Key HUD Official Defends Sale of Ranch to Lyon Co.

A federal housing official involved in the government’s controversial sale of the Robinson Ranch in Orange County to a Newport Beach developer who is a major Republican contributor said Tuesday that the transaction was based on sound economics and was not influenced by politics.

In an interview, Edwin W. Baker, one of five officials who recommended in 1985 that the federal government sell the 827-acre ranch to the William Lyon Co. for about $16 million, disputed key conclusions reached by investigators of the U.S. Department of Housing and Urban Development who looked into the sale several months after it occurred.

The investigators noted that the sale to Lyon, who originally was the lowest of four bidders, “ . . . indicated improper award practices, conclusions and possible favoritism to the William Lyon Co.” Based partly on interviews with losing bidders, the investigators alleged that Lyon received the property because of his political influence and his friendship with Shirley M. Wiseman, then a deputy assistant HUD secretary.

But Baker, who is a HUD official, said Tuesday that:

* Wiseman, accused by HUD investigators of steering the sale to the Lyon company, was only indirectly involved in negotiations that led to the company’s purchase of the property.

* Even though HUD investigators said that the Lyon company’s bid was the lowest of four, the five-member panel that recommended the sale determined that Lyon’s complex offer actually was worth the most to the government. The offer included a $10.5-million cash down payment and “equity kicker” payments that would vary based on the number of homes actually built. He said that all four offers contained many of the same elements, but it was determined that Lyon’s was the best.

* Despite other HUD documents that set the value of the ranch at $35 million, the officials charged with selecting a buyer for the partially developed property never formally determined what the land was worth. “There was never a real, quote, appraised value, unquote,” Baker said.

In addition, Baker said that neither he nor at least two of the four other members of the selection committee selected by Wiseman have ever seen or heard of the highly critical report on the handling of the sale written by the HUD inspector general’s office in San Francisco.

Officials Not Interviewed

The report noted that none of the HUD officials responsible for selecting the William Lyon Co. were interviewed.

The report, a copy of which was obtained by The Times, concluded that the sale to the Lyon company was “improper” and “inappropriate.” The report strongly criticized Wiseman and suggested that the former deputy assistant secretary of HUD, who is now president of the National Assn. of Home Builders, singled out the William Lyon Co. for special treatment.

Lyon has contributed about $200,000 to Republican political committees and candidates since 1980, records indicate. At his Coto de Caza home last year, Lyon hosted a fund-raiser to benefit the library of former President Ronald Reagan.

Wiseman has been a key figure in the developing scandal involving allegations of political influence-peddling at HUD. During recent testimony before a House subcommittee, Wiseman was praised for refusing to obey a superior’s orders to approve a North Carolina housing project proposed by an influential Republican developer.

HUD took possession of the Robinson Ranch in 1984 after a previous developer defaulted on a $35-million HUD loan made under the now-defunct Title X land acquisition program, which was intended to encourage development of single-family housing.

An initial plan to sell the ranch for cash failed in August, 1984, when no bidders responded to a HUD offering. HUD then decided to accept mortgage securities and a cash down payment for the property, and put the ranch back on the market in January, 1985.

Panel of 5 Chosen

To evaluate the bids, Wiseman chose a panel of five HUD officials who had been involved in the Title X program, Baker said.

“We don’t dispose of much property, and we particularly had never disposed of property that had a mortgage claim on it the size of the one on Robinson Ranch,” Baker explained. At the time he sat on the selection committee, Baker served as chief of the Title X branch in HUD’s Office of Insured Single Family Housing. He is now head of HUD’s valuation and technical support branch.

Baker said all five members of the selection committee eventually agreed that the Lyon bid had the greatest “present value” to HUD, and that all signed a letter to that effect dated April 15, 1985.

The report, however, notes that the decision came on a split vote on March 7, 1985. The report also said that officials of developer Kaufman & Broad of Los Angeles, one of the losing bidders, received a telegram the next day informing them that their bid had been rejected.

“During the (selection) process, nobody was pushing anybody,” Baker said. Of Wiseman, he added: “During the negotiation process and during the process of the group putting together a package with a proposal to her, she was not pushing.”

Baker branded as untrue an assertion by the San Francisco inspector general’s office that the Lyon company was given an opportunity to make a last-minute change in its bid that made its offer more attractive than those of its competitors. He added:

“There was a decision that was made by members of the committee, and ultimately by the general counsel’s office, that . . . to compare the numbers in the various original bids that we should invite everybody to make what I characterize as a ‘best and final’ offer.

“All of the (bidders) came in with a subsequent clarification and revision to the original bid package,” Baker continued, offering several alternate development proposals. The Lyon company received no special treatment, he repeated.