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Thursday, November 16, 2006
Olympic shenanigans
Money, money, money...that's what it's all about in the news.

After all the front page splashes over the rising costs of the Games, it is all about where to find the extra cash - and indeed, how much to find. The Treasury wants a huge 60% contingency to be factored in, whereas the Ken and the ODA call this "breathtakingly ridiculous" and call for a still massive 30%.

And where to get it? Well, according to Ken, he wants to effectively introduce a planning gain supplement levy on the uplift in land prices. “Land prices in the Olympics area have doubled. I will be looking at using the profits from developers on additional profits to service any cost overruns [on the Olympics].” Neale Coleman, policy director to the mayor and a member of the ODA board, said “If we had reliable receipts of what the land values would be after the Games, we could borrow against that now and the money could be used to fund extra Games costs. The two are connected because the LDA owns the land.”

However, some developers are clearly not sure that they are actually going to make much money on the sites. The ODA is renegotiating the contract to develop Stratford City after the two teams competing for the deal claimed the proposals were “unrealistic”. Apparently both consortiums bidding for the residential portion of the scheme, led by Lend Lease and Bouygues, have demanded a subsidy to ensure they can make a profit on the 4,500 homes in the scheme.

The negotiations are likely to delay the appointment of a developer, which was expected this month. It is understood that the stakeholders in Stratford City (the ODA, developer Westfield and London Continental Railways) have agreed to a subsidy but are unclear whether they, or central government, will pay. A 'source' said: “The whole deal was never going to stack up financially and it’s clearly going to have to be renegotiated. They are now having those discussions.”

It was "never going to stack up financially"? That's pretty damning. Or are the developers just protecting themselves from the cost repurcussions of the terrible partnering they are likely to suffer from a government who 'forgets' about VAT?


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