Most Agree Ruling Won’t Slow Irvine Co.

The punch line to the age-old question, “Where does a 500-pound gorilla sleep?” is, of course, “Anywhere he wants.”

It is a line still very much applicable to Orange County’s version of a powerful gorilla--the Irvine Co.

And that is unlikely to change much in the aftermath of Monday’s court ruling awarding an additional $35 million to heiress Joan Irvine Smith and her mother, Athalie Clark, for their shares of the giant land-development firm.

In part because the company has been prepared for a potentially adverse ruling and has grown rapidly since 1983, the decision should have a minimal effect on the largest private landowner in the United States.

Even if the Michigan court referee who issued Monday’s ruling subsequently orders the Irvine Co. to pay interest and court costs, nearly doubling the amount to $70 million, company observers say the total won’t slow down the developer.

Irvine Co. officials, in more restrained language, say the same thing. “The Irvine Co. has acknowledged and planned for the eventual compensation of Mrs. Smith and her mother,” said Irvine Co. Senior Vice President Gary Hunt. He added, in a prepared statement Monday, that the ruling “will have no averse consequences upon the company or its operations.”

“The amount of today’s judgment falls within a range that the company anticipated and will pay through existing lines of credit,” Hunt said.

The Irvine Co. holds about 64,000 acres of Orange County in its grip. It currently has major developments covering more than a third of that territory either under way or on the drawing boards.

Those operations include the 1,740-acre Tustin Ranch development that is well under way with about 1,500 of a projected 9,000 homes already built.

Ken Bruner, an aide to county Supervisor Thomas F. Riley, whose district includes that project, said Monday that the suit had never been a major issue in the planning process.

As Riley’s land-use specialist, Bruner has been part of planning negotiations with the Irvine Co. for both the Tustin Ranch and the pending Newport Coast project, a resort-themed development scheduled to get started this year on 9,400 acres between Newport Beach and Laguna Beach.

“I don’t perceive any impact (from the court case) at the present on any Irvine Co. plans that I know of,” Bruner said.

He added that because Riley is acquainted with both Smith and Bren, “our feelings about this are mixed.”

In Orange, officials have been negotiating with the Irvine Co. on plans for the company’s 7,000-acre East Orange development, where construction work has just begun. Community planning administrator Vern Jones said that the settlement would not appear to have any impact on the proposed community of 12,350 homes.

“The company never brought up the suit in any of our sessions,” Jones said.

Underscoring the Irvine Co.’s longstanding position that the suit--whatever the result--would not adversely affect its plans, company officials never offered a cut-down version of the plan or a slowed timetable to compensate for a huge payment to Smith, Jones said.

Almost as if reading from the same script as other city officials, Irvine City Manager Paul Brady said Monday that Irvine Co. owner Bren “has a lot of resources and there has never been any discussion with us of whether the suit would have an impact on the Irvine Co.’s ability to go on with its development here.”

Brady--whose city was created by Irvine Co. planners more than a decade ago--said watching the suit’s seven-year progress has been something of a pastime among many in the city.

“I’ve been watching it,” he said, “and I doubt the settlement will have any impact.”

The award to Smith--although effectively boosting Bren’s initial 1983 valuation of the company by 35%--to $1.36 billion from $1 billion--should not affect the company’s substantial property tax bill--$37.4 million last year, government officials said.

“It has absolutely no impact,” said County Assessor Bradley Jacobs, who was involved in a two-year court battle with the Irvine Co. after reassessing its land holdings after Bren’s acquisition of controlling interest in the firm.

When Bren bought the company, the purchase price valued it at $1.1 billion. Under Jacobs’ reading of assessment rules, however, each individual parcel owned by the company was reassessed to then-current market value, boosting the valuation to $3.6 billion and more than tripling the property tax bill.

In settling the Irvine Co.’s challenge of the reassessment, a 1985 tax-year valuation of $2.95 billion was agreed on and has become the basis for subsequent tax bills.

Monday’s court award, Jacobs said, establishes a value for the equity investment held by Smith, but will not affect the county’s property valuation.

While both Smith and the Irvine Co. seem pleased with the decision, real estate analyst Sanford Goodkin looked at things from a slightly irreverent perspective.

“I’m probably a winner in this,” he said. “That’s because I’ll end up being investment counselor to some of the attorneys in the case when they collect their fees.”