Last week, the Oceanside City Council approved a tentative agreement to invest $27 million to help pay for a massive, 300-room beach resort in downtown Oceanside. The agreement is a fantastic deal for the developer, S.D. Malkin, but leaves Oceanside's residents holding the bag, and bearing the risk, should the project not meet the city's rosy expectations.

Under the terms of the agreement, S.D. Malkin will receive a $27 million taxpayer subsidy, a land lease with no payments for 12 years and an option to sell after eight years with a 20 percent profit. In return, Oceanside gets little more than a promise -- and significant downside risk.

Taxpayers are paying 15 percent of the project's construction costs. At minimum, a fair agreement would grant the city a 15 percent ownership interest in the hotel, with an escalation clause should the costs to the city increase. The estimated subsidy two years ago was $9 million. It now stands at $27 million. If costs tripled in that time, what will happen over the next four years?

The city wants to use $18 million in redevelopment money to build the hotel's parking lot. However, its legal authority to do so is uncertain. Legislation currently pending in Sacramento may prohibit the city from extending the life of the downtown redevelopment district. Instead of using redevelopment money, the city could have created a parking district authority, which could spread the costs among those properties benefiting from the additional parking.

Out of the city's general fund, the account that pays for street maintenance and repair, as well as the city's police and firefighters, the council agreed to pay $200,000 for an environmental impact report. If S.D. Malkin can't even afford to pay for its own environmental study, how financially secure can this developer be?

Oceanside had a committee bargaining with S.D. Malkin, and the results show it. To appease various interest groups, the city imposed restrictions on the project that made the hotel financially infeasible. The sad truth is that, if the city becomes a partner in this project, the city won't allow the project to fail. While the developer can always declare bankruptcy and walk away in the event of a sudden drop in tourism, where can we taxpayers go if we want out of the deal?

As Southern California develops, the value of this land will continue to skyrocket. Hotels will be built in Oceanside on a size and scale that developers and lending institutions believe will support their investments, as they balance risk against the expected rate of return.

Ultimately, the downtown hotel project should be treated like any other project. S.D. Malkin should not receive preferential treatment. Tax money should not be used to subsidize a for-profit enterprise. If the developer will not pledge its own money, and if outside lenders won't assume the risk, the project must be too risky in its current form. Why then should we taxpayers have to take on a risk that no lending institution is willing to accept?

- Oceanside resident George Barrante is a former planning commissioner and a candidate for City Council.