Will LA’s ‘no-build’ Olympics spur Southern California’s next building boom?

In contemporary times, the Olympics have become a vehicle for investment, global attention, and urban regeneration. Though cities have promoted the Olympics as a chance for reinvention, the reality is often an Icarus-like tale of optimistic infrastructure investments gone wrong. Take, for example, Rio de Janeiro’s unused luxury housing, London’s failed public housing promises, or the deserted stadiums of Athens.

As Los Angeles prepares to host the games again in 2028, the success of the city’s widely hailed turn as host in 1984 looms large. The only profitable games in modern Olympic history, LA 1984 was a case study in public–private partnerships, corporate sponsorship, and municipal storytelling.

Led by local businessman Peter Ueberroth, later named Time magazine’s Man of the Year for his work, the 1984 Summer Games ran a $232.5 million surplus, added $1.1 billion to the Los Angeles economy, and became “the powerful engine pulling California to prosperity,” proclaimed then-mayor Tom Bradley.

It’s proof, say LA 2028 organizers, that the city can do it again: re-use the city’s wealth of existing and under-construction stadiums and athletic facilities, house athletes and the media at local universities, and host an Olympics that won’t require new publicly-funded infrastructure, and, most importantly, won’t have the negative impacts seen in other recent host cities.

“We are focused and responsible for putting on this event, doing it privately, and taking pressure off the city,” according to director of operations for LA 2028 Lenny Abbey.

But can an event of this size and scope truly be low-impact—especially in a city facing both an affordable housing and a homelessness crisis?

LA 2028, the organizing committee for the Olympics, aims to show the city at its best: multicultural, well-managed, filled with new mass transit options, and open for business. According to Rick Burton, professor of sport management at Syracuse University and a former chief marketing officer of the U.S. Olympic Committee, the organizing committee understands taxpayers want that, too, but don’t want to be left with any upfront costs.

“Los Angeles doesn’t need stadiums, the U.S. doesn’t need to host, and we’re not having a coming-out party,” says Burton. “The Olympics is in LA based on the belief that the city can put on the games really well.”

According to Anne Orchier, an organizer with NOLympics LA, a coalition of local organizations opposed to hosting the 2028 Games due to the social and economic costs, the idea that something this large can be low-impact is both naive and misleading.

The Olympics will only add to the existing pressures in the city’s housing market, Orchier says. And while organizers may not be building new stadiums or housing, the presence of the games waves a green flag at the real estate industry.

“We’re not saying Olympics cause gentrification,” says Orchier, “but they accelerate it.”

The Olympics, in a “state of panic,” turn once again to LA

LA’s choice as the 2028 host comes at a time when the International Olympic Committee is “more or less in a state of panic,” says Rich Perelman, editor of TheSportsExaminer.com, an Olympic news website, and the former vice president/press operations for the 1984 Games. A string of host cities have either been left with white elephant facilities, staggering bills, or both. Beijing’s 2008 Summer Olympics cost nearly $40 billion, and Sochi, Russia, broke the bank, reportedly spending $51 billion for the 2014 Winter Games and related developments in the resort town.

As a result, under new president Thomas Bach, a former German Olympic fencer, the IOC has taken an 180-degree turn, says Perelman, asking future host cities to only build structures that are necessary for the future of the city. In short, they’re pushing the LA approach. “Here in Los Angeles, we’re happy to welcome everyone to where we’ve been for 40 years,” says Perelman.

While the ’84 Summer Games are often held up as a model for frugal management, LA’s first time hosting, in 1932, offers a similarly compelling story. Held amid the Great Depression, the event, as recounted in Caitlin Parker’s The Capitalist Games, focused on reusing existing venues and managed to turn a small profit, all while indulging in two of the city’s great passions: stagecraft and real estate speculation.

Organized by William May Garland, a banker, developer, and two-term president of the National Association of Realtors, LA’s bid for 1932 was an effort to rebrand the city and attract investment. It foreshadowed what would become a common debate around hosting the Olympics: the value of promotion, prestige, and a worldwide spotlight versus the social costs of spending on athletic spectacle instead of local citizens.

In the lead-up to the event, the city spent $100,000 to line the streets with 30,000 palm trees, while protesters would later march on the state capitol in Sacramento, shouting “Groceries not games! Olympics are outrageous!”

“It was a chance to rebrand LA as a kind of tropical-themed, single family-home paradise,” says Jonny Coleman, another organizer with NOlympics. “They imported palm trees to show it’s not a desert. ”

Distracting visitors from the climate was relatively easy, but it was impossible to escape the economic situation in 1932. Due to the prohibitive cost of travel during the Great Depression, just 1,500 athletes from 37 nations showed up, leading to the cancellation of team events like soccer.

Some competitors, bereft of funds to pay for their trip, arrived not with money but with goods to barter—the Brazilians arrived with bags of coffee, and the Cuban delegation, carrying sacks of sugar, found out too late that commodity prices had dropped and had to turn around mid-trip. The Olympic Village constructed in Baldwin Hills was about community, but also cost: Most athletes just couldn’t foot the bill for hotels.

Despite facing strong headwinds, the games succeeded in economic terms. The $1 million public bond raised for the event was paid back, and newspapers proclaimed this frugal event a great success, with the New York Times hyping it as “the greatest carnival of sport ever seen in this country.”

Displacement, debt, and other Olympic debacles

Based on the Olympics’ recent track record, and the impact of the games on housing and real estate, a better approach is needed.

The 2028 bid, like the 1984 bid, views the traditional reliance on public infrastructure and funding as a negative, according to Abbey. Other countries typically have sports ministries and government organizations that run the Olympics, which often lead to the cost overruns and wasteful infrastructure that have caused so much bad publicity for the IOC.

In Rio, which hosted the 2016 Games, the signature $700 million athletes’ village has been mostly shuttered just a few years later, with just 7 percent of its condos sold.

When London hosted the 2012 Games, public housing was demolished in the Stratford neighborhood to make way for the Olympic Village, with promises that after the games, the site would be redeveloped for public housing. Not only has London fallen behind on promises to build that housing, but housing prices in the area shot up 71 percent between 2005, when London’s winning bid was announced, and 2016.

Before Atlanta’s 1996 Games, thousands of residents of public housing complexes were displaced when those buildings were demolished to make way for the Olympics.

Perelman says the 2020 Games in Tokyo have already gone over budget, and predicts Paris 2024 organizers will have trouble meeting their goals for constructing accommodations for athletes that will become public housing after the games.

Orchier says that NOlympics has already been working with groups in Tokyo and Paris on housing and homelessness issues in anticipation of the 2020 and 2024 Games.

“I don’t think it’s an accident that every other anti-Olympic coalition group came out of the housing rights movement,” she says.

Since LA 2028 will be hosting events at sites that already see large-scale concerts and sporting events, as well as commercial investment, organizers say the impact on housing and gentrification will be muted. The legacy for 2028 will be more “people-oriented,” in the form of investment in youth sporting leagues, not massive new buildings.

“Obviously there will always be speculation with an event like this,” says Abbey. “You’ll have a lot of individuals looking to make money, and Southern California is already a hot housing market. We’re trying to be as low-risk as possible. It’s something we’ve talked about throughout the bid.”

Is there such a thing as a responsible Olympics? LA 2028 says yes, and has outlined perhaps the most sustainable infrastructure program of any modern game.

Orchier contends that it’s a contradiction—that the Olympics will naturally accelerate gentrification and displacement across the city, and, in this case, especially in South and East LA. She also predicts it will exacerbate the impact of forthcoming waterfront developments on the LA River.

Perelman, the Sports Examiner editor, says the 1984 Games had “absolutely zero” impact on local housing markets and real estate. The only facilities built for for the ’84 Olympics—the velodrome that was later converted into the StubHub Center, the pool at USC, and the shooting range in Chino—have all been net-positive for their respective neighborhoods. He forecasts a similar impact (or lack thereof) happening in 2028.

“Any critic who tells you we displaced people in 1984, or that we had any impact on housing prices, is lying,” he says.

Selling Los Angeles as the great Olympics bargain

With LA 2028’s proposal, the IOC has once again been presented with a bargain that can supposedly only happen in Los Angeles. By taking advantage of the city’s wealth of existing stadiums and sporting arenas, organizers and local government don’t have to engage in any infrastructure boondoggles. And they aim to do it all without public money or raising taxes. Private funding has been a constant with Los Angeles and the Olympics: the streamlined bid for the ‘84 Games coincided with the statewide property tax revolt that led to the passage of California’s Proposition 13, which capped property taxes.

Preliminary plans to build a completely new Olympic Village were dropped to avoid complication and financial risk. Existing student dorms at USC and UCLA will provide housing for international media and athletes, respectively, with organizers taking advantage of the institution’s existing expansion plans to add capacity. (UCLA plans to add 2,085 new rooms and 4,169 beds as part of planned housing developments at sites currently occupied by existing low-rise housing and university buildings.)

With more than 125,000 hotel rooms within 30 miles of the games, and 47 additional hotel projects in development, visitors in 2028 will have plenty of options, organizers say. Los Angeles City Councilmembers say that’s not enough—they’ve recently noted the need for more hotel rooms due to record-breaking tourism. There are also 42,000 Airbnb rooms available for rent in the same area right now, but that number could be impacted if the City Council regulates short-term rentals. It’s moving toward capping the number of nights the rooms could be rented, among other restrictions.

Most bids for the Olympics rely on renderings and CGI. Los Angeles was able to show the IOC facilities that already exist. IOC President Bach dined at a dorm cafeteria during a 2016 stop at UCLA on the same day they were serving kale and bison to students.

According to Burton, the 2028 Olympics adds to the large number of LA development projects and high-profile events—including the new LA Rams football stadium and the 2026 World Cup—that give developers and investors more reasons to buy into in the city’s real estate market in the coming decade. By announcing the games so far in advance, the IOC has provided more runway for developers to plan more elaborate projects.

The LA 2028 plan is also an excellent deal for the IOC. When the committee awarded both the 2024 and 2028 games simultaneously, it did so, as many suspect, to lock down a city for 2028, since fewer and fewer want to deal with the side effects of hosting. (Paris will host in 2024, but seven consecutive public referendums to host the games in European cities have failed at the ballot box, and Boston was chosen by the U.S. Olympic Committee as a potential host city for 2024 before the city withdrew its bid.)

By choosing to place the games in the media capital of the wealthiest nation on Earth, the IOC is making a bet that corporations will gladly pay for additional access to the U.S. market.

“Why stage the games in LA? Because it’s there and ready,” Burton says. “It’ll make a lot of fiscal sense for a lot of people, including local universities and the media. The sponsors are going to come back because it’s in the U.S. You can already feel the capitalistic lift.”

Author: Patrick Sisson

Source: Curbed, LA