As a last-minute reprieve for the bankruptcy-bound San Diego Symphony, the City Council has discussed extending an unprecedented letter of credit to the orchestra so it can borrow money to cover its operating deficit.
Four council members and a San Diego Chamber of Commerce official said Wednesday the letter of credit has been discussed as a “last resort” if private fund-raising efforts this week are not enough to erase the symphony’s $1.8-million debt. The symphony has said it will file for bankruptcy Monday morning if it does not raise the funds.
Councilman Mike Gotch said he expected the City Council to be called into an emergency meeting to consider the letter of credit between now and Sunday night.
If the council were to wait until the last minute, he said, council members could be deliberating the symphony’s plight while the orchestra plays its last scheduled performance--an all-Beethoven concert--several blocks away.
Gotch said he believes there will be a call to assemble enough council members and approve the letter of credit before the final curtain. “The symphony has asked that by the conclusion of the final performance on Sunday, it have funds or the letter of credit from the city,” said Gotch. “They want the patrons on Sunday and the musicians to know if they have a reprieve.”
Acting Mayor Ed Struiksma, however, said late Wednesday he has no plans to call the special meeting.
But interviews with four other council members and Lee Grissom, chamber president and one of the business leaders spearheading the recent flurry of symphony fund-raising, indicate the idea has been discussed in some detail. While they have not determined an amount for the letter of credit, Grissom said, it would be extended for only four months.
Typically, a letter of credit is issued by a bank, guaranteeing that a business or individual has enough money in its account to pay a debt.
While council members, including Gotch, say they do not want to use city funds directly to bail out the symphony, the letter of credit would allow them to pledge tax money as collateral if the orchestra then sought a loan elsewhere to pay all or portions of its $1.8-million operating deficit. Grissom said it would be solicited with the strict understanding that it was a stop-gap measure.
Some council members, however, expressed concern Wednesday that the letter of credit could leave the city liable if the symphony defaulted on the loan.
City Atty. John Witt said extending a letter of credit would be tantamount to the city giving money to the symphony outright.