BLINDSIDED / ORANGE COUNTY’S FINANCIAL CRISIS : What Does It Mean? : From roads to real estate, schools to sports stadiums, the county’s residents will feel the tremors of the investment fiasco.

Schools

The numbers: Thirty-one Orange County school districts, representing about 500 schools and 400,000 students, invested $1 billion in property tax revenue in the troubled county portfolio. The districts borrowed an additional $550 million to invest in the pool. Four districts outside Orange County invested $9 million.

The impact: School officials say the financial crisis will not disrupt daily operations, but will force the delay of many improvement projects, such as building repair. State Secretary of Child Development and Education Maureen DiMarco has urged officials to find a way to keep their incoming tax revenue out of the county pool. The effects of the bankruptcy on districts will vary. The Laguna Beach Unified School District board voted to delay indefinitely the renovation of classrooms at one middle school that burned in last year’s brush fires. In Fullerton, the high school district said a first step would be to delay any asphalt repairs, while in La Habra remodeling plans for an elementary school were jeopardized.

TEACHERS: Teachers’ aides, cafeteria workers and other support staff were paid Friday; teachers are due to be paid Jan. 3 and have received assurances that payroll will be met. Most retired teachers contributed to and receive their money from the State Teachers Retirement System, which is separate from the Orange County fund and their money is not in jeopardy, according to California Teachers Assn. officials. However, Vivian Blevins, chancellor of the Rancho Santiago Community College District, noted that the district has $7 million in retiree benefits tied up in the county fund.

Transportation

The numbers: The Orange County Transportation Authority, responsible for highways and public transit, has more than $1 billion, or a third of its investments, in the county fund. The Transportation Corridor Agencies, which are building three toll roads, invested $325 million.

The impact: Because both agencies have large sums invested in the county portfolio, experts predict a slowdown, at the very least, in the start and completion of several big-ticket projects.

ROADS: Work under way to widen Interstate 5 in Santa Ana is not likely to be affected because much of the project already has been funded, an OCTA spokeswoman said. However, efforts to improve the infamous El Toro Y bottleneck and install car-pool lanes on I-5 in South Orange County could be delayed because those projects are still awaiting county funds.

TOLL ROADS: About $466 million is needed to complete a 15-mile tollway through Laguna Canyon, but $311 million is tied up in the flagging bond fund. Tollway officials insist that the road will go forward, but say the start of work on another toll road linking the Riverside Freeway to I-5 could be slowed. Officials say work already under way on the third tollway linking several foothill communities to I-5 will continue.

PUBLIC TRANSIT: Buses will continue to run without interruption next year because of federal grants and rider fares. Plans for an inter-county light rail system and expansion of commuter train service to Los Angeles could be affected because of the drain on OCTA finances.

Bondholders

The numbers: Roughly $320 million in Orange County pension revenue bonds were in default as of Friday. A whopping $1.58 billion in bonds were downgraded by Standard & Poor’s. Another $3 billion in bonds were added to S&P;’s “credit watch” list of tenuous issues that may or may not be downgraded as events unfold. And the entire $1.2-trillion municipal bond market is shaken.

The impact: Municipal bond investors may need Dramamine while watching the value of their investment portfolios rise and fall with every bit of news.

INCOME-ORIENTED INVESTORS: Buy-and-hold municipal bond investors such as retirees are unlikely to feel much pocketbook impact. Few issues are in default. Most issuers say they have enough cash to pay interest on their debts. Indeed, trustees for even the two issues now in default say they have the cash to pay interest--at least for the immediate future. They just can’t give everybody their principal back--and investors were banging at the door, wanting to cash out.

TRADERS: It’s a mixed bag for people who are hoping to earn capital gains on their muni investments. Those who are selling into today’s depressed and jittery market are taking a beating. Buyers, on the other hand, may be picking up bonds at bargain prices. Some traders say that revenue bonds issued by utilities shouldn’t be hurt in the long run. They are trying to snap up troubled issues, hoping for a bonanza when Orange County gets its act back together.

Housing

The numbers: Developers took out nearly 8,500 permits for new housing in Orange County from January through July, more than twice as many as in the same period a year ago. Home construction, exclusive of land costs, is expected to total $2.2 billion this year and generate 44,000 jobs. In resale housing, sales had picked up in recent months.

The impact: Analysts say the bond crisis could hurt the real estate industry in coming weeks and months. Lenders may be reluctant to finance new projects if local governments raise development fees to ease their cash flow problems. Potential home buyers may lose their confidence in the county’s future.

DEVELOPERS: John Shumway, president of Market Profiles, a real estate consulting firm, predicted only minor damage to the building industry because most projects in Orange County already have roads and sewers in place or financed. Michael Meyer, managing partner at Kenneth Leventhal & Co., said developments that are dependent on municipal support for infrastructure could be delayed or scrapped. Dawn McCormick, spokeswoman for the Irvine Co., said the bankruptcy “has no immediate or foreseeable impact on our residential or commercial development programs. . . . The financing is in place, the assessment districts are in place and are independent and separate from any of the problems the county is experiencing.”

BUYERS: Consumer confidence is essential to home buyers and could be shaken for a few weeks, but for the long term, interest rates will remain the key factor, Shumway said. He and Meyer agreed that housing values will not be affected in the long run by the crisis.

Disneyland

The numbers: Disney is eyeing a $3-billion expansion of its theme park and counting on $800 million in road and other improvements financed with city, state and federal funds. But Anaheim has $170 million tied up in the county’s stumbling portfolio.

The impact: The investment fiasco threatens local government participation, particularly in helping finance two sprawling parking garages planned for the resort. Anaheim officials are considering a potential freeze on capital improvement projects, but remain hopeful of going forward with a $172-million face lift around the theme park.

City Jail

The numbers: Santa Ana has about $150 million invested in the county portfolio, clouding the future for a $107-million jail and police administration center under construction.

The impact: Although the jail is about 20% completed, city officials say further work may be affected by the investment debacle. Revenue from the city’s investments was counted on to help pay for the project.

Ballparks

The numbers: A committee trying to keep the Los Angeles Rams from leaving town has proposed a $200-million football-only stadium near the existing Anaheim Stadium. Meanwhile, Anaheim officials are negotiating with the Angels to build a 45,000-seat baseball-only park. Anaheim, however, has $170 million tied up in the county fund.

The impact: Organizers trying to keep the Rams say the timing of the bond fiasco couldn’t have been worse, although they are hopeful the park can still be funded largely by corporate and individual contributions. Negotiations continue on the baseball park, but Anaheim officials are concerned because at least some of the financing would come from bonds.

Airport

The numbers: Orange County voters last month approved construction of a commercial airport at the soon-to-close El Toro Marine Corps Air Station. The project could cost in excess of $1 billion. The county was being counted on as an active participant.

The impact: Airport boosters remain surprisingly optimistic that the county’s woes won’t affect their plans. They say airport bonds could be sold because they would be segregated from the county portfolio. Some critics remain skeptical, suggesting that bonds of any kind will be hard to market, making financing for the facility unpredictable.

Business

The numbers: About 1.2 million workers are employed at nearly 200,000 businesses in Orange County. The gross annual product is nearly $80 billion, close to 10% of the state annual product.

The impact: Chapman University economists have predicted the financial crisis will cost the county thousands of new jobs. Based on early estimates that the investment portfolio had lost $1.5 billion, the economists said 4,000 to 5,000 new jobs could be lost mostly because many public works projects may dry up. Still, the economists projected that the local economy will grow by 16,500 new jobs next year. Fred Mickelson, chairman of the Chamber of Commerce and Industry of Orange County, said the region will remain attractive to business because of good schools and universities, skilled workers and a climate favoring entrepreneurs. The county administrative officer ruled out a tax increase to cope with the financial crisis, but if higher levies in other forms are imposed, they would “definitely have a cooling effect on business,” Mickelson said. Tax increases “would slow down the recovery that’s in place in Orange County, but they would not stop it,” he said. Recruiters from other states are expected to take advantage of the bankruptcy to woo businesses away from Orange County, especially if fees are raised.

Employees

The numbers: Orange County has 16,000 employees, such as sheriff’s deputies, firefighters and social workers, and an estimated payroll of $930 million a year.

The impact: A hiring freeze has been imposed since the county filed for bankruptcy protection. Sandy Sternberg, a county spokeswoman, said employees will continue to be paid without interruption. Similarly, retirees will continue to receive their checks, she said.

Welfare

The numbers: Nearly 400,000 county residents receive some form of government aid, such as Aid to Families With Dependent Children, food stamps, Medi-Cal and refugee assistance.

The impact: Payments will not be disrupted by the county’s troubles, Sternberg said. Most payments are funded by the federal and state governments, with the county checking eligibility and relaying the funds.

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