PROPERTY TAX POST: OLYMPIC GAMES CARRY A HEFTY PRICE TAG TO HOST CITIES AND LEAVE BEHIND POST OLYMPIC VALLEY EFFECT

 

Selecting a host city for the summer and winter Olympic games is a highly competitive process. If selected, the host city not only becomes a part of the legacy of the Olympics, but the award can also bring financial benefits and opportunities. Six cities in the United States have hosted the games[1] —what happens in those cities after the torch goes out and all of the jubilation and pomp and circumstance ends? Residents are left to deal with the effects of the games and the benefits are debatable. There’s even a name for the residual impact on host cities: “Post Olympic Valley Effect.” Author Chang-jie Zhao, with the International Society of Olympic Historians explains “the phenomenon occurs when economies are hit by a post-Olympic economic downturn.” This happens when the Olympic host city dramatically increases investments in infrastructure to prepare for the games, followed by the decline of real estate prices and use of the sports facilities among other things, after the games.

Atlanta

The 1996 Olympic games in Atlanta left behind great monuments like the Centennial Olympic Park and the $209 million Olympic Stadium which is now Turner Field, home of the Atlanta Braves. New hotels, condominiums and office buildings were also a part of the economic development. But 15 years after the Summer Games, there were reports of declining property values and vacant properties that some experts attributed to “overbuilding” in anticipation that the games would bring buyers to the area. Atlanta business owner Frank Duffy, of Duffy Realty of Atlanta, during an interview by local news outlet, NWI Times, stated, “[t]hose inner city areas never gained momentum from the [Olympic] games as expected and could not sustain the growth and continued development after the conclusion of the games.” Duffy goes on to explain that taxpayers are burdened by property tax hikes or special assessments from nearby property owners for revenue to cover the cost of pre-game infrastructure investment. For the same reason, Boston taxpayers didn’t want any part in hosting the 2024 Olympics. After winning the bid to host the games, Boston withdrew. Taxpayers protested that if the games were to have any financial shortfalls, they would be left to pay for them with tax revenue.

Los Angeles

In contrast to the Games hosted by other cities which are mostly funded by state and local government, the 1984 Olympics in Los Angeles were financed almost entirely by private contributions after taxpayers voted against public financial support. The games were considered a financial success, creating $225 million in profit, and the monies are still used to fund local community programs.  Los Angeles made do with existing public facilities and local stadiums to reduce cost. Notably, Los Angeles also hosted the 1932 Olympics, so perhaps the city’s infrastructure investment at that time helped ease the financial burden the second time around.

Looking to the future, CNN reported that the next cities up to bid for the 2024 Olympics are Los Angeles, Rome, Paris, Budapest and Hamburg. Host cities have a lot at stake when submitting a bid to host the world’s premier multi-sport and multi-country athletic competition. All should have a plan in place to overcome Post Olympic Valley Effect. Residents may be positively or negatively impacted long after the medals are awarded and the Olympians have gone back to their home countries. The glory of hosting may not yield the hoped-for future economic development and indeed may leave local residents holding the property tax bag.

Continue the discussion on LinkedIn: Should tax dollars fund pre-game Olympic investment?

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By Cynthia N. Wells

[1] The games were hosted in St. Louis, MO in 1904, Lake Placid, NY in the winters of 1932 and 1980, Los Angeles, CA in the summers of 1932 and 1984, Squaw Valley, CA in 1960, Atlanta, GA in 1996 and Salt Lake City, UT in 2002.