After suffering both insult and injury in several weeks of media revelations, the once-mighty $53 million U.S. Olympic Committee retention deal lay bleeding Monday on the desk of City Council.
LandCo Equity Partners and its chairman, Ray Marshall, had been revealed to be something of a liability the subject of multiple lawsuits, and allegations of misusing funds. Then last Friday, LandCo had filed a lawsuit of its own against the USOC and the city, claiming they hadn't met contractual obligations. The city, most notably, delayed selling bonds to produce millions in funding last November to relieve LandCo from a large construction loan.
Monday's mood was dire.
"I don't know what I want right now," Councilor Scott Hente said. "I want a lot of crap cleaned up."
But as Council headed toward a strategy-building closed executive session, the heart of the problem was the same as it was last October: LandCo couldn't produce $16 million to renovate the Olympic Training Center, as promised.
Until that happened, the USOC wouldn't sign a lease for its new downtown office building, or obligate itself in any way to the unfinalized retention deal. And until the USOC was in, the city wouldn't go millions into debt.
This charade couldn't go on forever. And it won't. Because the city has decided to end it.
The initial plan which still needs approval from all three parties was hashed out in Monday's secret three-hour meeting, from which Council members emerged grinning. The plan, they say, isn't much different from what it was a few weeks ago.
Vice Mayor Larry Small says the city plans to pay for the headquarters building at Tejon Street and Colorado Avenue, allowing LandCo to retain control of the bottom two floors, as originally agreed. Public-private financing will be used to expand the OTC; LandCo may or may not be involved in that project.
"Their primary mission now," Small says, "is to finish the construction of the headquarters building."
All project deadlines will be pushed back under the plan, though it's unclear how far.
But according to sources who wish to remain anonymous, a couple things are different from what has been previously reported.
First, and most important, the city plans to provide "bridge money" millions in financing to assure the USOC that OTC construction will be completed. The city hopes that will be enough to persuade the USOC to obligate itself to the plan.
After that, private funds likely will be brought into the deal. Those could be charitable donations, or investments from local people hoping to make back at least some of their money on tax rebates.
If all parties agree to the amended deal, the city will issue at least $27 million in certificates of participation to help fund the well-underway headquarters project and possibly other work. LandCo will get its money, but it may not stay in the project the city could, instead, work directly with builder GE Johnson to complete the headquarters, and bring in another developer or builder for the OTC.
The USOC deal first ran into trouble last fall, when the bond market went sour. The city had trouble issuing its USOC bonds at a reasonable price, and was immediately alerted to the fact that LandCo's financing which was considered much riskier and therefore less desirable would be impossible to obtain. Without financing, LandCo could not complete the OTC improvements.
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