With the city’s 600-page bid for the 2012 Summer Olympics due to be delivered to the USOC this Friday, recent weeks have seen a flurry of attention to the notion of a Big Apple Games—will there be an Olympic stadium on the West Side? Will it bring the Jets back to New York? Will the bid be doomed by New Jersey’s pullout?
But even if synchronized-swimming-on-the-Hudson never comes to pass, this could be a key moment for the future of the city. There’s a growing suspicion among many city insiders that the Olympics bid is being used as a Trojan horse by those anxious to sink their teeth into the West Side land that has been a target of developers (not to mention George Steinbrenner) for so long. Whether it leads to the Olympics, the return of the Jets, or merely an extension of the No. 7 train to the Javits Center, goes the theory, the 2012 bid will provide the leverage to get there—and to get billions of dollars in public money to subsidize developers’ West Side dreams.
The Olympic Games, contrary to popular myth, do not make money. In fact, they don’t even break even: The Atlanta and Sydney Olympic committees balanced their books only by shifting large sections of the infrastructure cost—land, Olympic housing, police and fire department overtime—to the public sector. The 1996 Atlanta Games, according to Georgia Tech planning professor Larry Keating, cost the public $1 billion in housing and infrastructure, while an independent audit by the state of New South Wales came up with an even more staggering loss figure for the Sydney Games: $2.2 billion Australian (about U.S.$1.5 billion).
The standard retort of Olympic supporters is that these losses are more than made up for by the resulting boost in tourism—as the head of Toronto’s visitors’ bureau put it, “the Olympics serve as an infomercial for the host city, promoting itself to the world throughout the duration of the Games.” But the evidence is flimsy here as well. University of South Florida economist Philip Porter pored over the tourism figures for Atlanta in the summer of 1996—consumer sales, hotel occupancy rates, and airport usage—and found no discernible difference from a normal Georgia summer.
Boosters cite Barcelona and Seoul as examples of cities showing post-Olympic tourism booms, but as critics point out, New York is no Barcelona. “New York does not require the Olympics to enhance its image,” says Johns Hopkins professor and Imagineering Atlanta author Charles Rutheiser. “In fact, I think in some way the Olympics can only take away from the city’s image.”
What the Olympics can do, Rutheiser says, is “bulldoze away barriers” to development, clearing the path for massive urban renewal projects that otherwise would be unthinkable. “So it’s a matter of what the material legacy is going to be for the city as a whole, but also for those communities that are going to be most directly affected by the venues and the physical construction of the Games.”
Dan Doctoroff, president of the Olympic bid committee, NYC 2012, has been saying essentially the same thing. “The major benefit of hosting the Olympic Games is that it would act as a catalyst for projects in the city that you otherwise wouldn’t be able to muster the political will to achieve,” the investment banker told The New York Times in October. Doctoroff’s group has been talking up the benefit of Olympic venues to the city’s sports infrastructure, though the velodromes and aquatic centers scattered across former Olympic host cities don’t provide much support—Atlanta’s natatorium for swimming events, notes Porter, was built unenclosed for the Summer Games, and so is unusable much of the year.
The real goal, charge critics, is the so-called Midtown West project: the extension of Manhattan’s central business district into Chelsea and Hell’s Kitchen, the holy grail of the developers and local corporations (including Chase, American Express, and the Times, Post, and Daily News) that are fronting the money for the Olympic bid.
“They want to pave over the neighborhood and make an office park,” says West Side activist John Fisher. The NYC 2012 plan includes the Olympic stadium, expansion of the Javits Center, new office towers, and a new avenue running for several blocks between 10th and 11th avenues. Fisher and other locals would prefer to see a mixed-use commercial/residential development plan being put together by the Hell’s Kitchen Neighborhood Association—but “when you get the Olympics and the NFL and the mayor and the entire real estate industry up against you, you’ve got problems.”
All this, say the Olympic boosters, can be yours without a dime of public money being spent—depending on how you count, of course. “It was classic,” says one city politico who sat through an NYC 2012 presentation that called for nearly $383 million for the concrete slab that will support the stadium over the Penn rail yards, plus $266 million in city funding for the building’s air-conditioning and retractable roof. “They say the public won’t pay for the stadium, but if you’re paying for a platform and for the air-conditioning of the stadium, you’re paying for the stadium.”
NYC 2012’s no-new-taxes pledge is arrived at by using a funding scheme called tax increment financing, or TIFs, whereby increased property taxes on the newly developed land are used to pay off the costs of infrastructure improvements. “That is not city tax money,” insists NYC 2012 CEO Jay Kriegel, “because that is not money that’s available unless you do the plan.”
Development subsidy experts aren’t so sure. This is “the proverbial ‘but-for’ problem,” says Greg LeRoy of the D.C.-based Good Jobs First; TIF subsidies are provided under the assumption that no new development would happen “but for” the TIFs, yet developers often strain the limits of that concept. In Minnesota, LeRoy notes, city officials were recently found to be handing out TIF money for projects that otherwise would still occur, just on a different block.
“TIFs are among the most problematic kinds of subsidies in America today,” in part because of their speculative nature, continues LeRoy. “Right now we’re in the middle of this giant real estate boom, but real estate markets are cyclical. During the crash in real estate values in the early ’90s, some places got caught in the downdraft, and the increment evaporated. And you’ve got a situation where a liability that was supposed to be taken care of by the TIF is now eating the lunch of the general fund.”
Further complicating matters are the Jets, who figure prominently in the Olympic bid package as the means of getting a West Side stadium built. Yet there are seemingly intractable timing problems here. The Jets are apparently ready to move immediately (or as soon as they can get out of their Giants Stadium lease, which runs through 2008). Building a Jets stadium in the hopes of landing the Olympics, though, is itself problematic, because no one is pretending that eight games a year of football can justify a multi-billion-dollar public investment. For that you need the Olympics, with their feel-good aura and claims of economic bonanza. But with no final decision on the host city due until 2005, any Olympic construction would be years off and contingent on the none too certain possibility of New York winning the nod of both the U.S. and International Olympic committees.
Thus far, NYC 2012 seems to be engaging in a clever dance, hoping that no one will notice that their proposal is all cart and no horse. Kriegel says that while most of the Olympic venues must wait until 2005 to go forward, Midtown West will be dealt with immediately. “With the Midtown West plan, we believe that it can proceed independently because it doesn’t require Olympic revenue,” he says. But Midtown West does depend on landing the Jets, and even if owner Woody Johnson agrees to front the money for a West Side stadium—conceivable, since the Washington Redskins, New England Patriots, and Carolina Panthers have all struck deals in recent years to pay venue construction costs if the public pays for land and infrastructure—it can’t happen without the platform, which can’t happen without city and state backing, which is dependent on the promise of the Olympics. If any one piece fails to fall into place, the whole house of cards collapses, which is no doubt why Kriegel and his associates are playing this extremely close to the vest, refusing to release so much as a single budget projection to the public.
Then there’s the little matter of next year’s mayoral race, the winner of which will inherit this whole mess in 2002. For now, all four candidates are reflexively pro-Olympics. (“Yes, we should have the Olympics in New York City,” snapped a spokesman for Alan Hevesi. “What do you mean, ‘because?‘ “) But they are mostly cool to a West Side stadium: Hevesi “is yet to be convinced that a West Side stadium makes sense.” Mark Green is “not for a West Side stadium that doesn’t include serious community involvement.” And Peter Vallone and especially Fernando Ferrer have each come out against the plan. No doubt all have been reading the polls, which at this early stage are likewise in favor of luring the Games (64 percent) but against the Manhattan stadium site (55 percent).
Among community groups and good-government organizations, meanwhile, there is concern but so far little action. The bellwether for anti-Olympic sentiment has been Fisher’s Clinton Special District Coalition, which has kept up the drumbeat against the Midtown West plan. “I hope they understand,” he says, “that we will be in the streets on this.”
How much all this will cost, no one knows. NYC 2012 promises to use Olympic revenues (TV rights, corporate sponsorships) to pay for all venue construction outside of Midtown West, from a beach volleyball stadium in Williamsburg to an equestrian center on Staten Island. But the West Side costs alone could be staggering: The Olympic stadium itself is estimated to cost in the $1 billion range, plus another billion for the extension of the No. 7 train to 33rd Street and 11th Avenue, and hundreds of millions more for the concrete platform and other sundries. Even if some of the money is repaid from TIFs, Olympic construction could monopolize the city’s capital budget for more than a decade, delaying construction of needed housing (the Olympic Village in Sunnyside—bitterly opposed by Queens Borough President Claire Shulman, who wants to see mixed-use residential and commercial development on the site—would be opened up to renters, but not until 2013) and possibly stalling such projects as the Second Avenue subway.
Of course, even if funding is procured, the Olympics are not a sure thing by a long shot. There are still seven other U.S. locales—Los Angeles, San Francisco, Houston, Dallas, Cincinnati, Tampa-Orlando, and Baltimore-Washington—yearning to be selected as the U.S. candidate when the field is narrowed down in the fall of 2002. And whichever bid clears that hurdle will face a still more grueling competition in 2005, against international competitors like Toronto and Rio de Janeiro. There’s already speculation that the IOC would prefer to avoid the scandals and logistic snafus that accompanied the Atlanta and Salt Lake City Games, with Salt Lake Olympic Committee president Mitt Romney predicting that his 2002 Winter Games would be “the last Games on American soil for a long, long time.”
Even if the bid ultimately fails, though, Fisher is not sanguine about the threat of a West Side stadium. “We take this seriously,” he says. “There are a lot of people who say it’ll never happen for a lot of good reasons. But they said Disney would never come to Times Square. Who knew?”