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Taxpayers face £420m bill as Olympic builder struggles to raise cash
Matthew Beard, Evening Standard03.06.08
The taxpayers' contribution to the Olympic village has risen to £420 million due to the credit crunch.
Documents seen by the Standard expose a shortfall in the funding of the £800 million village, which will accommodate 17,000 athletes and officials before being converted into 4,000 homes and sold off after the Games.
The Olympic Delivery Authority is poised to plug the gap after the preferred developer, Australian firm Lend Lease, struggled to raise the cash.
The ODA is now unlikely to avoid raiding a £2.2billion Olympic contingency fund to ensure the village does not fall behind schedule.
It has also agreed to take on a greater degree of the financial risk to stop the building project falling behind an exacting schedule.
The agency will finance the structure - or "vertical build" - of the village rather than just the design and infrastructure, as initially intended.
Olympic officials and Lend Lease are in talks with five banks about spreading the risk. The two partners have identified the reduction in loan-tovalueratios in commercial property markets and "restriction in financial resources" as obstacles to raising funds.
Games chiefs assured inspectors from the International Olympic Committee two weeks ago that the village was on a sound financial footing.
Privately many agree that the project would have been mothballed until the credit squeeze eased if it were not for the immovable deadline presented by the 2012 Games.
Less than six months ago a budget breakdown from the Government put the ODA's combined contribution to the village and the media centre at £492million.
Olympics chiefs claim much of the initial outlay will be clawed back through property sales after 2012 and a profit-share scheme with developers.
However, the ODA admits the revenue is difficult to forecast accurately and the sale may not be completed for a decade. Preparatory work on the village site has begun in recent weeks with the drilling of holes to form the foundations. Builders are scheduled to be off the site by the end of 2011.
The village, which is adjacent to the Stratford City development, will be fitted out for athletes by June 2012.
Shadow Olympics minister Hugh Robertson said: "The Government and the ODA announced a figure of £492 million for the village and the media centre in January, well after the credit crunch had taken effect, so it is staggering that this figure has already risen so markedly.
"Given that all the major sports infrastructure has now overrun its budget, it is difficult not to conclude that the presence of such a large contingency fund is simply encouraging cost inflation."
An ODA spokesman said: "The financial agreement with Lend Lease is yet to be concluded but it has always been the case that the ODA would contribute towards infrastructure serving the Olympic Park, the Olympic Village and Stratford City, and that there would be a return to the public purse on this investment."
Reader views (14)
We the taxpayers will receive no benefit for having to fund a bunch of athletes running around a track and throwing things except a massive bill of billions of pounds. It won’t help the country and it won’t make housing any cheaper for the long suffering population, we seem to be being dragged further into the mire and the politicians of all parties are taking us down that slippery slope to a totalitarian state called Eurasia. Feed the population on cheap booze and even cheaper television dross and pretend to give them a much better education and bingo you have them.
- Stephen D., London England.
The Olympics will just be a huge money pit - cesspit at that.
As usual the secret boys club will reap the only benefits.
- The Vicar, Basildon
I think that as the taxpayers are paying for the Olympics, we should all get a free ticket or even better, a % of the profits. Why should I foot the bill and then get nothing out of it? Anne, you're right, we should receive something but that would be wishful thinking.
- Disgusted, London, UK
This "negligent and/or incompetent budgeting problem" must not be thrown back at the taxpayer to pick up the bill!
The "ownership of this budgeting problem" lies directly with the organisers... Let them pay for any shortfall that may occur!
It's high time that the organisers stopped whining and simply got on and did their jobs! After all, 2012 is just around the corner!
- Fraser, Telford Park
We all know that final cost will be millions more than first thought.
I won't care providing the government don't raise our already extortionately high taxes to pay for this turkey.
- Allan, Stafford,UK
So if the taxpayer is paying for this ridiculous village, they get first dibs on the properties afterwards or receive a refund on completion of sale?
It's almost like someone investing in a company and never getting a return, so why should they bother?
- Helen, Peterborough, UK
I am quite happy that my tax is going towards the games. It will be a great show and I don't care how much we pay... As long as we do it properly.
- Sean, London
When will this black hole stop swallowing money? The Mayor Athens said Boris needs to get Londoners excited about the Olympics. I'd be over the bloody moon if he announced that existing facilities would be used and affordable housing would be built on the site instead.
- Mark, London, UK
The Shadow Minister is quite right and, Billy Blighty should be well aware that the opposition has to be very cagey about revealing its ideas - Gordon Brown pinches them and then botches them completely. Perhaps the Aussie sun is getting to him.
- James Elliott, Eastbourne UK
During the 1948 Olympics at Wembley, the Greek & Lebanese athletes were accommodated in our school classrooms. We were on our Summer break.
They were picked up each morning by a London Transport bus.
The system worked well & did not cost a Kings Ransom.
- Tom Crompton, Ickenham, Middlesex.
Cancel the games, problem solved...
- Teddy, Islington, London
Does anyone ever tell the truth about this massive funding for a small number of elite athletes and the useless zil riders of the Olympics?
- Dave, London
And what would the shadow Olympics minister do if he were in office?
- Billy Blighty, Sydney Australia
"accommodate 17,000 athletes and officials before being converted into 4,000 homes and sold off after the Games"
Presumably at which point us Londoners as investors in this project will receive our dividends from the sale?
- Anne Investor, Tottenham
