Corporate O.C. Sees Its Role as ‘Reality Check’ : Bankruptcy: Business leaders--criticized for staying out of public arena in first weeks of crisis--have recently taken an active stance.

Though Orange County business leaders drew criticism in the early weeks of the county’s financial crisis for not jumping in quickly to lend their expertise, when they did get involved they did so boldly and with an eye for practical solutions.

The plan announced Friday to repay participants in the county’s collapsed investment pool varies little from one worked out last month by the Orange County Business Council. And county Chief Executive Officer William J. Popejoy’s recommendation last week for a half-cent increase in the local sales tax also echoed earlier business community sentiment.

“We’re going to be the reality check on a lot of this stuff,” said Wayne Wedin, chairman of the Orange County Business Council and president of Wedin Enterprises in Brea. “We’re going to focus on . . . what kinds of things we should be doing.”

Playing that role has not always been particularly comfortable. The sales-tax proposal came under immediate fire when it was first raised, and business leaders invited more political heat for privately discussing the removal of the three county supervisors--Gaddi H. Vasquez, Roger R. Stanton and William G. Steiner--on whose watch the county’s December bankruptcy occurred.

Business executives generally are not players in the public arena, said Harrison J. Goldin, a consultant who served as comptroller of New York City during its fiscal crisis in the 1970s.

“They don’t want to expose themselves to the maelstrom you get when you do something political,” said Goldin, who recently spoke to a group of Orange County business leaders about their role in bankruptcy proceedings.

Local corporate executives seem determined, however, to excel at their crash course in politics, forming a task force that will help judge which of many proposed bankruptcy cures are impractical and which hold promise.

The task force is being appointed by the Business Council, which was formed by the recent merger of the Orange County Chamber of Commerce & Industry and the Industrial League of Orange County. Edgar S. Brower, chairman of Pacific Scientific Co. in Newport Beach, is leading the group.

As Brower envisions it, the task force will focus not only on immediate challenges but also on long-term strategies.

“If we have to borrow money, then we need to position ourselves to be able to pay that money back or face some future melt-down,” he said. “We could find ourselves two years down the line in another economic crisis, and this county can’t take two of these things.”

There is no shortage of proposals.

Thomas E. Daxon, the Oklahoman brought in to serve as interim county treasurer when former Treasurer-Tax Collector Robert L. Citron resigned, has suggested that the county could garner $800 million by selling its garbage dumps.

The libertarian Reason Foundation says the county could pump as much as $500 million into its coffers by selling John Wayne Airport and a part of the El Toro Marine Corps Air Station.

And as county officials struggle to refinance a mountain of debt that will grow to $2 billion during the next fiscal year, others are floating much more complicated plans that would either bolster county revenue or enhance the county’s ability to borrow money.

“Just as we’ve never, ever found credit cards easy to pay back in our personal life,” Brower said, “we’re not going to find it easy to pay (debt) back in public life.”

One goal of the business task force, whose members have yet to be appointed, is to act as a watchdog group so that harried officials and confused voters won’t make costly missteps or unwittingly accept proposals that could end up making the county’s problems worse.

“People say sell the airport, the garbage dumps,” Brower said. “But those numbers just don’t add up. . . . Reality checks are advisable. We need to sit down and ask, ‘What do we want to look at, and why do we want to look at it?’ ”

The business leaders’ first big initiative, put together by three well-known executives, was essentially the same as the proposal endorsed Friday by members of the investment pool: 77 cents on the dollar for everyone, including the county, plus a combination of marketable notes and an assortment of IOUs for cash-strapped schools, cities and special districts.

Its creators--developer George Argyros, Irvine Co. executive Gary Hunt and Pacific Mutual Life Insurance Co. Chairman Thomas C. Sutton--are continuing to meet with pool investors to win support for the plan.

“We’re going to spend our energies . . . to avoid the potential meltdown” that could come when most schools run out of money in April, Brower said. “But with our left hand, we’re trying to formulate what needs to be done on a longer-term basis.”

That means uncovering “efficiencies and consolidations” that will cut the county’s operating costs and make it possible to move a mountain of debt, Brower said.

The Business Council will issue a report or a series of interim updates, he and Business Council President Todd Nicholson said, but voters and elected officials must make the final decisions.

Brower and Nicholson are adamant that elected officials not slip back to their pre-bankruptcy approach to the county’s fiscal situation.

“We just got burned as badly as any organization can get burned,” Brower said. “Yet here the supervisors are, back to business as usual by wanting to appoint Moorlach as treasurer without going through the process of a search.”

John M.W. Moorlach, who lost a campaign to unseat longtime Treasurer Citron in June’s election, was sworn in Friday as Orange County’s treasurer-tax collector.

The Business Council, along with the president of the California Assn. of County Treasurer-Tax Collectors, Popejoy, Daxon and Wall Street bankers, had urged the Board of Supervisors to postpone filling the position until it could conduct a national search for the best-qualified candidate.

“These aren’t stupid people in the supervisors’ offices. They’re just locked into a mind-set that they need to get unlocked from,” Brower said.

But some observers suggest that the Business Council too might do well to entertain a wider array of opinions and viewpoints.

“If they’re going to serve as the reality check for the county, who’s going to serve as a reality check on them?” asked Louis H. Masotti, a professor at UC Irvine’s Graduate School of Management.

“That’s the problem with Orange County,” Masotti said. “Leaders keep turning to each other for help. But if the other guy knew the answer, we wouldn’t have this problem to begin with.”

Consultant Goldin said New York’s brush with bankruptcy proved that the business leadership can play a key role in finding solutions, but “it’s absolutely essential that various critical constituencies play a constructive role.”

“That includes business, labor, good-government groups and the political establishment,” Goldin said. “If any of those groups withdraw or are excluded from the process, the process is likely to fail or the problem is likely to be compounded.”

Business Council Chairman Wedin defended the organization’s ongoing role in the bankruptcy. “We’re going to people in the county who have proven track records,” he said. Critics, he said, “think these (executives) don’t have the street-level kind of common sense needed.”

He and other Business Council members express confidence that they can assemble a team of chief financial officers at local corporations who will pitch Orange County’s eventual recovery plan to skeptics on Wall Street and in regulatory agencies.

The goal is to “take what’s a complex problem, a hard thing to discuss, and clarify it,” Brower said. Also, he said, “we have to lay out alternatives.”

That means debunking the belief, he said, that Orange County can avoid new taxes by rushing to sell assets, cut the size of government and privatize public-sector services.

Brower pointed to Daxon’s landfill sale plan as an example.

“That proposal is dependent upon raising rates on landfills,” Brower said. “It seems clear to me that a landfill rate hike is increased taxation. We should give people the chance to say if they want their taxes raised by higher garbage fees.”

“We’ve got to give the electorate the opportunity to look at all these options,” he said, “and what each option costs.”

Wedin maintains that the cloud over the county since its bankruptcy filing could have a silver lining.

“The way in which local government restructures itself in Orange County, for better or worse, will have a significant influence on how local government ultimately is structured statewide,” he said. “That’s a terribly awesome responsibility.”