TWO-YEAR COUNTDOWN TO THE VANCOUVER WINTER OLYMPICS

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SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CAN, DS/P/MECU

E.O. 12958: N/A
TAGS: CA KOLY PGOV ECON ASEC
SUBJECT: TWO-YEAR COUNTDOWN TO THE VANCOUVER WINTER OLYMPICS

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1. Summary: This is the first of two cables assessing
preparations as Vancouver passes the two-year mark in its
countdown to the 2010 Winter Olympics. Organizers and officials
are giddy with satisfaction over the preparations for the Games
thus far. All major sporting venues are complete or will be
completed by the end of 2008, an unprecedented milestone. The
initial call for 25,000 volunteers resulted in 10,500
applications the first day alone. The Vancouver Olympics
Committee (VANOC) finances appear healthy and sound, with
construction almost complete and the sponsorship targets at 90
percent. Critics continue to hammer both VANOC and the city for
misuse of public funds and lack of effort to incorporate more
socially responsible activities into the program. As VANOC moves
away from construction into operations more issues are surfacing
regarding accommodations and staffing. Big questions remain on
the shape of cross-border management of the tens of thousands of
visitors expected for the event, which we will address in a
separate cable. Overall VANOC and its public and private
partners are well poised to bring about one of the most
financially successful, environmentally friendly and socially
responsible Olympics in history. End Summary.

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Responsible, Sustainable and Profitable
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2. With the competition venues substantially complete, VANOC is
moving from a construction to an operations phase. The
organization has reached 604 employees and achieved C$ 709
million in domestic sponsor agreements with a final goal of C$
760 million in sponsorships. Financial statements for the second
quarter show a cash balance of C$ 56.5 million plus a hefty
construction contingency in place. The major projects still
underway include two training facilities and the two Olympic
Villages, one in Whistler, the other under construction in the
False Creek area of Vancouver.


3. Contributing to VANOC's rosy construction and financial
picture is the fact that several Olympics-related construction
projects, such as the new convention center, the Canada Line
metro and the Sea-to-Sky highway between Vancouver and Whistler,
are not VANOC projects. Provincial officials tell us that only
one-third of one percent of the C$148.1 billion in big
construction projects ongoing in BC is Olympics-specific
projects. They note that many of these big ticket projects were
already in the planning stages prior to the Olympics' bid. The
Olympics just provided the catalyst to get them moving forward.
But it is these big, primarily publicly-funded projects that are
the focus of much of the criticism. The convention center has
already nearly doubled in price, from an original estimate of C$
496 million to C$ 883.2 million. The Canada Line project has
left a gaping trench on one of Vancouver's main north-south
thoroughfares and caused severe economic hardship, including
closures, for many businesses located on this road.


4. The city and province are also receiving harsh criticism for
funneling money into these projects and neglecting other issues,
such as the lack of affordable housing in the Vancouver area.
VANOC, the city and the province have mounted a massive
publicity campaign to present themselves as the most
socially-responsible Games ever seen. One way the city has
addressed this is by including both Olympic Villages in a legacy
plan to provide additional affordable housing. The Whistler
Village is to be turned over to that city and made available as
housing for the resort area's labor force. The Olympic Village
in Vancouver has already been sold to a developer with 250 units
guaranteed for low-income housing once the Games have ended.
Rumors persist that as the Games approach, residents, especially
low-income, will be forced out of their homes as landlords
attempt to cash in on the Olympics' housing crunch. Social
activists are blaming VANOC for not instituting programs to
prevent people from being displaced. However, in its most
recent sustainability report, VANOC strongly defended its record
and stated that it is not responsible for fixing the city's
social problems. The organization will focus on six areas that
are under its control: accountability, social inclusion and
responsibility, environmental stewardship, economic benefits,
aboriginal participation and collaboration, and sport for
sustainable living. Along with the sustainability report, VANOC
announced measures to guarantee manufacturers of Olympics
merchandise meet a code of conduct governing working conditions
in the mostly Chinese factories. After the first round of
audits just concluded, six factories were banned for failing to
meet the standards.


5. As part of its sustainability commitment, VANOC has created
an environmental plan for the Olympics, including a Carbon
Management Strategy. It signed an agreement with BC Hydro to
provide clean power and programs to ensure energy efficiency and
conservation. By using hydroelectric power, VANOC touts it will

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have less than ten percent of the emissions of previous Winter
Games.


6. VANOC is also working hard to be inclusive across the
country, reaching out to provinces and First Nations to ensure
the Games engage every Canadian. The organizing committee has
signed MOUs with New Brunswick, Manitoba, Prince Edward Island,
Newfoundland and Labrador, Quebec and the Northern Territories
and is in negotiations with other provinces. The MOUs encompass
language, sports development, culture, volunteerism, tourism and
economic development. VANOC also recently concluded an
Aboriginal Licensing and Merchandising Agreement with the Four
Host First Nations that will allow aboriginal artists to use the
Olympics symbols in their work. In addition, representatives of
the First Nations sit on the Board of VANOC, giving them
significant input into the planning. Closer to home, the city
of Vancouver just announced a C$ one million fund available for
local communities to pay for events celebrating or promoting the
Olympics.

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Opportunities Abound but~.
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7. There are still millions of dollars in opportunity for local
and regional companies to cash in on the Games. Of the
estimated 6000 contracts to be issued by VANOC for goods and
services, only a little more than 600 have been signed thus far.
Companies need to act fast, however, as the rate of issuance of
new RFPs has increased dramatically in the past two months.
Primary consideration is being given to Canadian companies. But
with an event of this size, many firms are finding that they
have the product or service but not the capacity to meet the
demand. U.S. companies are gaining a foothold in the door by
partnering with local companies to win contracts. The Foreign
Commercial Service Office in Vancouver worked with a Washington
state supplier of portable toilets to win a large 2010 Olympics
contract. The Washington state vendor had expertise gained
during the Salt Lake Winter Games plus inventory but lacked
local facilities or access to disposal dumps. The vendor
identified smaller Canadian companies that had the local access
but not the capacity. A consortium was formed and their bid won
the contract. Regional organizations are also galvanizing
support for the Games. The Pacific Northwest Economic Region
(PNWER) e-mailed every National Olympics Committee (NOC) around
the world with information about training facilities in the
region for winter athletes. VANOC officials later told us they
were surprised to hear that members of the French winter
Olympics team were practicing in Washington. They did not
realize the efforts being made next door to take advantage of
the event.


8. Staffing is becoming a key issue for VANOC. Although
initial response to calls for volunteers has been tremendous,
organizers worry that 20-30 percent will drop out before the
Games even begin. VANOC has reached out to the international
community especially to attract volunteers with foreign language
skills, particularly in the hard Asian and Slavic languages. A
dilemma is building in the mountain resort town of Whistler as
more and more locals take advantage of offers to rent
homes/condos during the Games. With so many residents leaving
during the Games, there are not enough people left to fill all
the vacancies needed on the volunteer list.


9. Accommodations are also proving an opportunity and a
problem. As mentioned above, Whistler residents are being
offered tens of thousands of dollars for short-term rent of
residences during the Games. Organizers always have maintained
that housing would be a problem in Whistler, with the hotels
already dedicated to the Olympics family leaving only private
residences for everyone else. Early on a proposal was made to
use cruise ships moored at Squamish to support the overflow,
including any overflow from the Olympics family itself, but
VANOC quickly determined it would not be necessary, at least for
them. Cruise ships are still being discussed by tour operators
and other entities to meet their Whistler housing needs. On the
positive side, accommodations in Vancouver still appear to be
plentiful. Studies conducted by Western Washington University
indicate there will be enough hotel rooms in the greater
Vancouver area to handle the demand, which is estimated to be
less than a normal peak summer period.

10.Comment: The completion of competition venues on schedule and
on budget has left VANOC in high spirits. But there are so many
details to be worked out that nobody is resting yet.
Preparations are entering a phase now where the pace begins to
quicken and it is critical that all interested parties stay on
top of the plans as they develop. VANOC will be ramping up its
staff and we anticipate even more interactions on commercial,
transport and border-management issues. CONGEN Vancouver is

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working to create the USG Olympics Liaison office and we hope to
open by end of summer, with personnel starting to arrive as
early as June. Dedicated personnel will go a long way toward
helping us engage VANOC and city and provincial officials on the
many issues of mutual concern to make this a truly successful
regional and international event. End Comment.
LUKENS