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. Last Updated: 07/27/2016

Olympics Forcing Businesses Out

LONDON -- Lance Forman's family has smoked salmon in East London for 100 years and two weeks ago supplied the Wimbledon tennis championships. The city's successful bid to host the 2012 Olympic Games means he will not be there much longer.

Forman's 2-year-old factory, which cost $5 million to build and sells fish to Harrods and the Savoy Hotel, is one of 284 businesses on a 200-hectare site earmarked for development into the main venue for the Games. The forced relocation may cost Forman ?2 million ($3.5 million), he said.

"It's frustrating because we'd love to be able to share in the nation's pride," Forman said in a telephone interview.

"Instead of pushing our business forward, we're going to be building another factory. It's a complete waste of time."

London plans to spend $15.8 billion on the Games after edging out Paris, New York, Madrid and Moscow last Wednesday. Organizers say East London, which includes the country's third-poorest borough, will gain 9,000 homes and 11,000 jobs as part of a development program. Local businesses want compensation for moving to areas where rent can be three times higher.

The companies must move by July 2007. Of those, 20 have agreed to terms with the London Development Agency on so-called compulsory purchase orders. The authority expects as many as 70 businesses to have agreed to terms by the end of this month.

"The IOC will no doubt be keen to avoid the last-minute panics of Athens, and the pressure will be on to move as soon as possible," Phillip Challinor, a director of Caldes, a British property company advising the businesses, said in an interview. "Very few can afford this and many will struggle to survive."

Construction delays raised concern that Athens would fail to complete its venues in time for the 2004 Olympics. London Mayor Ken Livingstone said last Wednesday that building would start immediately.

Organizers will spend $2.1 billion on the Games site, including $700 million on sports venues, $600 million on roads and rail, and $800 million on other infrastructure. The Olympic stadium will cost $595 million out of a total British government and London municipal authority budget of $3.8 billion.

"We will use the Games to transform the chances of children of the East End and break that cycle of poverty," Livingstone told reporters last Wednesday in Singapore. "If a few firms continue to be difficult, then we will move to the compulsory purchase procedure."

Forman does not want to move the company and his 40 workers without compensation. The London Development Agency values land on the site at as much as ?800,000 ($1.4 million) per acre. Challinor said land about a kilometer away might cost three times that.

"So I'm meant to sell to the LDA for ?700,000 an acre and buy for ?4 million? It's ludicrous," said Forman, a Cambridge University economics graduate. "It would be an absolute tragedy if, for the sake of two weeks of sport, we are wiped out."

The Marshgate Lane Business Group, which represents 173 of the companies, in May sent a letter to the International Olympic Committee saying the development agency had failed to give them "fair treatment."

"We're living in a different world now that London has won, and they may hold us over a barrel," Forman said.

"Nobody is seeking to profiteer, but we don't see why it should cost us a single penny. We just want what's fair."

Almost 50 percent of London-based companies expect their business will benefit from staging the Games, the first in the capital since 1948, according to a Chamber of Commerce survey of 357 companies in the fourth quarter last year.

Challinor, whose company was hired by the agency, said London's offers to businesses were "way ahead" of regular compulsory purchases. The London Development Agency will pay legal and surveyors' fees for those moving.

"Moving businesses creates obvious concerns, and the main one is costs," Challinor said. "Unfortunately, some will suffer the ultimate pain of extinction."

Gareth Blacker, a director of the London Development Agency, said an early commitment to help companies may have "raised expectations and led to disillusionment." He made initial offers in July last year.

"Most businesses have worked with us, but a small number have adopted tactics to exploit the situation," Blacker said on June 30. "It's probably not unreasonable of them to do that. Where people have a genuine issue, deals have been done."