Orange County Voices : COMMENTARY ON THE BOND CRISIS : Business Leaders Offer Suggestions for Speeding O.C. Recovery : Government must respond in the same tough, creative way that the private sector did during the recession.

We in the business community have watched the county’s recent financial problems with compassion--yet with a growing sense of urgency. While we recognize the inherent strength within our economy and our ability to lift ourselves out of the financial turmoil, it is imperative that an immediate, workable and creative plan be developed for fast resolution of the issues in order to quickly emerge from the bankruptcy.

We urge the leaders of Orange County not to focus on placing or avoiding blame which led to the crisis, but rather to look to the future with the wisdom to make tough decisions.

Throughout the recent recession the building industry, like many families, businesses and municipalities in Orange County, was forced to make hard-hitting financial decisions and live with financial pains. The combination of the recession, the lack of home buyers, laid-off workers and no money from lenders for new homes virtually crippled our industry for several years, much as the county is crippled now.

To get our feet back on the ground, we went through many steps: We rethought our mission, redesigned our product, downsized our operations, cut overhead, restructured debts; evaluated the market, anticipated economic trends and retooled our operations. In short, we re-created our industry, cut our losses, lived with humility and reshaped our destiny by adapting to the times.

Orange County must do the same.

It is clear that the leaders of Orange County should take this opportunity to reinvent government and make decisions to protect our citizens and our businesses from any further fallout. Most important, the leaders of the county must aggressively consider all options for maximizing the funds available to resolve this financial crisis.

Some of the major options that should be considered:

Privatization: This would allow the county to reduce or contain costs and also provide greater efficiencies and effectiveness in the delivery of services. For example, many of the functions of the Environmental Management Agency--such as plan checking, traffic engineering, road programs and other public works, and operation of county parks and marinas--contain opportunities for greater use of private sector management and services.

Prudent sale of selected county assets: County-owned and -operated enterprises, such as the landfills and John Wayne Airport, should be considered for sale to the private sector or to other government agencies.

Downsizing and restructuring county government: As called for by Supervisors Roger R. Stanton and William G. Steiner, a comprehensive review of each activity within county government must be performed immediately. An important first step was recently announced by the Board of Supervisors. A chief executive officer with line authority over department heads should stimulate a much-needed review and refinement of the county’s department structure. The challenge is to eliminate duplication, produce efficiency and ensure accountability. Supervisor Marian Bergeson’s proposal for extensive, periodic audits also would be an important step. Also, support for relevant state legislation to achieve these goals must be ongoing in order to accomplish significant changes.

Exploring new broad-based revenue sources, including a temporary sales tax: Any increase in revenue sources must be scrutinized with the most careful analysis. As a general principal, fees targeted to any particular segment of the economy or the community must be avoided. For instance, increasing development fees will unfairly burden the purchasers of new homes. Any discussion of fees or taxes--including a sales tax--should be as measures of last resort and should include the goal of being both broad-based and temporary in nature.

The BIA applauds the Orange County Business Council and its effort to serve as convener of the discussions between the county and members of the investor pool to explore all available options. We believe that every equitable method of raising funds to repay all obligations to bondholders, investors, financial institutions and vendors should be a starting point in the discussions. The program must be adequate to restore the credit ratings of our public agencies, minimize costly litigation and maintain our county’s economic well-being.

Orange County’s financial crisis is not a “normal” bankruptcy. The debt restructuring program adopted by the county must take unusual steps to protect the interests and assets of local citizens. It is therefore important to give public assurance to bondholders that debt service payments will be made with no consideration to default. The county and its financial advisers should work diligently to restructure the debt to create a more manageable cash flow schedule.

We also strongly urge the county leadership to protect the thousands of county homeowners who live in Mello-Roos and special-assessment districts, by ensuring that funds set aside through property assessments to build and complete new public facilities and infrastructure be protected. Failure to protect these funds will unfairly single out one group of homeowners for less favorable treatment than other county residents.

Finally, the elected leaders of the county should continue to rely on the business community as a valuable resource in management issues and in debt restructuring. Likewise, Board of Supervisors Chairman Gaddi H. Vasquez and his colleagues deserve recognition for calling upon the business community to assist in efforts to lead this troubled county through the maze of challenges toward a financial recovery.

As Chapman University President James Doti recently pointed out, real estate in Orange County devalued a total of $20 billion in the early 1990s, but the county’s investment loss was less than one-tenth of that amount. While this is hardly a heartwarming statistic for homeowners or for our building industry, Doti’s calculation shows the inherent strength of the Orange County economy and the proven ability of people and industry to rebound.

Government can do the same, especially in taking heed from the lessons our building industry has learned in the school of financial “hard knocks.”