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House to Investigate O.C. HUD Deal, Official Says

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Times Staff Writer

The House subcommittee investigating the widening HUD scandal will examine whether the Newport Beach development company headed by William Lyon received preferential treatment when it bought the 827-acre Robinson Ranch in southern Orange County from the agency in 1985, a panel official said Tuesday.

The Department of Housing and Urban Development accepted the Lyon Co.’s bid of $16 million, despite warnings from HUD’s general counsel that it was not the best of four bids under consideration, according to a 1985 internal HUD report.

The land was valued at about $35 million at the time of the sale, according to other HUD documents.

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The investigation of the Robinson Ranch land deal by the House Government Operation Subcommittee on Employment and Housing could begin as early as November, said Stuart E. Weisberg, the subcommittee’s chief investigator on HUD matters.

Weisberg said among those likely to be called to testify is Lyon, one of the nation’s largest home builders and an acquaintance of former President Reagan, who reportedly contributed more than $200,000 to the Republican Party during the Reagan years.

Lyon, who has steadfastly refused comment on any aspect of his company’s Robinson Ranch development, was also unavailable Tuesday. An aide to the developer said: “As it has been from the beginning, our position on this issue remains no comment.”

Another likely witness, Weisberg said, is Shirley M. Wiseman, former deputy assistant secretary for housing at HUD, who was accused by federal investigators in the HUD report of showing “favoritism” to Lyon’s company when the Newport Beach firm was negotiating to buy Robinson Ranch from the agency.

In the 1985 HUD report, which was signed by HUD’s regional inspector general, Wiseman is accused by two Southern California developers--who sought unsuccessfully to buy Robinson Ranch--of favoring Lyon in hope of winning his support in her bid for a position with the National Assn. of Home Builders.

Wiseman, who left HUD in 1986 and is now president of the home builder group, has denied discussing Robinson Ranch with Lyon before the bidding and has refuted suggestions that the developer played a role in her ascendancy to the top post of the national home builders group, a powerful Washington-based lobbying group.

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Key Figure in Scandal

Wiseman, who could not be reached Tuesday for comment on the pending investigation, has been a key figure in the HUD scandal, which has focused on political influence-peddling and on up to $1 billion in losses from flawed or questionable projects begun by HUD.

Government investigator Weisberg said Tuesday that Robinson Ranch was added to the committee’s “must list” to investigate because of the “peculiar bidding process” involving the sale.

“The whole deal doesn’t seem to make a lot of sense,” Weisberg said. “It is an apparent reversal of policies by career staff by higher-ups who stepped in at the last minute against strong legal advice. Something does not add up.”

Weisberg also said, “It seems like there is pattern that when it comes to selling, as in the Robinson Ranch matter, HUD sells to the lowest bidder.”

Weisberg said it is unlikely that the subcommittee, which is headed by Rep. Tom Lantos (D-San Mateo), will take up Robinson Ranch before November, when congressional investigators are expected to begin reviewing Title X projects, of which Robinson Ranch is one.

Designed for Incentives

Title X was designed to provide incentives for developers to build on property where it would be otherwise difficult to obtain financing, in contrast with more typical HUD programs aimed at helping poor people.

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The HUD hearings are scheduled to resume Sept. 15, with the opening witness expected to be former HUD Secretary Samuel R. Pierce Jr.

“Our plate looks pretty full right through the end of October,” said Weisberg, who heads an eight-member staff working full time on HUD.

As to whom could be called to testify before the committee, Weisberg said: “Anybody is essentially fair game. Generally, we call the people who are most involved with the project--the decision-makers at HUD, as well as the particular developers and consultants on that project.”

Weisberg said another California housing development, Desert Falls in Palm Desert, may also be investigated.

Santa Ana Home Builder

A wealthy Montana cattle rancher and a small Santa Ana home builder persuaded HUD in 1983 to help them build luxury condominiums around a golf course in Palm Desert, using funds from Title X.

Two years later, the developers defaulted on the $13.6-million loan HUD had insured. Desert Falls went into bankruptcy, leaving HUD to repay the developers’ lender nearly $10 million.

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“We are getting dozens of letters and phone calls a day about HUD projects from across the county,” Weisberg said. “It’s overwhelming. This thing has mushroomed beyond anyone’s expectations.”

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