LA City Council approves 2028 Olympics plan

LOS ANGELES — The Los Angeles City Council voted unanimously to authorize Mayor Eric Garcetti to sign a Host City Contract with the Inteational Olympic Committee in which the city agrees to host the 2028 Olympic Games and guarantees that it will cover any potential financial shortfall from those Games during an often heated meeting Friday moing.

Over the chants of opponents of the bid, the council also approved a memorandum of understanding between the city, local organizing committee Los Angeles 2028 and the U.S. Olympic Committee that gives the council a role in the planning of the 2028 Games and the city protection against an unexpected financial deficit. The council also signed off on a tripartite agreement between LA 2028, Paris 2024 and the IOC in which Paris agrees to host the 2024 Games.

“A chance to make history,” council president Herb Wesson said.

Friday’s votes cleared the way for the IOC to award Los Angeles a third Olympic Games. All 95 IOC members have assured Los Angeles officials that the organization will unanimously approve Los Angeles as the 2028 host and award Paris the 2024 Games in a Sept. 13 vote in Lima, Peru, Garcetti and LA 2028 chairman Casey Wassserman said.

The IOC will award Paris the 2024 Games that same day.

The council vote comes less than two weeks after LA 2028 and the IOC reached a record-setting agreement for the city to host the 2028 Games.

Under the terms of the Host City Contract, LA 2028 will receive at least $2 billion from the IOC, up from $1.7 billion had the city been awarded the 2024 Games, and will also receive the IOC’s 20 percent share of the 2028 Games surplus. With the deal, LA 2028 will receive 80 percent of those Olympics’ surplus. LA 2028 initially projected a $166.1 million surplus in 2015 documents, an estimate considered conservative by several longtime Olympic bid analysts.

The IOC also agreed to provide LA 2028 a $180 million advance, to be paid out in 20 quarterly $9 million payments beginning Jan. 1, 2018. This marks the first time the IOC has provided a host city an advance. LA 2028 will use as much as $160 million to fund youth sports programs through Los Angeles Parks and Recreation starting next year.

The IOC also agreed to concessions that will result in $67 million in applied cost savings, and $39 million in in kind services.

But Friday’s vote also took place with a finalized budget for the 2028 Games still months away. LA 2028 expects to have a finalized budget in the first quarter of 2018, a LA 2028 official said. It could be 18 months before that budget is validated by the accounting firm KPMG in a city council mandated analysis that will be paid for by LA 2028.

Opponents said the 2028 Games will exacerbate the city’s housing crisis, raises immigration and police violence conces and the Games’ agreements were rushed to approval by the council.

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KPMG validated a balanced $5.3 billion budget for the 2024 bid last year.

By signing off on the Host City Contract and other bid documents, the council agrees to two guarantees: that “city is prepared to sign the HCC without reserve or amendment” and “will guarantee that it will cover any potential financial shortfall of the OCOG, including potential refunds to the IOC of any advance payments to the (LA 2028) by the IOC in the event of a contingency such as a full or partial cancellation of the Games,” according to report by the city chief legislative analyst and administrative officer.

Those guarantees will be part of documentation presented to the IOC by its Aug. 18 deadline.

Critics charged the council with rushing through Olympic agreements on a timeline dictated by the IOC. Olympic historians, economists, members of previous U.S. Olympic bids, sport business analysts and community activists have also raised conces about signing off on agreements without a firm budget amid the increased uncertainty of hosting Games 11 years from now.

Council members, city and LA 2028 officials countered that the MOU and the similarities between plans for the 2028 Games and a previously vetted bid for the 2024 Olympics offset potential financial risks.

The MOU requires LA 2028 to establish an Allocated Contingency account of $270 million, up from $250 million under the MOU for the 2024 Games. “The Allocated Contingency account may only be utilized with the City’s prior written consent. In the event any portion of the account remains unutilized upon dissolution of the (LA 2028), the funds will be disbursed as surplus consistent with the HCC,” according to a report by city officials.

LA 2028 plans to set aside $487.6 million for contingencies

The MOU also gives the council oversight of “Financial Performance and Transparency Measures,” and requires LA 2028 “to obtain a range of insurance policies at its own expense, to include the City as an additional insured, and to incorporate contractual indemnification language into any venue use agreements it executes. The 2028 Games MOU includes a new requirement of the OCOG to purchase insurance coverage for the HCC.”

LA 2028 will also present an insurance package to the city on Sept. 14, LA 2028 chief executive Gene Sykes said.

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