CSUN’s Hopes Are Building : Education: The university weighs a handful of proposals for its North Campus. The riskiest project may also be the most promising.

It is a minimum $35-million proposal that promises virtually everything Cal State Northridge could want for its North Campus: a 7,500-seat indoor arena, a performing arts center and theater, an expanded football stadium and even the prospect of professional sports.

But there’s a catch: The music promoter behind the glitzy project has never developed anything like it. And he wants the university, which had hoped to earn money by leasing the land, to instead provide the site for free and pay to use the new complex. In exchange, CSUN would get a share of the profits--if there are any.

Thus, campus officials, narrowing their development plans for the property, now face a dilemma: to gamble on building an entertainment complex that could become a boom or a bust or go for the sure bet of leasing its property for yet another shopping center project, a stable but unexciting source of cash.

That is the choice that emerged after a university panel guiding development of the property narrowed its focus last week to the two concepts. The group decided to continue discussions with just four developers, the one proposing the sports complex and three with retail plans.

“The idea of a retail complex was never the most favored concept. But the one they think would really be nice doesn’t look financially feasible,” said John Rollow, the university’s development consultant. “We ended up comparing apples and persimmons,” he said.

CSUN officials clearly like Woodland Hills-based music promoter Mark Steele’s proposal to use about half of the university’s 65-acre North Campus site for an upscale complex that would become the premier entertainment venue of its kind in the San Fernando Valley. Steele has no background as a developer, which has raised concern among CSUN officials, but his ideas have piqued their interest.

Under his proposal, major CSUN athletic events would have scheduling priority at the new indoor arena and football stadium; campus cultural events would enjoy similar provisions at the performing arts center. For the rest of the time, Steele envisions booking outside athletic events, concerts and circuses and is even talking about bringing professional hockey and volleyball teams to the site.

Whether the campus can afford such a deal is a different issue.

About a decade ago, the university also reached for the big time when it began pursuing development of the property, formerly known as Devonshire Downs. Then CSUN struck a $200-million mixed-use deal with developer Watt Industries, only to see the deal collapse and cost the campus millions.

This time, with those memories still fresh in their minds, campus officials say they intend to be cautious. And with the choice of a final concept not scheduled until next spring, campus officials will receive even more detailed proposals, including the financial arrangements, from the four finalists.

The site is just north of the main campus, bounded by Devonshire Street on the north, Lassen Street on the south, and between Lindley and Zelzah avenues. It includes the earthquake-damaged University Tower Apartments, which are due for demolition, and CSUN’s decades-old North Campus Stadium.

Of more than 120 solicitations sent to developers in September, the university received only nine responses, not the several dozen expected. After reviewing those, CSUN’s North Campus/University Park Development Corp. decided to hear more from only the four short-listed firms.

They are:

* Steele and his newly formed NSRC Development Co., which calls its proposed development the Northridge Sports and Recreation Complex. Under the proposal, if the complex were successful, CSUN would share in the profits. But if the complex struggled, the university would have to pay.

* A partnership of the Woodland Hills-based Voit Cos., which built much of Warner Center, and the East Los Angeles Community Union. They propose 10 to 15 acres of retail and a 150- to 200-room hotel along Devonshire Street, along with about 250 units of multifamily housing.

* Brentwood-based Lowe Enterprises, a major developer that proposes about 22 acres of retail along Devonshire, along with about 400 multifamily housing units on 20 acres, a small office and research complex and a relocated and rebuilt athletic stadium.

* A partnership led by Atlanta-based Cousins MarketCenters Inc., which suggests an 18-acre retail center along Devonshire and two housing components consisting of about 375 rental units and about 150 units of owner-occupied housing.

The housing elements of the proposals now appear to be moot after the university’s development panel decided not to consider any housing uses on the property--even though it had originally told the developers to consider including them.

All three retail plans envision the same financial structure: The selected developer would take out a long-term lease of the university property and build its own project. That would guarantee the campus a relatively stable source of income for decades to come but do little else.

Steele’s proposal is considerably more glamorous--and risky. He wants the campus to lease at no cost more than 30 acres of land for the complex that his partners would build. Once opened, the university then would be obligated to pay them an as yet unspecified annual users fee.

The university and the developer, who would manage the complex and book events, would have a revenue-sharing agreement for most proceeds. If the complex were profitable, CSUN’s fee would simply come out of its profits. But if the complex did not show a profit, CSUN could owe a sizable amount each year.

In an interview and in his proposal, Steele called the deal “a true public-private partnership” and insisted that CSUN “will never, ever have to write us a check.” He added: “Once they see the financial plans, it will ease their concerns.”

Steele is working with Mariani Financial Co., a San Jose investment-banking firm, and lists prominent San Fernando Valley attorney Ben Reznik as his legal counsel. He also produced a letter from Koll Real Estate Group, a major builder that expressed interest in becoming a partner.

Steele said his financial structure is necessary because the state university is leasing rather than selling its property. Without that asset as collateral, Steele said his venture would need other guarantees--the CSUN users fee and other leases--to obtain construction financing.

However, the proposal remains worrisome to CSUN officials. They are pursuing the new development in part to cover the debts left by their failed 1992 deal with Watt Industries, which left behind student housing that has run multimillion-dollar operating deficits.

And CSUN officials also have heard different financial assessments of Steele’s proposal. One analysis reportedly concluded the complex could, if successful, earn far more for CSUN than a shopping center. But another advisor reportedly told officials that such developments often require subsidies.

Still, the lure is undeniably there. Steele’s proposal includes a nearly 100,000-square-foot indoor arena for basketball, volleyball and other events ($17.5 million); a 1,250-seat performing arts center and theater ($7.5 million); and a doubling of CSUN’s stadium to 12,000 seats ($7.5 million).

The site plan also calls for a 24-court volleyball complex (Steele says he is talking with volleyball star Karch Kiraly about becoming a partner); a nearly 40,000-square-foot health club; two restaurants, one sports-oriented and the other country and Western; a small park, and a retail complex.

Steele gave CSUN officials a letter from the Los Angeles Ice Dogs, an International Hockey League team that now plays at the Sports Arena, expressing interest in relocating. And Steele said he also holds the rights to the Los Angeles franchise of the planned men’s National Volleyball League.

His proposal also calls for establishing a scholarship in memory of Los Angeles City Councilman Hal Bernson’s daughter, an acquaintance who died in an October car crash. The councilman represents CSUN’s area and would be a major influence on city planning decisions on the project.

Meanwhile, campus officials said they soon plan to meet with all four developers to convey the university’s preference for an athletic-recreation complex, if it can be financed. CSUN officials hope by May to seek approval from Cal State system trustees to deal with a single developer.

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North Campus Development

A $35-million sports and recreation complex is one of four proposals being considered by Cal State Northridge for development of its North Campus. Here is a proposal drawn up by Woodland Hills music promoter Mark Steele.

1) Sports Arena

2) Football Stadium

3) Practice Field

4) Parking

5) Volleyball Stadium

6) Volleyball Complex

7) Health Club

8) Park

9) Performing Arts Center