City report urges Calgary to forgo Olympics bid unless conditions met

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Calgary should not bid for the 2026 Winter Olympics unless a number of conditions are met to ensure the Games would not break the city financially, city staff have advised in a report delivered Monday to municipal politicians.

In documents released prior to Monday's council meeting, staff argued that Calgary faces "significant challenges" with respect to its debt. The Olympics, the report concludes, could push the city's debt levels beyond what it could handle. An analysis of the proposed master hosting plan for the Olympics does not include prerequisite projects that could cost more than $1-billion, the report to council notes.

The report comes one month before the International Olympic Committee's "invitation phase" begins. During this stretch, the IOC will work with potential host cities to help them decide whether to bid on the 2026 Olympics. In the midst of this process, Calgarians go to the municipal polls in October, 2017. Aspiring host cities must indicate their intentions to bid on the Games in the spring of 2018.

Read more: Calgary grapples with an Olympic-sized question: how to fund the Games

Read more: Advisory group warns Calgary's 2026 Olympic bid in peril if Canada gets World Cup

The IOC and Los Angeles on Monday reached a deal that could allow the U.S. city to host the 2028 Summer Olympics. The IOC, according to media reports, could contribute more than $2-billion (U.S.) to the hosting process.

In Calgary, city staff want more precise information on what the Olympics would cost and how much local taxpayers would have to carry.

"The city has limited debt capacity and it would be challenging for the city to incur additional debt with respect to the 2026 [Olympics], including the facilities that are already being contemplated by the city," the report said in the section outlining the points of concern that must be satisfied should Calgary decide to bid for the Games.

Calgary has a legislated debt ceiling and last week, the city's chief financial officer warned hosting the Olympics could mean surpassing the limit. Alberta's largest city recently analyzed its overall debt situation but that information is not public.

City administration noted the first stage of Calgary's light-rail expansion comes with a $4.65-billion price tag and is expected to add to the city's debt, regardless of any Olympic considerations. Further, Calgary's debt may balloon should the city contribute to projects such as a proposed new arena and cover the cost of a fieldhouse at the University of Calgary. Both these facilities are included in the Olympic blueprint, but not budget. The capital projects excluded from the proposed Olympic budget, but necessary for hosting the Games, create financial uncertainty for the city.

"These investments could exceed $1-billion in total with the responsibility for funding not identified at this point," the report said.

The city appointed a bid exploration committee last year to examine whether Calgary should bid for the 2026 Winter Games. The study group was supposed to deliver a recommendation to council last week. Instead, it said that while it believed Calgary is capable of playing host to the 2026 Games, further study is required on whether it would be prudent.

City administration based its more conservative recommendation on the committee's report, which runs thousands of pages. Only a sliver of the study group's report is public.

Trevor Tombe is an economics professor at the University of Calgary and was one of the two academics who reviewed the committee's economic analysis. He said decision-makers should ignore the committee's arguments that posit the Games would boost GDP in Calgary and Alberta.

"There's just not a lot of evidence that that's actually the case for cities that host the Games," he said in an interview. Studies examining whether infrastructure projects spur the economy, Prof. Tombe said, can be twisted in order to support either side of the argument. And the Olympics, he said, are similar to other mega-projects.

"It is just a very large spike in government spending. And that's presuming it even is a spike in government spending," Prof. Tombe said. "You could imagine it is just shifting from another activity that would have otherwise received those public dollars."

Calgary's bid exploration committee calculated the Games would cost $4.6-billion and run a deficit. It predicted the federal government and other levels of government would chip in $2.4-billion, but it did not have any guarantees.

The committee's math – which was based on previous Winter Olympics, particularly the 2010 Games in Vancouver – worried the city administration.

"There are risks in both the underlying revenue and expense assumptions," city administration said about the bid committee's report. "The actual gap could be much higher. At this stage, it appears the city would be responsible for any operating gaps."

A spokesman for the bid exploration committee declined to comment.

City administration also provided council with another option, should the local politicians reject its conditional recommendation. The alternative recommendation is much simpler: Don't bid.