Brown Invites O.C. Leaders to Face Assembly : Bankruptcy: The Speaker is briefed by county officials and business representatives on ways the Legislature can assist in recovery.

Assembly Speaker Willie Brown came to Orange County for a briefing Saturday on the county’s unprecedented fiscal crisis, then invited top county officials and business leaders to travel to Sacramento this week to plead their case before the Assembly.

Brown, an often pointed critic of Orange County and its leaders since the debacle began, issued the unusual invitation during a three-hour meeting with Chief Executive Officer William J. Popejoy, Supervisor Marian Bergeson and representatives of the Orange County Business Council. The business group has played an increasingly influential role in the county’s efforts to recover from the $1.69 billion in investment losses that pushed it into bankruptcy Dec. 6.

Popejoy described the discussion, which took place Saturday morning at the home of Irvine Co. Vice President Gary Hunt, as a “no-nonsense, detailed meeting, with no small talk.” Brown, he added, “listened very carefully and asked some very penetrating questions.”

The purpose of the meeting, requested late last week by Hunt and other business leaders, was to acquaint the powerful Assembly leader with specifics of the county’s financial plight and issue a personal appeal to him for legislative help, Popejoy said.

State lawmakers are in the middle of a special session to respond to Orange County leaders’ requests for legislative assistance to help the county recover from the financial crisis.

Along with Popejoy, Hunt and Bergeson, those in attendance from the county Saturday included Sheriff Brad Gates and Bruce Nestande, the chairman of an audit oversight committee appointed by the supervisors last month.

Brown was accompanied by Michael Galizio, his chief of staff, and John Stevens, the chief consultant to the Assembly’s Select Committee on the Insolvency of Orange County.

“We were very impressed because they had a good and concise presentation,” Stevens said. “We were also impressed by the participation of the business leaders.”

After hearing the presentations from Popejoy, Hunt and others, Stevens said, Brown “suggested the best way to get this story told was for the Assembly to meet . . . and for the Orange County leaders to make this same presentation to all the members of the Assembly.”

Brown could not be reached for comment Saturday. Last week, however, he promised to respond seriously to the county’s woes, tempering his earlier criticism of the county and its conservative leadership.

“I think he was impressed with the gravity of the situation and that, of course was the intent--to let him know how deeply in trouble we are,” Bergeson said.

“I also think it was very much in the interest of the state to better understand that the ability of the county to repay debt will have a direct impact on the state’s own ability to borrow, and on its credit rating.”

Much of the discussion, she and other participants said, centered on the county’s collapsed investment pool--specifically, how the bankrupt county can repay the scores of cities, school systems and special districts that invested in the pool and meet upcoming bond payments.

During a daylong hearing Friday in Irvine, Popejoy and other officials appealed to a panel of state legislators to guarantee loans for the county, warning that the county could not recover from its investment losses without state assistance.

County officials reiterated that request Saturday, according to one participant in the meeting who spoke on the condition of anonymity. Specifically, the source said, Brown was asked to support a proposal by the county to issue about $250 million in “recovery notes” that would be guaranteed by the state but use the county’s assets as collateral.

If the county could not meet its obligation when the notes came due, the state would liquidate the assets to pay off bondholders. But by Saturday, the participant said, county leaders had identified only $150 million in assets that could be used as collateral.

Asked how Brown responded to the discussion, Popejoy said, “I’m not sure receptive is the right word, but he certainly was attentive.”

The funds raised through the bond issue would be earmarked to help repay participants in the county’s troubled pool, according to the source in the meeting.

Many of the investors in the pool have rejected a recent settlement proposal brokered by the business council that does not guarantee them the return of their entire investment. The plan would immediately repay all participants 77 cents on each dollar invested and holds out a promise that they would eventually recoup all their funds.

The county hopes to sell the recovery notes in an effort to increase the amount repaid immediately to 90 cents on the dollar for school districts and 80 cents per dollar for other investors, the source said.

But the source said Brown continued Saturday to stress his belief that Orange County officials must also consider other means of filling the county’s gaping budgetary hole, including raising the sales tax rate. “It was very clear that he was serious about a tax,” the source said.

Meanwhile, several county officials, including Popejoy, Bergeson and Gates, are expected to travel to Sacramento this week to address the Assembly. They probably would be accompanied by Hunt and other leaders of the business council, including developer George Argyros and business executive Thomas Sutton.