Assuming that Chicago wins the Olympic bid for 2016, the effects on the city as a whole would be many. The obvious effect would be seen in infrastucture. The proposed Olympic Village near the lakefront south of McCormick Place as well as any new venues built for the games, particularly the proposed changes to Washington Park as the location for the yet-unbuilt Olympic Stadium, would endure for decades to come as testament of the games. Were the city to gain the nomination it would receive federal funds which most likely would be diverted to the expansion of transportation infrastructure. While I am not aware of any pressing highway projects awaiting funding there is plenty of maintenance work to be done (especially if there are any winters such as this past one between here and 2016 that leave behind a glut of potholes). The rest of the transportation funds would likely go towards funding the CTA's pet projects as of this moment: the Circle Line, the Red Line extension and the Mid-City Transitway (all of which I've referenced earlier) as well as perhaps a new line connecting the Olympic Stadium to the Olympic Village to the Loop...or some other worthy project.
When looking for an Olympic host city from the 1970s on, I wanted to look for a city whose very image had been transformed as a result. Barcelona sprung to mind first but perhaps it was because I was only 6 at the time of the games. The articles I found talking about urban regeneration in Barcelona following the games were written in regards to the upcoming London 2012 Olympics. To me it never seemed as if the city of London was in any need of a makeover as far as image went and although London certainly has its dodgy areas (as every major city does) from my limited knowledge it does not seem as if London is in any dire need of urban renewal. Nevertheless the articles centered on the definite changes that Barcelona has undergone around its Olympic developments. What was once a dingy, unused port became the Olympic Village and is now an attractive neighborhood. However, Barcelona underwent a change that some Chicagoans fear will repeat itself. The cost of living in the city almost tripled following the games and many of its poorer inhabitants were priced out. The poor sections of the city of Chicago are already being squeezed out of the perfect city that some in power relentlessly market. The Olympics could cause some of that movement to increase.