing during construction can create considerable risk to taxpayers.The Civic Federation Olympics analysis page here.
Chicago 2016 proposed several layers of protection from the financial risk associated with construction of the Village. The Bid Committee proposes using a team of developers and notes that the original plan projected to cost around $1 billion could be altered if it does not attract qualified bids from developers. The strategy of using numerous qualified developers is a fair and reasonable step to reduce some risks of the Village as proposed. Although a sound strategy, this does not fully protect against distressed markets.
The developers would be required to purchase typical construction related insurance such as surety and performance bonds. A new type of insurance, called capital replacement insurance, developed and priced specifically for Chicago 2016, would also provide substantial protection for taxpayers. If developers were to buy the capital replacement insurance, the loss of financing during construction would be covered, reducing the risk to city taxpayers. The OCOG could purchase the capital replacement insurance itself but has not included the policy as part of its
proposed $68.3-million budget for insurance for the Games. If developers proceed with the Village as planned and are not required to buy the insurance, then taxpayers could be exposed to risk.
Download the Narrative Summary here.
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