Working for Free, CEO Popejoy Earns Respect

With a single sweeping gesture in February, William J. Popejoy succeeded in blunting future criticism of his hot-seat role at the helm of Orange County--he offered to work for free.

Since then, Popejoy, the chief executive officer charged with charting the bankrupt county’s course toward recovery, has done plenty to make himself unpopular.

He has bullied five reluctant supervisors into placing a tax increase before voters, a move most politicians see as akin to political suicide. He has forced them to approve a budget that chops county services nearly in half and slashes the work force by about 12%. And he has fired several longtime top county officials.

Still, less than two months into his nine-month tenure as Orange County’s chief executive, Popejoy, 56, generally wins plaudits from a broad cross-section of observers within and outside the financially devastated county.

“He’s doing one heck of a job and he’s not getting paid anything,” said Anil Puri, director of Cal State Fullerton’s Institute for Economic and Environmental Studies. “He’s doing it because he’s concerned about the county and the future of the county. What can you say?”

Even some natural Popejoy adversaries--tax opponents and labor groups, for instance--offer grudging respect these days to the millionaire Newport Beach businessman willing to tackle such a thankless task.

“I like Mr. Popejoy and I admire him for offering to do this for free,” said Bill Mello, a leader of the anti-tax Committees of Correspondence. Nonetheless, Mello added, a trifle wistfully, “I just wish he would listen to us a little more.”

Linda Pierpoint, spokeswoman for the Orange County Employees Assn., the county’s largest employee group, said Popejoy has “tried to be fair and conscientious. . . . We don’t think he’s always succeeded, but he has tried.”

A former savings and loan executive and the onetime president of the Federal Home Loan Mortgage Corp., Popejoy was appointed by the supervisors Feb. 10 to help rescue the county from financial crisis. On Dec. 6, after the loss of nearly $1.7 billion in risky investments, the county became the largest municipality in U.S. history to declare bankruptcy.

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In interviews with nearly two dozen participants and observers of Orange County’s debacle, a picture emerges of a decisive, strong-willed leader who is not afraid to use the unprecedented authority he has been given as the county’s first chief executive officer. Many interviewed said they like his confidence, his forthright manner and his willingness to take the heat inherent in his role.

One admired Popejoy’s phrase-making, especially during the impassioned debate last week that led to the supervisors’ decision to place a half-cent sales tax hike before the voters in June.

“I’d like to thank him for using the phrase ‘turning Orange County into a Third World country,’ ” said Zane B. Mann, publisher of the California Municipal Bond Advisor, of the dire image Popejoy painted of the consequences if supervisors refused to approve the sales tax vote. “I wish I’d used it first.”

Popejoy said he too has been pleased with the progress made since his appointment, particularly last week, a “watershed week” that included both the hard-fought sales tax approval and adoption of his scaled-down budget.

“It was a very satisfying week, but it’s not over,” he said Saturday. “There’s no sense of complacency, there’s no victory celebration. This week was a giant step forward but there’s a long way to go.”

The chief executive also credited “tens of people,” volunteers and county employees alike, who have played key roles in parts of the county’s recovery plan being set in place.

The next step, he said, may be the most difficult, however: persuading the county’s historically conservative, tax-wary voters to approve the sales tax increase on June 27. “A special election in Orange County for a tax is an uphill battle. But we simply don’t have any other revenue source,” he said.

Supervisors and top employees at the county are quick to praise Popejoy, both privately and in public. During a daylong hearing last week on the controversial cutbacks he proposed, critics from the audience and dais alike dropped compliments to the CEO even as they berated his plan.

Popejoy, meanwhile, sat quietly in his reserved seat, speaking confidently when asked questions even though he was sometimes mistaken about past practices and state requirements for county operations.

In presenting his latest budget proposal, for example, Popejoy created a $19-million reserve fund that could be spent only with his written permission. But at the board meeting, he learned that he was overstepping his bounds: A state law governing such matters already exists, and requires a four-fifths vote of the supervisors.

Though the supervisors had ordered him to restore more than $11 million to the budget plan he presented earlier this month, Popejoy put back only $1.7 million, and then asked for $19 million in further reductions. Not only that, he defied his bosses’ longstanding admonition against major cuts in law enforcement.

“We have fallen short of your request,” he said simply by way of explanation. “I hope we can explain to your satisfaction why that was necessary.”

He presents an odd mix of general experience and specific ignorance, constantly reminding people how new he is on the job--he began his testimony before a state Senate panel last month by announcing it was his 21st day--and how little he knows about the public sector. But he brings an air of supreme confidence and expertise from private industry.

Often, he briefly forgets where he is, calling the supervisors the “board of directors” or referring to county-owned vehicles as “company cars.”

Popejoy routinely jokes about how soon he plans to depart, referring to problems that will have to be resolved by his “successor.” Still, he marches around his third-floor suite of offices in the Hall of Administration as if it is his castle, stopping to chat with those he passes in the corridors.

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In statements to supervisors and others, he appears to pride himself on not understanding the politics of county government. He purports--refreshingly, many say--just not to care about such things.

Supervisors were shocked Thursday, for example, when Popejoy said he wanted to study combining the county’s law enforcement agencies, a concept sure to anger the powerful Sheriff-Coroner Brad Gates and Marshal Michael S. Carona.

In discussing the idea, Supervisors Gaddi H. Vasquez and Roger R. Stanton said they pitied the county employees who would have to write an analysis of such a merger, and budget director Fred Branca said he hoped to be able to delegate that responsibility.

Popejoy retained his characteristic good humor, saying: “So far in my discussion with the sheriff and the marshal, the only thing they agreed upon was that the CEO should go away.”

Perhaps it is a measure of the severity of the debacle--and a widespread public recognition that this, unlike other recent disasters, threatens the entire county--that Popejoy’s drastic actions seem almost palatable, several said.

But many also credit him personally with having finally forced county leaders and the public to face up to the grim fact that the county is in a crisis of historic proportions, and that harsh measures are needed.

“I think he’s managed to bring off some things that the supervisors perhaps wouldn’t have done if he hadn’t been there to show them how necessary it was,” said state Sen. Lucy Killea (I-San Diego), who co-chairs a state Senate committee investigating the Orange County crisis. “There’s a little bit more of a sense of reality coming in now.”

As the former chairman of the nation’s largest and most troubled S&L;, Irvine-based American Savings, Popejoy is accustomed to crisis. His abilities as a hard-nosed, no-nonsense crisis manager have been on display since his first days on the job in mid-February, several said.

“He’s done particularly well in being realistic as to the nature of the problem and putting forth solid proposals,” said Bill Mitchell, who heads the Orange County chapter of Common Cause.

In a few short weeks, Mitchell noted, Popejoy has had to deal with layoffs, budget cutbacks, the sales tax issue, the county’s settlement agreement with its investors, and its continuing negotiations with its bondholders. “Not one of those things is fun to do,” Mitchell said.

Still, Mitchell wishes Popejoy would be a little less “myopic” on the importance of repaying bondholders when the debt comes due, without exploring such options as rolling the debt over, he said. “That’s his only major weakness, I think.”

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Popejoy, notes La Habra City Manager Lee Risner, is essentially “writing a new textbook,” defining the position of chief executive officer for his successors. His predecessor, Ernie Schneider, was demoted from his job as county administrative officer and later fired after supervisors complained of his lack of leadership during the crisis.

In contrast, Risner said, “there’s no question that (Popejoy’s) in command, as someone has to be right now. It’s a damn dirty job.”

Several members of the Board of Supervisors agreed.

“I think he’s doing an extraordinary job under very difficult circumstances, and he’s been very decisive in coming to conclusions that, while painful and difficult, are necessary in light of the circumstances,” said Vasquez, the board chairman.

“He’s putting in very long hours,” Vasquez added. “Every time I hang up the phone with him at 10, 10:30 at night and think about the fact that he’s doing this for free, it just speaks volumes about his character.”

Supervisor William G. Steiner, who lost a battle with Popejoy last week to restore millions of dollars in cuts to the county’s social services budget, said the chief executive has earned his respect.

“I underestimated his ability to handle the complexities of government and the politics of it all with such a fresh approach,” Steiner said. “That doesn’t mean I’ve always agreed with him on some things that are very important to me, but I certainly respect the job he’s doing.”

Still, Popejoy has earned his share of criticism.

He rankled employee groups early on by abolishing the county’s flexible work schedules, and upset them again last week by proposing a 5% pay cut for employees who earn $75,000 to $100,000 a year, a group that labor leaders say includes doctors and dentists at county health clinics.

“We’re glad that he recommended the sales tax increase and we agree with some other actions he’s taken,” said Pierpoint, the association’s spokeswoman. “But we worry sometimes that he really has no idea of the constituencies involved with the county and county government, and how intricate government really is. It’s very different for someone who’s used to business and not government.”

Several others said they were concerned that Popejoy’s inner circle of advisers includes too few women and minorities and is too heavily weighted toward the business community.

“I don’t think his advisory group is broad enough based,” said Jean Forbath, a longtime advocate for Orange County’s impoverished. “There is not enough grass-roots input and there aren’t enough women.”

Added Judy Rosener, a professor at UCI’s Graduate School of Management: “I’m interested in a quote he made about not wanting diversity for diversity’s sake. . . I hope he doesn’t feel that diversity is just a symbolic showing of having people who look and act different, but realizes that those differences bring insights that might not otherwise be there.”

Popejoy angered tax opponents with the sales tax proposal. And he even irked the supervisors by failing at one point to notify four of them that he was having a crucial meeting with Assembly Speaker Willie Brown.

“There was a breakdown in communications in that instance,” Vasquez said. “I don’t think there was any negative intent there; it’s more just the nature of the fast pace we’re running these days.”

The opposition from anti-tax fighters like Mello and Carole Walters, both leaders of the Committees of Correspondence, is likely to be longer lasting. But even they often mute their angry words with respect for Popejoy’s efforts.

“He’s the enemy, but he’s a friendly enemy,” Mello said. “You’ve got to respect someone who can make decisions the way he can. . . . But right now, I guess we feel like he’s a turncoat. We thought he was on our side about new taxes, but he’s not.”

Walters, who frequently harangues Popejoy at board meetings, admits to admiring him for volunteering his time. “But on this issue, I do not think he’s doing his job. It’s easier to tax your way out of a mess than to try to get out of it by cutting deeper” and selling county assets, she said.

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Doy Henley, president of the conservative Orange County Lincoln Club, also counts himself a tax opponent.

Although he and Popejoy disagree on that issue, Henley says, “I don’t see that anyone could do a great deal more than he has so far. He hasn’t cut anything enough yet, he hasn’t sold anything, but how long has it been, a few weeks? On balance, I think he’s done the right thing as he sees it.”

Given the constraints of the situation, including his lack of familiarity with government regulations and the enormity of the crisis, Popejoy has moved as quickly as he could, said Stephen Ward, chief investment officer for Charles Schwab Corp. in San Francisco.

Ward, whose firm owns $41 million of Orange County bonds, praised Popejoy’s role in persuading supervisors to allow county residents to vote on the sales tax, calling it a step in the right direction.

“I also think he’s done a good job in shifting the emphasis from a pure bankruptcy mode to a public finance mode, thinking about the county’s future,” Ward said. “The county must live with its neighbors and continue to exist for public purposes. He’s done that more by setting a tone than anything else, I think. He’s gotten the county to move away from an adversarial tone.”

On occasion, however, Popejoy has adopted an aggressive tone himself. Since taking his position, he has criticized many of the county’s elected officeholders, including some of the supervisors.

For example, Popejoy last month launched a blistering attack on Supervisor Jim Silva, accusing him of refusing to reduce his own office budget while publicly supporting cuts in county services.

In a private memo to Silva obtained by The Times, Popejoy described the supervisor’s position as “an insult to the employees of the county, who must carry much of the burden of the . . . budget cuts.”

Silva said he was angry at Popejoy for writing the memo, but changed his position as a result, cutting his staff and office budget.

Bill Mitchell of Common Cause decried the memo as “inappropriate,” but others praised Popejoy for his evident willingness to tackle tough issues without regard for the touchy politics they may involve or possible ramifications for him.

“When he comes to a conclusion, he’s definitely prepared to defend it,” said Wayne D. Wedin, head of the Orange County Chamber of Commerce. “He’s willing to get into the rough and tumble if that’s what it takes to get it through.”

Philosophically, Wedin added, “you just have to admire his commitment to the county, his willingness to go through what he’s going through for nothing. Nobody can question his motives.”