Watt Forfeited $3.75 Million in CSUN Project : Education: University officials hope to use the developer’s funds to attract new investors.

Watt Industries Inc. forfeited $3.75 million by withdrawing from the Cal State Northridge University Park development--money that campus officials said Friday will be used to attract other investors or to build a version of the project without a partner.

Outgoing CSUN President James W. Cleary said he is optimistic that the project will eventually be built, but he conceded that finding investors for the proposed $200-million project--a combination of commercial ventures and campus improvements on 100 acres of school land--is going to be difficult because of the slumping real estate business.

That Santa Monica-based Watt Industries was willing to lose so much money to pull out of the deal indicates how difficult it may be to find another investor, campus officials said.

The $3.75 million is Watt’s profit on the recently completed $35-million University Park student housing complex, which the firm agreed to donate toward construction of the larger project. The money is held by the Campus University Park Development Corp., controlled by senior members of the CSUN administration, Cleary said.

Watt abandoned that money as a result of its June 5 withdrawal from the University Park partnership, said Elliot Mininberg, vice president for administration and university advancement.

Under the decade-old partnership deal, CSUN had agreed to lease its state-owned land to Watt for 75 years. The company was to have built 360,000 square feet of office space, a 225-room hotel and conference center, a 20,000-seat athletic stadium, restaurants, a campus theater and auditorium. Watt was to keep 80% of the annual profits and CSUN would have received 20%.

At the end of the lease, CSUN was to take ownership of all the commercial improvements.

But progress on the deal was stalled three years ago when Los Angeles city planners sought to assert control over traffic and other environmental issues. State projects such as the campus improvements are usually exempt from local jurisdiction, but the city planners argued that they should have control over the commercial development. As negotiations dragged on, the slumping economy finally prompted Watt to pull out of the deal, company President Jim Wadsworth said earlier this week.

Mininberg said the action by Watt Industries--owned by Ray Watt, one of the state’s largest developers--”doesn’t mean that someone else doesn’t feel it is worth the gamble.”

Watt representatives estimated two years ago that the company would earn as much as $2.4 million a year from the development.

Breakup of the partnership was seen as a major setback for the Northridge campus, which had hoped the landmark deal would become a model for Cal State universities to generate funds for school improvements the state could not otherwise afford. An athletic stadium and performing arts center are especially needed, school officials said.

The bad news comes as faculty and students nervously await an agreement between Gov. Pete Wilson and the Legislature over a final state budget that is expected to result in layoffs of one-third or more of the teaching staff and elimination of hundreds of classes in the fall.

Cleary and Mininberg said during a joint interview Friday that they remained hopeful that an investor will be found in the coming months. Mininberg said he has contacted two financial consultants for help.

In addition, a representative of a professional sports team has expressed some interest in helping to build an athletic stadium to share with CSUN sports teams, Mininberg said. But he declined to name the team or team owner.

If no investor can be found, the two men said the campus would consider completing a revamped version of the project alone.