Business & Economy

Will Los Angeles be signing a 'blank check' to host the Olympics? (updated)

File: A picture taken on February 13, 2014 shows the Olympic Rings and the Olympic flame during the Sochi Winter Olympics in Sochi. When the leaders of the U.S. Olympic Committee meet Thursday, they'll be deciding on more than a city to put in the running to host the 2024 Summer Games.
File: A picture taken on February 13, 2014 shows the Olympic Rings and the Olympic flame during the Sochi Winter Olympics in Sochi. When the leaders of the U.S. Olympic Committee meet Thursday, they'll be deciding on more than a city to put in the running to host the 2024 Summer Games.
Loic Venance/AFP/Getty Images

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Updated 12:47 p.m: A Los Angeles City Council committee has approved an amended joiner agreement on the city's Olympics bid that requires final up or down approval from the full council on a host city contract.

The Ad Hoc Committee on the 2024 Summer Olympics pushed the agreement through on Friday. The council will likely vote on it next Tuesday.

"It would appear to me that what we've done is we've given ourselves more time," said council president Herb Wesson. "It is not a rushed decision. What it does is it gives the time that we need to be engaged with the committee, the mayor, and to make sure we have all our ducks in a row and that we've penciled this thing out and that we feel comfortable and that there's no obligation at the end of the day."

Wesson seemed to be directly addressing critics — such as former L.A. County Supervisor Zev Yaroslavsky — who have said the council would essentially be signing off on a blank check because no host contract has been written yet.

Even though the committee approved an agreement with additional oversight measures, members took pains to emphasize their support for the Los Angeles bid.

At one point, Councilman Joe Buscaino held up a sign of former Councilman Bob Ronka as a cautionary tale; Ronka cast the lone "no" vote against the city's 1984 Olympics, which turned out to be profitable.

"He was wrong, and he was a one-term councilman," said Buscaino.

Members of the committee received a letter from city controller Ron Galperin, who urged caution as Los Angeles pursues the Olympics.

"Our city has been emerging from more difficult economic times," wrote Galperin. "Hosting the Games is a major undertaking, and it would be imprudent to ask city taxpayers to assume financial risks associated therewith."

Earlier: The newly formed “Ad Hoc Committee on the 2024 Summer Olympics” will hold its first meeting at Los Angeles City Hall Friday morning.

It comes as residents and L.A. leaders are evaluating newly released details on the city's bid to host the 2024 Games. The "bid book" created by Mayor Eric Garcetti's LA24 Committee was made public just days ago, revealing an initial $4 billion budget for the Games, in the event that Los Angeles is chosen as the host city.

Then Thursday, the city's Chief Administrative Analyst and Chief Legislative Analyst released a review of that bid book, raising red flags about its budgetary projections.

It reads: "The Council President has instructed our Offices and the City Attorney to report back on how the City Council can continue to be involved in the bid process for the 2024 Games, and to protect the City against financial risk."

The report echoes what many have said this week about L.A.'s move to host the Games - that the committee will be signing a contract that would put Los Angeles on the hook for huge cost overruns if, like other recent Olympics, the rosy financial projections don't pan out.

The analysts' report flags numerous areas that need more study, including the projected cost to build an Olympic Village along the L.A. River. It reads: "the development cost, including acquisition, remediation, and construction, may significantly exceed the projected $1 billion."

Despite these budgetary questions, the report notes that the city will soon be expected to enter into a joiner agreement, which the council must approve. That joinder requires the host city to "execute a 'Host City Contract' with the IOC [International Olympic Committee] and the USOC [United States Olympic Committee" if and when Los Angeles is chosen by the IOC.

However, no host city contract exists yet.

"What they’ve been asked to sign is a legally-binding obligation that they would sign an agreement that has not yet been written that would among things, require the city to be the financial guarantor of the staging and operation of the Olympic Games in 2024," said Zev Yaroslavsky, the longtime member of the Los Angeles County Board of Supervisors who was an L.A. city councilman when Los Angeles hosted the Olympics in 1984. "When you sign a commitment to somebody you have to know what you're committing to," said Yaroslavsky. 

But Rich Llewellyn, legal council to Mayor Garcetti, said approving the joiner is merely a preliminary step.

"The documentation, which has been reviewed by the Los Angeles City Attorney, is very clear that the council gets the final vote sometime down the road in the next year or so before the city actually joins the bid," Llewellyn told Airtalk. "In the next year, we expect a robust community engagement process and a robust financial analysis process."

Yaroslavsky says he brought the joiner language to three different attorneys and they do not share Llewellyn's interpretation.

"He’s the only lawyer in Los Angeles who takes the position that this joiner agreement, as it’s now drafted, protects the city,” said Yaroslavsky.

Herb Wesson, president of the Los Angeles City Council and chair of the Ad Hoc Committee, said he and members of the council will spend the next week reviewing details of the proposed Olympics budget and bid book that were released publicly for the first time this week. They will also hear from members of the Los Angeles 2024 Committee, who wrote that bid book. He expects the council to vote next week.

"That's what we're doing now, fact-finding and vetting," said Wesson. "I think a week is more than enough time. You know we do have a deadline."

But when asked how the council could vote on the joiner given that the bid book and budget are early drafts and no host city contract exists yet, Wesson said the council would also be exploring ways to provide checks going forward.

“I think the council would want to look at ways that we could be more engaged,” said Wesson.

The internal analysts' report was clear in its recommendation that the city council protect the city against financial risk. The report included a draft resolution, written by the City Attorney, which gives the city council the authority to approve or deny the Host City Agreement, which is expected in 2017, as well as other agreements with the IOC and the future Organizing Committee for the Olympic Games.

Yaroslavsky says the City Council needs to be careful because recent Olympics have exceed their initial projections by 179 percent. He notes that L.A.'s current bid does not include security or transportation costs. He also says the bid relies on a continuing strong economy because much of the construction would be privately financed, including the proposed Olympic Village housing development.

"If there's a recession in the real estate economy, there's not a real estate developer in the country who will build a billion dollar project," said Yaroslavsky.