Fiscal Crisis Threatens Anaheim’s Grand Plans : Development: The city’s blueprint for the next century is stalled, but officials vow to pursue their goals.

December was the month when this city, home of Disneyland and three professional sports teams, expected to add the final details to its blueprint for the next century.

City officials hoped to reach an agreement by year’s end to build a new baseball stadium for the California Angels and to choose the designer for a dazzling entertainment complex that would surround it.

Moving ahead with that project and the Anaheim Resort--a $172-million renovation proposed for the area surrounding Disneyland--was the key to the city’s plan to spruce up its shabby commercial areas, widen streets and make itself over as a modern metropolis.

Orange County’s Dec. 6 bankruptcy filing, however, rocked the city, which had $169 million, or about 20% of its money, in an investment pool that has lost $2.02 billion through risky investments.

The financial crisis raised serious doubts about whether Anaheim can proceed with its ambitious redevelopment, but city officials vow that they will proceed. “This is a bump in the road,” said James D. Ruth, Anaheim’s city manager. “It’s going to hurt, but there are ways to deal with it.”

The city faces other potential setbacks, though. The Los Angeles Rams are reportedly close to announcing plans to move to St. Louis, in spite of an intense effort by community leaders to keep the football team with enticements that include a new or renovated stadium for football only, rather than one shared with the Angels.

The city’s newest professional team, the popular Mighty Ducks of Anaheim, had a spectacular first season performing to sold-out houses at the new city-built arena, The Pond. That success is expected to continue if the National Hockey League can settle its labor dispute, which has stalled the season.

The week before the bankruptcy filing, Anaheim Mayor Tom Daly met with Rams President John Shaw to assure him that the city is serious about keeping the team. A detailed proposal for a new stadium was to have followed, but city officials have had to focus instead on financial crisis management rather than strategic planning.

“The timing could not be worse,” Leigh Steinberg, co-chairman of Save the Rams, said at the time.

Negotiations with the Angels, too, have been postponed, dashing earlier hopes that an agreement on a new stadium could be sealed by year’s end.

“We’re still hopeful in terms of Rams negotiations and optimistic about the Angels, but this is obviously not the right time to sit down and cut deals,” Ruth said.

Officials are also anxious to see what effect the financial setback will have on Walt Disney Co.’s proposal to build a $3-billion resort next to Disneyland.

Disney’s plan is insulated somewhat from the county’s money problems because it does not depend on public money. But county-financed roads and other infrastructure improvements to have been part of the project could be in jeopardy, officials said.

“Obviously, there will be some impact,” said Michael Johnson, manager of communications for Walt Disney Development Co. “But we are going to look for ways to keep our plan for a project in Anaheim on track and work closely with Anaheim officials to see that we’re able to do that.”

Mayor Daly said he is optimistic that the city will continue its progress on several fronts, even if it has to take a different approach.

“What the county bankruptcy makes clearer than ever is that we will have to rely on partnerships with the private sector to build major projects,” Daly said.

The county’s financial crisis, though, “was like being hit between the eyes,” said Anaheim Councilman Bob Zemel, who was sworn into office on Nov. 29, just two days before news of the investment pool loss.

And it is not clear yet how much the city is out. Anaheim invested heavily in the county investment pool. And, because that strategy netted the city a total of $12 million in revenue for the past three years, officials borrowed $94 million early in 1994 solely to invest in the fund, Ruth said. That loan comes due in April, and it is not clear where the city will get the money to pay back the loan if it loses some of the principal invested with the county.

“At the time, it was a very prudent business decision, and we were advised that it was almost no-risk,” Ruth said. “We feel somewhat misled.”

In a worst-case scenario, the city could lose as much as $45 million out of the $169 million it had put in the county fund, Ruth said. Until city officials learn the final figure, they have put a hold on all new capital improvement projects, instituted a city hiring freeze and canceled an order for a new fleet of city vehicles.

Work on the Anaheim Resort project is continuing, though, with the city placing overhead utility lines underground.

Zemel said the council has no contingency plan yet to deal with a major loss and that any solution will have to include a way to proceed with major projects like the Disney resort and baseball stadium.

“It’s very important that Anaheim not be knocked backward by this,” he said.

City officials have made several moves to regain their momentum, including a meeting last week with 50 members of the Anaheim Chamber of Commerce to update them on the crisis.

“They gave us a relatively upbeat presentation,” said Jay Walton, government affairs manager for the group. “The bankruptcy doesn’t help, but these dreams can still happen.”

City Manager Ruth said that in January the city is “going to hit the track running” and resume meetings with the Angels and Disney. Also, he said, the council will vote on a consulting firm to develop an updated land-use strategy for the stadium area, a step that officials say much be taken regardless of what the Rams do.

“This is an extremely vital city, and we see it moving forward,” Ruth said. “We are going to set the tone for this entire county. Anaheim will be the leader.”