O.C. Unveils Plan to Sell Facilities : Bankruptcy: Official’s proposal exempts John Wayne Airport and landfills, citing legal and financial obstacles.

Struggling to raise cash, Orange County Chief Executive Officer William J. Popejoy announced plans Thursday to privatize a variety of county services and sell as much as $145 million in public assets--including libraries, courts, a drug rehabilitation home and a juvenile detention center.

But Popejoy did not recommend the sale of John Wayne Airport or county landfills, the county’s big-ticket holdings, saying that legal and financial obstacles would make them too difficult to spin off.

“Asset sales and privatization of county services are important links in the process of financial recovery, but they are not a panacea and must not be looked upon as salvation from the county’s financial woes,” Popejoy warned in a report to the Board of Supervisors. “Like the severe budget cuts I announced this week, they are only a part of the recovery plan.”

Thursday’s proposal was part of a sweeping plan to help the county recover from its unprecedented Dec. 6 bankruptcy filing. In addition to selling assets and privatizing county services, Popejoy has announced plans to lay off 1,040 workers and eliminate another 563 positions to save the county $188 million.

Popejoy said his proposal was the “first wave of sales of county assets and services that we suggest should be privatized.” Additional properties and services may be identified later, he said.

The county could earn about $33 million by selling a dozen properties over an initial 12-month period, the former savings and loan executive said. They include a fire station, a federal court facility and the Phoenix House drug rehabilitation center--all in Santa Ana--and several office buildings throughout the county.

That sum, Popejoy said, is the most that the county can reasonably expect to raise toward its short-term obligations, which include more than $1 billion in bond payments due by Aug. 10.

“There’s been a perception that the county had all these hidden assets. The reality is different,” Popejoy said. “The other assets will help down the line.”

The county could earn as much as another $71 million by selling and leasing back three properties: the Santa Ana Civic Center, including the Hall of Administration; office buildings used by the Sheriff’s Department, and the Probation Department headquarters.

Other properties, which could take years to sell, might be worth another $40 million, Popejoy’s report noted. They include nine county libraries, an American Legion Post in Buena Park, the Joplin Youth Center in Trabuco Canyon, the historic Howe Waffle House in Santa Ana, and the South Orange County Municipal Court complex in Laguna Niguel.

The sale of those properties would involve a number of complicated legal and logistic problems--not the least of which is relocating some operations of the sheriff’s, probation and public defender offices.

Don Hansch, club manager of the American Legion Post, said the county would have to break a $1-a-year lease with the organization that expires in the year 2033 if it wants to sell the property.

“We’d be upset, that’s for sure,” Hansch said. “If they break the lease, I think they would have to relocate us, and that could cost them even more money. We’ve been here since 1934. . . . Hopefully, they won’t touch us.”

It was unclear Thursday whether there might be buyers for many of the county properties that could be put on the block.

Financially strapped Seal Beach expressed little interest in buying a county library branch. But officials in Irvine, one of the cities hardest hit by the collapse of the county investment pool, were intrigued.

“Library service is considered a very high priority in Irvine,” Councilwoman Paula Werner said. “I certainly think the idea is not just something we should consider; it’s something we should actively pursue.”

Despite much speculation about the sale of John Wayne Airport and county landfills as a way to raise up to $1 billion, Popejoy and a task force that researched asset sales concluded that such deals weren’t feasible.

“In order to achieve a sales price of any substantial amount, it would be necessary to increase revenues significantly,” Popejoy told the board. “Such measures would likely impact taxpayers through increased airline fares or trash disposal fees, which would be the likely result of selling these assets.”

Instead, Popejoy suggested that the airport and landfills be used as collateral to secure loans.

Some residents and business leaders were critical of Popejoy’s reluctance to put the high-value assets up for sale--especially if the alternative would be raising taxes.

“There is a real missed opportunity here to generate dramatic revenues to replenish a significant portion of what was lost,” said Robert W. Poole Jr., president of the Reason Foundation, who studied the county’s privatization options for the Lincoln Club of Orange County. Poole estimated that the county could garner $977 million to $1.4 billion from asset sales and lease-backs.

Reed Royalty, executive director of the Orange County Taxpayers Assn., called Popejoy’s plan a good start, but pressed him to look for more assets to sell, including the airport.

In another money-saving proposal, Popejoy identified a number of county services that could be privatized, including payroll operations, vehicle maintenance, accounting services, electronic surveillance of inmates and maintenance of county records--as well as management of the investment portfolio that got the county in its current fix.

Hiring private firms to perform some county jobs--such as crossing guards, custodians, food preparers at jails, carpenters and other trades workers--would require special state legislation, the report noted. The county is actively lobbying in Sacramento for such measures.

County officials said they have not calculated the full savings or the number of jobs that would be lost by privatizing those services. Still, the talk of transferring county jobs to the private sector was the latest jolt of bad news for county workers already jittery over Popejoy’s recent layoff announcement.

“Seems like they’re privatizing all the (positions) that weren’t part of the layoff notices,” said Bill Fogarty, executive treasurer of the Orange County Central Labor Council. “There seems to be an attitude with the board and Mr. Popejoy to cut first and worry about it later, and let the public be damned.”

Times staff writers Greg Johnson and Mark Platte and correspondent Shelby Grad contributed to this report.