Governor Explains Veto of Loan Measure

Gov. George Deukmejian acknowledged Thursday that he may have been misinformed when he allowed the state to risk $15 million in general fund money on an unsecured loan toward construction of an Olympic training center in San Diego.

Deukmejian said at a news conference that he was assured by the San Diego foundation receiving the money that it would fully secure the loan as part of its contract with the state--an agreement the governor said was still being negotiated.

But Deukmejian acknowledged that he may have been under a false impression after reporters pointed out that the contract already had been signed in June and that it had allowed for a risky unsecured loan. A state official told The Times after the contract was made public that it was “unusual” and could lead to the state losing its money if the foundation folded or walked away from the deal.

“That wasn’t the information that I had,” said Deukmejian. “My information is that a contract has not yet been signed. . . . I don’t have the right information. If that’s in fact true, I would like to see that contract.”

Deukmejian’s comments came when he tried to explain why he had vetoed special legislation, contained in last week’s budget bill, requiring collateral for the loan to the San Diego National Sports Training Foundation. The group broke ground this summer on what it hopes to be a state-of-the-art, $60-million all-weather complex to train Olympic athletes in a private development in the San Diego suburb of Chula Vista.

The loan was mandated under a law passed last year but signed by Deukmejian only after he made the foundation promise it would be responsible for the loan if a plan to pay back the money through specialized license plate sales fell flat. The loan is to be made over the next three years.

Despite that direction, the Department of Commerce negotiated a contract that required no collateral and called on the foundation to pay only simple interest on the loan--facts that drew loud criticism from legislators this summer. Branding it a risky venture, the lawmakers put in the special language requiring security and the payment in compounded interest.