Page last updated at 12:58 GMT, Tuesday, 13 January 2009

Money worries for Canada Olympics

Vancouver's Olympic village - courtesy CBC
Building work is going on - for now - at Vancouver's Olympic village

The global financial crisis is hitting preparations for the 2010 Winter Olympics in Canada, officials say.

Vancouver city authorities are seeking emergency powers to borrow up to C$458m (US$380m) to finish the construction of the main Olympic athletes' village.

Private financing is stalled but to complete the project on schedule, residents may have to pay.

Vancouver's Mayor Gregor Robertson has been quoted as saying: "It's a bitter pill for taxpayers to swallow."

Money running out

The plan for the athletes' village was for a private developer to build 1,100 up-market flats on Vancouver's picturesque waterfront. These would then be sold, after the games, at a healthy profit.

But now a drop in housing prices, a sharp rise in construction costs and the global economic situation mean funding for the project is in trouble.

Vancouver's Mayor Gregor Robertson - courtesy CBC

The Olympic village is a billion dollar project and the city's on the hook for all of it

Gregor Robertson
Mayor of Vancouver

The developer and the private American firm financing the project have yet to agree on the next instalment of money needed to keep the construction going.

In the meantime, city officials have loaned money to the developers to keep the builders on site - but that cash is due to run out.

Guarantees that Vancouver will finish the project on time mean that if the building stops, the council will have to fund the construction itself.

"The city is not authorised to borrow, particularly amounts of this significance, without the consent of taxpayers," Mr Robertson told reporters.

"The Olympic village is a billion-dollar project and the city's on the hook for all of it."

The BBC's Ian Gunn in Vancouver says that several years ago, when the housing market was red hot, everyone involved thought there was money to be made and no-one foresaw the softening of the market.

Now, the people behind the financing are asking some difficult questions about whether they should really be putting more money into the project, our correspondent says, and a number of residents are not happy with the way things are shaping up.

Even when Vancouver was awarded these Olympics, our correspondent adds, a significant minority of people felt there were likely to be problems and that costs would run over. As a result, they were not convinced hosting the Games was a good idea for the city.

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