New Hurdles Blocking Olympic Center Loan : Finance: Angry state lawmakers want collateral--and answers--before they’ll consider lending the promised $15 million.
With a flurry of criticism and demands for more information, a key legislative budget committee Tuesday sent word that it wants a San Diego-based foundation to put up collateral before it receives a $15-million state loan toward construction of an Olympic training center in the South Bay.
The six-member Assembly-Senate budget committee, however, stopped shy of scuttling the controversial loan altogether, holding out a thread of hope that the transaction could be restructured and salvaged during the waning days of state budget negotiations.
Yet it was clear Tuesday that any approval from the committee, charged with the laborious job of working out the final details in the proposed 1990-1991 state budget, would come at a price.
After openly criticizing state administrators Tuesday for writing a contract for the loan that called for only simple interest and no collateral, the lawmakers pressed demands to know more about who and what is behind the San Diego National Sports Training Foundation.
They wanted to know about the foundation’s financial strength, as well as the business activities of its board members, which include such prominent San Diegans as shopping center magnate Ernie Hahn and former San Diego City Councilwoman Gloria McColl.
“I would like the analyst . . . to tell us who’s on the foundation board, who makes up this foundation,” said Assemblywoman Maxine Waters (D-Los Angeles), who raised the initial objections over the loan last week.
“I would like to know what their assets are. I’d like to know when it was originated, and I’d like to know what its operating budget is, aside from assets,” she said. “Again, all of the principals and whatever other business they may be conducting at this time.”
Tuesday marked the second time in a little more than a week that the conference committee has balked at approving the loan, which was mandated under a state law passed last year to help with the construction of a state-of-the-art, $65-million Olympic training center on the western shore of Lower Otay Lake in Chula Vista.
The measure called for the $15 million, to be loaned over the next three years, be paid back through the sale of specialized Olympic training-center license plates. Preliminary plans call for the year-round training complex to be built by the end of 1992 by the foundation, which will then turn over title to the U.S. Olympic Committee.
Worried that those license plate sales would fall far short of the promises of training center supporters, Gov. George Deukmejian signed the measure only after extracting the extra security that the foundation would sign a written guarantee to repay the remaining portions of the loan.
The Times disclosed this month, however, that the transaction, as negotiated by the Department of Commerce, did not require the foundation to set aside financial reserves or assets to back up its obligation. A high-ranking Commerce official conceded that, without the safeguards, the state could lose the money if the foundation were to change its mind or become defunct.
On Tuesday, members of the state’s Department of Finance and the independent Legislative Analyst office confirmed the absence of collateral, as well as the fact that the loan called for only simple interest and a liberal 20-year repayment schedule. The terms have especially raised objections, since lawmakers must make deep budget cuts in the face of an anticipated $3.6-billion shortfall.
“Just a minute,” said Assemblywoman Waters. “I’ve got a few foundations that would like to borrow some money, too, at simple interest and no collateral. It’s the best deal going.”
Sen. John Seymour (R-Anaheim) called the proposed loan a “bad deal.”
“I’m amazed at (the Department of) Finance, as conservative as you are, that you think this is an appropriate loan without collateral,” Seymour said. “That amazes me.”
When asked why state administrators didn’t demand any collateral for the loan, LaFenus S. Stancell, an assistant director of the Department of Finance, explained that the original law didn’t specifically spell out the requirement for such a financial safeguard.
“You couldn’t figure that out by yourself without the bill telling you?” asked Assemblyman John Vasconcellos (D-Santa Clara), who chaired the conference committee.
Vasconcellos then inquired what assets the foundation would have to back up the loan. “I don’t know,” Stancell said.
“I do,” Vasconcellos shot back. “It doesn’t have any.”
The foundation’s latest available public report, filed last November, showed that it lost more than $195,000 during 1988-1989. Foundation officials have told The Times, however, that they expect to end the year with a $3.5-million to $5 million surplus, an estimate predicated on the approval of the first $5-million installment of the state loan.
Armed with his own objections and those of two other committee members, Vasconcellos appeared ready to declare the training center loan dead and move onto other budget items.
But he suddenly drew back and allowed a glimmer of hope by suggesting that the staff go back to the foundation to renegotiate the loan to include collateral, the payment of compounded interest and repayment in less than 20 years.
In restructuring the loan, Seymour said he wanted to make sure of the collateral being offered by the foundation, if it agreed to renegotiate.
“Some collateral’s good, some collateral’s bad,” Seymour said. “I would like the . . . opinion as to what is reasonable and good business practice relative to repayment of the loan.”
David Neilsen, executive vice president of the foundation, declined Tuesday to say whether board members for the nonprofit group will be willing to reopen negotiations and offer the state collateral for the loan.
“I need to get a little more clarification of exactly what happened today,” Neilsen said in a telephone call to San Diego. “We had the bill last session. We do have an agreement.”