O.C. FINANCIAL CRISIS : Debacle May Affect Capital Projects : Repercussions: Officials uncertain if money is still available to upgrade police radios.

A potential casualty of the Orange County bonds crisis is a $94-million project to expand and upgrade the emergency telecommunications system used by every law-enforcement agency in the region, county officials said Monday.

The so-called Motorola project stood out among dozens of capital expenditures whose uncertain fate local officials found themselves pondering as County Treasurer-Tax Collector Robert L. Citron resigned amid what some were only half-jokingly calling “Bondgate.”

Scheduled to replace an outdated and overloaded radio network that emergency officials fear could impede their ability to respond to a disaster, the Motorola project was to be purchased with money from a county municipal bond sale. But officials now say the transaction will almost certainly have to be restructured in order to survive.

“Like everyone else, we’re concerned,” said Motorola sales manager Ron Thompson. He said Motorola officials are keeping a watchful eye on the situation but have heard nothing from county officials to indicate that the project is in jeopardy.

County officials as well as representatives of dozens of local agencies affected by the estimated $1.5-billion drop in the value of the county’s investment portfolio said Monday that it was too soon to tell what capital-improvement projects, if any, might be curtailed.

But caution and guarded optimism were the watchwords.

At the Orange County Transportation Authority, officials were relying on assurances from the county that no capital projects would be affected, despite OCTA having $1.1 billion tied up in the county-run investment pool--more than any other agency.

Officials with the Transportation Corridor Agencies, which is building three major toll roads in Orange County, sounded more pessimistic. A spokeswoman for the agency, which has $306 million in the shaky investment portfolio, said Monday: “We’re not making any statements. I think it’s safe to say that, potentially, anything could happen.”

That’s what had local officials concerned about the Motorola project, in which a state-of-the-art, 800-megahertz radio system would be bought for the Sheriff’s Department and every police department in the county, according to Bert Scott, director of the county’s General Services Agency.

The county is slated to bear 30% of the cost, with individual cities funding the rest.

Under a worst-case scenario being examined Monday, Scott said, the system would have to be scrapped, “meaning we’re left with a system over 20 years old, on 400 megahertz, that is out of room and hopelessly outdated.”

Scott sighed and said, “Right now, it’s like trying to run the traffic on the Santa Ana Freeway on a two-lane dirt road. That’s what we’d have to live with in the future.”

The existing system simply has more traffic than it can handle, “so if you call the police and want a cop to deal with something immediately,” Scott said, “you face a very severe time problem in terms of how fast the response will be. All of this is under a cloud at the moment.”

Scott said the Motorola project, which has been in the works since the 1980s, is due for completion in 1997. The sum of $28 million--in cash--has been set aside toward the cost, with the rest to be funded by bond revenue that now could be threatened.

Sheriff’s Department officials could not be reached for comment Monday but in the past have called the need for the upgraded system imperative. Scott said any decision on what to do with the system is up to the Board of Supervisors.

At this point, the county’s losses are on paper, so local officials don’t know whether real money will be lost and actual projects might have to be axed.

If the county can’t pay, Scott said the financing could be carried by Motorola, the telecommunications company to which the contract was awarded. But unlike the county, which can issue tax-exempt bonds, Motorola’s offering would be less attractive to buyers because they would have to pay taxes on any interest earned.

Motorola’s Thompson agreed that it has “always been a possibility” that the company would finance the system itself.

A private financing could also wind up increasing the overall cost of the project.

“It’s really too soon to tell about any of this,” Scott said. “We’re exploring so many areas. . . . We just don’t have the answers yet.”

Jim Kenan, director of finance and administration at OCTA, said he too was looking for answers. Beginning in March, his agency’s expenditure requirements will leap from the current $7 million a month to $15 million a month for such projects as a massive right-of-way acquisition and widening of the Santa Ana Freeway near Anaheim.

“They’ve assured me that if we don’t pull our money out prematurely, we’ll realize no loss of security, no loss whatsoever,” Kenan said. “So, at the present time, we’re guardedly optimistic. But we desperately need more information, and we need it quick. At the moment, we’re not very well informed, nor, for that matter, is anyone else.”

Sharing Kenan’s view was Peer Swan, president of the Irvine Ranch Water District, which has capital expenditures of $30 million to $100 million annually.

Swan said the district has access to about $170 million in funds separate from the county, “so if we can’t get the normal flow of funds from the county, we’ll still be able to handle it.”