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Tuesday, September 1, 2009

Examing Alderman Flores' Olympic Oversight Ordinance

Last night I received an email from Alderman Manny Flores' (1st Ward) office stating his intention to move forward with a new ordinance to create and provide more oversight and transparency for all expenses, contracts, and potential conflicts relating from Chicago's bid to host the Olympics and by extension the Organizing Committee for the Olympic Games (OCOG).

A bit of a refresher is important here. Chicago first bid for the 2016 Olympics in 2007. In March of that year, the Mayor, with little debate, was able to secure a commitment of $500 million from the city to finance the games. He did this despite giving the citizens of Chicago assurances that no tax payer money would be used to finance the games. Then, in May of this year, Mayor Daley pronounced that he would sign the host city contract which would put the city on the hook for most of the games finances effectively putting the city's tax payers on the hook for all unexpected expenses of the Olympics. Then, in July, Alderman Flores proposed an ordinance that would require strict oversight AND a cap on the city expenses to the $500 million that was already passed. If this ordinance passed, it would kill the city's bid because it would also mean the city couldn't hold up its end of the host city contract.

The city had proposed its own oversight ordinance and his office gave a bullet point comparison between his proposal and that of the city. There's no question that his proposal would create much stricter oversight. First, Flores' proposal adds two more layers of oversight to spending and contracts. Flores' proposal would empower the Office of Inspector General the power of oversight over OCOG finances for waste and mismanagement. Second, Flores' bill would also create an independent public interest group with the power to review all OCOG reports also for waste and abuse. The city's proposal only has a City Council body empowered for oversight. That body would be headed by the head of the Finance Committee and the Budget Committee. It should be noted that the Finance and Budget Committees are chaired by Daley allies Ed Burke and Carrie Austin.

Alderman Flores' bill also requires quarterly reporting on the web of all contracts and expenditures. It requires anyone employed by the OCOG making $50,000 and more to disclose an potential conflicts of interest. (a la Michael Scott) His office believes that by creating all this disclosure it would create a fourth layer of watchdogs, which is the citizens themselves.

What's missing from Alderman Flores' current ordinance is the cap of $500 million in exposure to the city's tax payers. Alderman Flores' office told me that he will introduce the more draconian ordinance if the current one is voted down. He will introduce the ordinance at the next hearing of the Finance Committee on September 8th. If passed, it will go in front of the full city council the next day. As of last check, there were eight co sponsors of the ordinance including Alderman Richard Mell.

After speaking with Alderman Flores' office, I spoke with Tom Tresser of No Games Chicago. (the main group trying to stop the bid) I've spoken with Tresser before and he usually doesn't mince words. He didn't disappoint on this occasion. He was simply incredulous. He called the entire ordinance "window dressing". He scoffed at the notion that there would be any independent body that could watch the money. He said that the city has a long history of ignoring FOIA requests and requests for information. What's more, the Inspector General that Flores is counting on to produce a layer of oversight will be chosen by Mayor Daley. So, are we supposed to believe this individual will really be an independent watchdog? He said that none of these watch dog bodies will have any budgets or subpoena power which, in his view, renders them teethless. Furthermore, he pointed out that if Chicago is chosen final decisions are left to the IOC. As such, in his view, all the disclosure in the world won't protect the tax payers from the will of the IOC. He told me that he believes that this bill effectively gives the Mayor the blank check he and his group feared.

Finally, I spoke with Alderman Flores a couple weeks back. He told me that he was committed to protecting the tax payers. He told me that he was committed to moving forward with the cap. He also said that he was going to look at several things before he would finalize the bill.

First, the Olympic committee is looking to buy insurance to protect the city against overruns. (in other words insurance that would pay for any construction that would go over budget) The Alderman didn't want to commit to a number but he was hoping the insurance would be between $1 billion and $1.5 billion. Second, the Chicago Civic
Federation
will finalize their report analyzing the financial projections of the Olympic committee. If the CCF finds that the numbers are trustworthy, the Alderman would feel better about the finances. Third, he'd like to see an oversight committee that would be charged with making sure the finances are spent efficiently and without corruption.

The Civic Federation did do its analysis and the analysis was comfortable with the numbers projected by the OCOG. That said, it was also revealed that 40 of the 82 board members of the Civic Federation have ties to the OCOG. The Civic Federation also gave its highest honor to the leader of the OCOG Pat Ryan, and the firm the Civic Federation hired, LEK Consulting, is trying to get business with the city. Furthermore, the insurance policy was changed by the OCOG late last week and it's unclear what the new policy looks like. I asked the Alderman's office what he's seen that changed his mind. I haven't received a response yet though I'll be happy to update if and when I do receive a response.

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