Credit crunch 'hitting Olympic Village funding'

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The Independent Online

Turmoil in the world's financial markets is making it difficult to secure private sector funding for the Olympic Village and media centre, Olympic Delivery Authority (ODA) chairman John Armitt said today.

It is believed that approximately £500m of the funding is in place but the credit crunch is having an impact on the availability of funding for Lend Lease, the Australian company which is building the £1bn village.

Mr Armitt, chairman of the ODA, the body responsible for building Olympic venues and infrastructure, predicted that deals will be struck by the end of the year for the 3,000-home project but some contingency funding will be needed.

He said: "Fundamentally, we originally expected to have quite big sums of private sector funding for the Olympic Village and for the media centre.

"The consequence of what is happening in the markets means that the availability of funding is more difficult - that is not to say that it is not available but, if it is available, it is available on harsh terms.

"What we are doing at the moment with Lend Lease and the International Broadcast Centre/Main Press Centre (IBC/MPC) is that discussions and negotiations are going on with banks and we will reach a conclusion.

"In reaching that conclusion there will be an element of contingency funding required."

The athletes' village is the biggest component of the 500-acre Olympic Park in Stratford, east London.

Mr Armitt said the funders contingency "was designed for major unexpected circumstances - and this clearly counts as that".

He added: "We are hopeful of reaching a conclusion by the end of the year, and that remains the case."

It will not mean that the £9.3bn Olympic project will go over budget, he argued.

"No, it certainly will not mean that," he said. "We are on schedule."

Construction work started on the Olympic Village in June 2008 and piling work is now under way on the site.

The IBC/MPC, complete with state-of-the-art facilities, is set to be a 24-hour media hub for around 20,000 broadcasters, photographers and journalists during the 2012 Games.

The new facilities will provide around 120,000 square metres of employment space.

Use of the facilities after the Games will be consulted on as part of the London Development Agency's plans for developing the area after the Games.

After the Games the Village will become part of the overall Stratford City regeneration scheme, including a new regional shopping centre with additional leisure, office and up to 3,300 new homes.

It is to include a mix of affordable housing plus accommodation for sale and rent.

Some profits may come from land sales after the Games but it is difficult to precisely predict land values at that time.