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Mary Moran, the chief executive of Calgary’s Olympic bid corporation, speaks to reporters in Calgary, Alta., on Oct. 31, 2018.

Jeff McIntosh/The Canadian Press

Calgary’s bid for the 2026 Winter Olympics narrowly survived a city council vote on Wednesday after organizers cut the budget for the Games by hundreds of millions of dollars and announced a complicated funding proposal that even baffled some councillors.

However, the plan fails to adequately account for cost overruns the city could face. Calgary hopes to obtain a $200-million insurance policy to protect against such a scenario. Some on council see this as wishful thinking and warned that further budget cuts for the Games will be required.

The council vote, which followed days of heated negotiations between the city, the Province of Alberta and Ottawa, means a Nov. 13 plebiscite will proceed as planned. But it also raised new questions about whether the three levels of government have committed enough public money to pay for the Games. In addition, it revealed deep divisions among city councillors, who voted 8-7 to kill the bid but fell short of the two-thirds majority required.

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Calgarians will vote on a revised bid that includes nearly $300-million in cuts to the total public funding required.

Mayor Naheed Nenshi, who voted to continue with the bid, said it was important for Calgarians to deliver a verdict on whether they want the Olympics. “This is an incredibly good deal. After all that sausage-making, the sausage that came out of it is amazing,” he told reporters on Wednesday evening.

The funding proposal, which still requires significant negotiation, is based on a revised budget that would require $2.875-billion in public funding from all three levels of government, down from about $3-billion. Cuts to the budget are largely related to security and the cancellation of nearly one-third of the planned housing for participants, which was meant to inject new affordable housing as one of the legacies of the proposed Games.

The federal government had previously committed $1.5-billion, but only if the money was matched by the province and the city − a requirement of a long-standing federal sport policy that was in place for the 2010 Olympics in Vancouver and the 2015 Pan American Games in Toronto. Alberta has already committed $700-million and the city had said it could not make up the difference.

Under the new agreement, the federal government would provide $1.423-billion and the province would keep its funding level the same. The City of Calgary would provide $390-million in cash and an additional $150-million from previously planned municipal spending. Guarantees for cost overruns to the tune of $200-million would also be part of its total contribution, all of which would count toward the federal government’s cost-matching formula. The proposal allows the city to claim a significantly higher contribution without actually spending more money in order to unlock that matching funding from Ottawa.

The city’s manager warned that it’s still unclear if the city can secure a $200-million insurance policy as a form of guarantee to guard against cost overruns. Mary Moran, the chief executive of Calgary’s Olympic bid corporation, said a further $200-million in savings may need to be found if the search for an insurance policy fails.

After details of the financial agreement became public on Tuesday, Mr. Nenshi said he had conversations with Calgarians and explained that the funding plan would be complicated and that council would be divided. He said he was told by voters: “Don’t condescend. Give us the deal, let us look at it and let us vote.”

Councillor Evan Woolley, the chair of the council’s Olympic bid committee, was one of the strongest voices against continuing with the pursuit of the Games. “A whole litany of questions remains unanswered today,” he said after the vote.

A day earlier, several councillors indicated they would vote to end the bid unless a funding agreement was in place before the council vote. During Wednesday’s council meeting, a majority of councillors said they were uneasy with the funding framework reached at the last minute. Other councillors warned that if the city goes ahead with the Olympics, it will be unable to spend significant money on anything else for years and risks a downgrade of the city’s credit rating.

After council’s decision to go forward with the plebiscite on the reduced bid, Ms. Moran acknowledged that her team would be presenting a “very complicated deal” to people with little time to convince them of its merits. However, she said she was happy to see the bid survive.

If Calgary stays in the running, it would be competing against Stockholm and an Italian bid involving Cortina D’Ampezzo and Milan. The International Olympic Committee will select a winning bid next year.

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