An assurance from Gov. Mike Leavitt that he intends to honor an Olympics indemnification agreement has calmed Salt Lake's threats to junk the agreement and wrest back control of the Games.
Three weeks ago, in the thick of the bribery scandal, City Council Chairman Keith Christensen noted that the validity of the 1991 agreement whereby the state agrees to indemnify the city for any losses related to the 2002 Winter Games is legally questionable.He vowed to get to the bottom of it, find out once and for all whether the agreement is valid, and if not, regain the control of the Games the city had given up in exchange for indemnity.
"What I cannot tolerate is no financial indemnity and no advise and consent (power)," he said at the time.
Christensen may not have gotten to the bottom of the problem, but he at least did some significant excavation. He and Council Vice Chairman Tom Rogan met with Leavitt last week, and Leavitt offered his assurance that "I remain committed to the 1991 agreement," as the governor stated in a follow-up letter.
They also consulted with City Attorney Roger Cutler, who responded that he believes the contract to be valid and enforceable, notwithstanding possible constitutional problems regarding the state lending money to private undertakings. (The Olympics are a public-private hybrid.)
For these purposes, Cutler said, "this is not a private foundation."
Cutler also based his opinion on the contract's mandate that the parties will not challenge its validity and noted that the city has taken action in reliance on the contract, prohibiting the state from then going back on its word ("equitable estoppel" in legalese).
"We don't think (validity) will come up, frankly, but if it does, we have a good body of sound legal precedent," Cutler said.
There is more that the council could have done to establish the validity of the contract. It did not, for example, require from Cutler a formal, written opinion. It could have gone after a declaratory judgment in court to establish the contract's validity. It could have sought confirmation from the Legislature's legal eagles, since the Legislature obviously has a say in what happens to the money.
But Christensen has determined he has gone far enough.
"Sometimes risk involves taking people at their word," he said. "We believe the governor's word, and his actions, are good."
Not everyone on the council agrees that everything necessary has been done. Deeda Seed and Joanne Milner, for example, would like further action to be taken to establish the contract's validity. But the majority of the council backs Christensen.
At various times in the past, the governor has confirmed his commitment to the contract, whatever the state of its legality, saying it is, if nothing else, "a moral obligation."
Measures have been taken to protect the city -- and the state -- from liability from the Games. The Salt Lake Organizing Committee has liability insurance and plans to take out more before the Games actually begin. All contracts with vendors contain language that the vendors will look only to SLOC -- not the city or state -- for reimbursement.
Nevertheless, lawyers have demonstrated time and again their skill at getting around even seemingly iron-clad legal provisions. If that happens, and liability for any shortfall goes beyond SLOC, the only question will be whether the tab is picked up by taxpayers in Salt Lake City or the entire state.
Cutler said if there is a problem, it will most likely be with regard to the financial commitments the city has made to the International Olympic Committee, not with vendors.
"Do you think under this scenario the IOC is going to come in and sue Salt Lake City?" he said. "Not likely."