LOCAL ELECTIONS / MUNICIPAL RACES : Good News, Bad News for Two Mayors : In heated contests, Santa Ana’s Daniel H. Young is cruising toward a victory over Councilman John Acosta. In Anaheim, Fred Hunter is losing to Councilman Tom Daly.

The bitter mayoral election in Anaheim appeared headed for a surprise ending late Tuesday as City Councilman Tom Daly neared an upset victory over two-term incumbent Fred Hunter.

With 66 of 180 precincts reporting, Daly led by a healthy margin over the mayor, who only weeks ago had predicted a landslide in his favor.

In Santa Ana, meanwhile, Mayor Daniel H. Young was cruising toward an easy victory over Councilman John Acosta, and Westminster voters were helping Tony Lam remain in contention to become the first Vietnamese-American public officeholder in Orange County.

In Garden Grove, Ho Chung was in a virtual tie with Bruce A. Broadwater for an open council seat. A victory would make Chung the first Korean-American to win local office in that city.

Daly jumped to a surprising early lead with the help of absentee voters whom Hunter had targeted early with an aggressive mailer campaign. Throughout the evening, however, Daly continued to extend his margin.

In the only other Anaheim council race, incumbent William D. Ehrle, a Hunter ally, was losing his bid for reelection to the well-financed challenge of retired businessman Frank Feldhaus. If the leads of Daly and Feldhaus hold, the results will shake up the previous council voting bloc once dominated by Hunter, Ehrle and Councilman Bob D. Simpson, who did not stand for reelection this year.

At a small gathering in a west side commercial center, Daly stopped just short of claiming victory.

“Obviously, I’m very pleased,” Daly said. “If anything, I think the margin will grow. I was getting really good feedback from the precincts. People want change. They are tired of embarrassing statements from the mayor.”

But Hunter was refusing to give up, saying that he was counting on returns from friendly precincts in Anaheim Hills to keep him in contention.

“I still think I’m going to win,” Hunter said. “There are a lot of precincts still out there that should come through for me.”

In Santa Ana, Young’s support seemed to be helping the allied candidacies of Lisa Mills in Ward 3 and Tom Lutz in Ward 4. Late Tuesday, the mayor said he was “feeling very confident that the whole team we’ve put out there will win.” Of his three slate members, only Glenn Mondo was trailing in Ward 1.

Young’s confidence was fueled by what he called Acosta’s “very strange and puzzling” campaign.

Acosta “tried to develop the theme of running as an outsider even though he’s got the longest term on the council,” Young said. “That left a contradicting message.”

Although considerably behind Tuesday night, Acosta was not in the mood to concede defeat. A loss would end an 11-year reign on the council.

“I don’t know what the outcome might be, but I’m not giving up,” Acosta said from his storefront headquarters on West 17th Street. “All I know is that I worked my heart out on this campaign.”

Tuesday’s voting capped particularly bitter mayoral campaigns in both Santa Ana and Anaheim, where candidates squared off on issues ranging from term-limit referendums to city gang problems.

In Santa Ana, the election season has been defined by the city’s growing gang troubles. In his challenge to Young, Acosta has accused the mayor of failing to understand the issue.

Last spring, after a gang-related shooting on the basketball court of Santa Ana High School, Acosta declared that Anglo council members neither understood nor cared about the problems facing minorities.

Young, however, has said that Acosta has used the gang issue in an attempt to inject subtle charges of racism into the campaign.

The issue came to a boiling point late last week when the Santa Ana Police Officers Assn. distributed a campaign mailer in which Latino children and older Latino youths were pictured holding assault rifles.

Acosta renounced the flyer as divisive, while Young said the material was produced without his knowledge. However, the mayor did not disavow its contents.

In Anaheim, the campaign has been equally contentious, punctuated by numerous personal exchanges between Hunter and Daly, during a series of public forums.

O.C. VOTE TABLES: A10, A17