Strings Threaten to Kill Loan for Olympic Center

After a third day of hand-wringing, a key legislative budget committee Wednesday agreed to make a $15-million state loan to help build an Olympic training center in Chula Vista only if the foundation receiving the public money puts up collateral and pays compound interest.

But the tentative approval came with what some predicted was a fatal string attached: The controversial loan would have to be paid out of the state’s besieged general fund, already being scoured by lawmakers for ways to make $3.6 billion in deep budget cuts.

Consequently, the Olympic training center loan would be considered alongside hard-pressed social programs such as services for the disabled and financial aid payments to the blind to determine what should be axed during the waning days of state budget negotiations.

And that kind of comparison, some said Wednesday, could spell doom for the loan, assailed by some as a special deal. Originally, the governor had proposed paying the first $5-million installment of the loan this year out of the state’s unitary fund, a protected account derived from corporate taxes.

“I think the $5 million, if it comes out of the unitary fund, would survive and so will the facility,” said Assemblyman William P. Baker (R-Danville), a member of the budget conference committee. “But, if it comes out of the general fund, it’s a dead duck.”

The proposed loan to the nonprofit San Diego National Sports Training Foundation was mandated last year by a state law, which required repayment of the $15 million from the sales of specialized Olympic training center license plates. The money is to help build a state-of-the-art, $65-million training complex on the western shore of Lower Otay Lake to be turned over to the U.S. Olympic Committee at the end of 1992.

Nagging doubts that the license plate proceeds would be enough, however, prompted Gov. George Deukmejian to sign the law only after the foundation signed a written promise to guarantee the loan.

But The Times disclosed earlier this month that the final contract with the foundation never required the group to put up collateral. And a Department of Commerce official who negotiated the deal conceded that the state could lose its money if the foundation changed its mind or folded.

Angered by the lack of collateral and that the contract requires the foundation to pay only simple interest, lawmakers on the budget committee openly criticized state administrators who negotiated the deal and balked twice at approving the transaction before Wednesday’s meeting.

Assemblywoman Maxine Waters (D-Los Angeles) continued to oppose the loan on Wednesday. At one point, she demanded that all of the San Diego foundation’s directors, which include shopping center magnate Ernie Hahn and former San Diego City Councilwoman Gloria McColl, be required to pledge their homes and businesses against the loan.

“Does the State of California have a program of any kind that you know about that is available to the public to come in and put together these kind of loans for projects and nonprofit corporations? . . . What’s the deal?

“I know small business (owners) who put up their homes in order to collateralize loans from the (state) Office of Small Business Development,” she said. “This is not that.”

Waters’ five colleagues on the committee, however, agreed to approve the loan only if the foundation can be persuaded to renegotiate its contract, puts up collateral and promises to pay compound interest on the obligation--provisions spelled out in budget language.

Dave Neilsen, executive vice president of the foundation, said late Wednesday that officials from the nonprofit group would have to review the language before deciding whether to renegotiate the contract.

“We need some time to review and analyze it,” Neilsen said. “We’re going to do everything we can to make it work.”

Even if the demands are met, the committee’s insistence Wednesday that the loan come from the general fund--as spelled out in last year’s enabling legislation--could make the whole transaction a moot point, committee members agreed.