3 The uncertainty on the deal for
the Olympic Village
12. The Olympic Village, with an estimated construction
cost of over £1,000 million, is the largest Games project.
The Village will accommodate athletes and officials during the
Games, and be converted into homes after the Games, with 30% to
be available as affordable housing. The project is linked to the
private sector development of the adjacent Stratford City Retail
Centre.[28]
13. The Olympic Delivery Authority's intention
is that development of the Village will be led and financed by
the private sector. The private sector financing is outside the
budget for the Games, although the budget includes provision for
the Delivery Authority to contribute to the cost of infrastructure
for the Village. In February 2007, the Olympic Delivery Authority
selected Lend Lease as the preferred developer, and expected to
agree the deal by the end of 2007.[29]
14. At the time of our hearing at the end of
June 2008 the deal had not been completed. The uncertainty in
the financial and property markets has increased the difficulties
of securing private sector finance and impacted on the commercial
viability of the deal. The global credit squeeze had particularly
affected the residential property values and, therefore, the ability
of the private sector to raise finance.[30]
The Olympic Delivery Authority told us that Lend Lease, in a recent
Statement to the Australian Stock Exchange, had confirmed that
it expected to obtain the debt financing by the end of 2008. The
Delivery Authority is also exploring other sources of funding
for the Village, including a government contribution to the cost
of affordable housing.[31]
15. Meanwhile, work to prepare the site for the
Village has continued and construction started in May 2008. The
Delivery Authority has paid for site preparation work as part
of its planned financial contribution, conscious of the need to
avoid slippage and that it would have to pay heavily to accelerate
the project later on.[32]
The Delivery Authority acknowledged, however, that it was likely
to need some of the Funders' Group Contingency (see paragraph
20) to fund the Village.[33]
16. The number of homes to be provided after
the Games has been reduced. By planning only for the accommodation
required at the time of the Games, the Olympic Delivery Authority
has reduced the number of apartments from the 4,200 originally
planned to around 3,300. The Delivery Authority considers that
the reduction reduces the risk to the project, and confirmed that
there would be sufficient apartments to accommodate the athletes
and officials during the Games.[34]
28 Q 30; C&AG's Report, paras 3.20-3.22 Back
29
Qq 10, 31-32; C&AG's Report, paras 3.21-3.22 Back
30
Qq 10, 42-43, 47; C&AG's Report, para 3.23 Back
31
Qq 10, 47 Back
32
Qq 10, 48; C&AG's Report, para 3.23 Back
33
Qq 31, 42 Back
34
Qq 10, 46 Back
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