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VANOC asks for more money

Muni moves on athletes' village

If Victoria agrees to lend a hand with the plan to build an Olympic legacy village, Whistler’s new community will become a reality.

Municipal council has agreed on a business plan to make the neighbourhood in the Cheakamus a reality, said Mayor Ken Melamed recently.

"…We have got agreement from council on a way to move forward and I believe (The Vancouver Organizing Committee for the 2010 Olympics) is with us," said Melamed.

"What remains to be seen is how the province will contribute to the solution to help resolve the issue.

"The province is going to have to do some things that are beyond funding. It goes to some of the covenants on title, it speaks to some of the infrastructure and it might be accessing some loan guarantees. It is not just a cash hand-out."

Melamed said it has been a complicated set of negotiations and discussions are still very active with all parties.

"But, I can tell you I am optimistic," he said.

"…It has taken a concerted effort to come up with a plan that works for all parties. Everyone is coming to the table on this and the intention was not to put an extraordinary amount of responsibility on any one partner, though the community is coming to the table with a significant contribution."

Melamed would not elaborate on what the community’s contribution would look like.

The debate over whether the legacy community, which will house the Olympic and Paralympic athletes’ village and an athletes’ training centre, would be permanent or temporary has been raging for months.

The group put together to make the new community a reality, The Whistler 2020 Development Corporation, has been struggling with rising costs as well as how to make the numbers work so that the homes would be affordable for Whistler workers after the Games.

It has already found efficiencies in the plan and decided to go with a tiered pricing system for the village housing units, which will be sold to residents after the Games to pay for construction.

VANOC is contributing $26 million toward construction of the village, another $13 million for an athletes’ training centre at the site and $6.5 million for housing for First Nations at the site. The rest of the funds for the neighbourhood, which could cost at least $180 million, must be secured another way.

It may be that more money for the project will come from VANOC, which late last week released details of its new capital budget. VANOC is asking Victoria and Ottawa for an extra $55 million each. Part of those new funds, $52 million, which neither level of government has committed to yet, will form a contingency. The province has already set aside $139 million for contingencies and it is likely VANOC’s request will come out of that fund.

In the bid phase the federal and provincial governments committed to providing $310 million each. Included in that was $87.5 million for security, $55 million for post Games legacies and some money for community programs and First Nations from each stakeholder. Of the $620 million, $470 was for venue construction and renovation.

VANOC CEO John Furlong laid the request for another $110 million, a 23 per cent increase in costs, squarely at the feet of the booming construction industry.

"We are dealing with a highly-charged business and construction environment in B.C. that shows no sign of slowing down," he said.

"Certain of our major venues are large, unique and complex structures with exacting safety and sport requirements that leave little room for adjustment. Some require not only extensive steel and concrete but also highly specialized and experienced contractors."

He said the request was not a surprise to those in government as it has been on the table for some time. It was clear even at the bid phase that there may be cost issues, as the International Olympic Committee insists that bidding cities submit their estimates in the current dollars not in the dollars of the years during which building and renovation will take place.

The news came as no surprise to those who follow Olympics around the world.

"Cost overruns are something that have come to be quite common with the Olympic Games from the bid phase until the completion of the project," said Professor Kevin Wamsley, director of the International Centre for Olympic Studies at the University of Western Ontario.

And he warns that it’s unlikely that this will be the final budget.

"We don’t know what is going to happen in the next few years," said Wamsley.

Ironically enough Montreal will finish paying for its cost overruns from the 1976 Olympics this year. The 2006 Torino Olympics were $100 million over budget due to cost overruns and a short fall in funding. This month several layers of government stepped in to cover the shortfall and a new lottery was created to help.

VANOC has been working on the issue for some months and has found savings of $85 million already by altering venue sites and finding efficiencies. Of that $21 million was saved at the Whistler Nordic Centre through a re-design for a smaller and simpler footprint and $4 million was saved at Whistler Creekside by combining all alpine events onto one mountain.

Furlong said he is committed to keeping the Games to this final budget and said if costs go beyond that he is ready to find savings where he can.

"We will stop at nothing to responsibly manage the task of cost increases through rigorous venue planning and design, negotiations and cost controls," said Furlong.

Dr. Robert Hindmarch, a lifetime member of the Canadian Olympic Committee, an assistant chair of the first bid to host a Games in Whistler in 1968, and a former athletic department director at UBC, has been watching the 2010 Games unfold closely.

"The big thing is that you want to be very transparent in what you do and you have to be up front and I think VANOC is doing a good job on that front," he said.

Hindmarch is also not surprised that the budget has to be adjusted.

"What you do when you are going forward with a bid is you do your very best, most honest assessment of what it is going to cost you, but no-one can predict the future," he said.

"You can’t possibly in any construction item know what your problems are."

Red flags about the projected cost of the venues were raised in 2003 by Auditor General Wayne Strelioff who warned that predicting costs and revenues and economic conditions years in the future was inherently difficult. He also warned that the province’s $139 million contingency fund might not be sufficient to cover possible cost increases.

Meanwhile VANOC has surpassed its expectation in raising sponsorship funds from national partners. To date it has raised over $600 million.