LA City Council Approves Olympics Contract, Including Taxpayer Liability For Overruns

The Los Angeles City Council voted Friday to approve a contract with the local Olympic organizing committee, known as LA28. The agreement governs who would pay for cost overruns and states that rules governing local hiring, contracting with vendors, dealing with traffic and other issues would be set by as-yet-unformed working committees.

The city has already agreed to host the games, because it signed the host city agreement in 2017, so the question before the City Council was not about whether the games would occur, but what the city and LA28 were promising each other.

The vote was 11-2, with council members Mike Bonin and Nithya Raman voting against it over concerns with taxpayer liability for budget overruns. Councilmember Joe Buscaino was absent and one seat is vacant.

Friday's meeting was the second opportunity for the public to address members of the City Council in one-minute statements about the games agreement, which was made public only two weeks ago. That narrow window of public exposure of the agreement led some to request more time for public review.

Debt Concerns

LA28 plans to spend $6.9 billion staging the games. The games agreement has language that could lead to the city paying debt from the games that LA28 cannot pay. And that concerned many of the public speakers.

"What if there is a climate disaster or economic recession or a pandemic? The city doesn't have a way out of hosting the games," Los Angeles resident Marybeth Troutwine told the council.

Council member Nithya Raman asked why the city had left itself open to paying for overruns when it had an iron-clad ordinance barring overruns in 1984.

Casey Wasserman, who chairs LA28, said the games will avoid the kinds of cost overruns other Olympic host cities incurred because the Los Angeles Games are not building permanent new structures, which have been the source of most Olympic debt.

Wasserman said LA28 already has contracts in place to fund half the budget, and could stage the games on that money alone.

Also, LA28 had built a $615 million contingency cushion into its budget, of which $270 million had to be placed into a city-monitored fund.

If LA28 goes over budget and exhausts its funds, then the city would be liable for the first $270 million in overruns, the state government would pick up the next $270 million and the city would be liable for any additional debt.

Olympic water polo player Omar Amr prepares to shoot against Hungary during the a men's preliminary match at the 2004 Summer Games.

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PIERRE-PHILIPPE MARCOU

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AFP via Getty Images

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Opportunities

Councilmember Paul Krekorian said the city's independent consultant had twice vetted the LA28 budget. The city has members on the LA28 board to keep the city informed, and the city was requiring extensive insurance for the games.

"I can't see a significant risk to the city of any exposure at all," said Krekorian, who chairs the council's budget committee. "This is as sound an agreement as we could hope to have."

Councilmember Gil Cedillo said he supported the games not just because they are inspirational but also because they present local hiring and local contracting opportunities for local businesses.

Councilmember Kevin de León asked LA28 and city staff to provide more detail on what, if any, involvement Immigration and Customs Enforcement would have in the security forces assigned to the games. He said many immigrant families in Los Angeles recoil at the prospect of ICE increasing its presence due to the games.

Stuart Waldman, president of the Valley Industry and Commerce Association, said the games could accelerate construction of a sports center in the San Fernando Valley and help local restaurants and businesses get more customers.

Organizations endorsing the games agreement were The Urban League, the YMCA of Metropolitan Los Angeles, Angel City Sports which works with athletes with disabilities.

More Input

Unite Here Local 11, the union that represents thousands of local restaurant, hotel and other hospitality workers, was joined in its letter by ten other organizations calling on the city council to wait to approve the contract so that more public input could be aired. The union said the games represent a once-in-a-generation chance to transform the city in a way that benefits workers and residents, but that a hasty approval of the games agreement deprives them of making changes.

The union wants more input from the community in developing the policies governing the games, a more explicit commitment to higher-paying jobs that can sustain families and a commitment to hiring and retaining Black workers. It also calls on the city and LA28 to "cease participation in militarized security operations."

Opponents of bringing the 2028 games to Los Angeles have several other lines of argument, including the likelihood that it would increase the number of police in the city, contribute to the loss of affordable housing and displacement of low-income residents through gentrification.