ORANGE COUNTY IN BANKRUPTCY : BOND TICKER : County Closes First Deal in Series of Asset Sales

The Board of Supervisors this week approved a sale and lease-back agreement for two county properties in Santa Ana, marking the first transaction in the county’s effort to unload assets.

The properties--two buildings on the 500 block of Sycamore Street--were purchased for $2.1 million by an investment group called Sycamore Partnership. The buildings are occupied by the county’s Health Care Agency.

The county received an initial down payment of $601,000. Under the agreement, the owner will lease back the buildings to the county for 15 years.

Officials said the deal is expected to save the county about $572,000 this year.

County Chief Executive Officer William J. Popejoy has said the county could raise $33 million by selling about a dozen properties in a 12-month period, including a court facility, a fire station and office buildings.

Roadblocks to Tax Repeal

Repealing the half-cent sales tax known as Measure M--as some anti-taxers want to do--would mean halting several of the county’s critical road transportation projects, including current work on the El Toro “Y” and widening the Santa Ana Freeway north of the “Orange Crush,” according to a county transportation report.

Released on Wednesday by the Orange County Transportation Authority, the report detailed these and other drastic measures that could be triggered by tampering with the sales tax that raises millions each year for road, rail and commuter projects.

The OCTA report also states there is no legal way to appropriate Measure M revenue short of calling a special election to let voters amend or repeal the measure. But the report says even a voter repeal could result in OCTA defaulting on some of its bonds and have a disastrous impact on efforts to improve transportation throughout Orange County, the report concludes.

Measure M, passed in 1991, has become a target of critics who say the county should use that revenue to help ease bankruptcy woes before it asks voters to raise the sales tax another half-cent with Measure R. The sales tax is currently 7.75%.

Investors Want Extra Time

The city of Huntington Beach and two local water districts are asking U.S. Bankruptcy Judge John E. Ryan to extend the deadline for investors to approve the proposed settlement agreement with Orange County and to set an emergency hearing by Friday regarding disclosure issues in the case.

In court papers, attorneys argue that the settlement agreement brokered by the county and a committee representing nearly 200 agencies that invested in the pool “is nothing more than a bold and blatant attempt to circumvent” requirements of the Bankruptcy Code.

“Taking advantage of the fact that many of the pool participants are desperate for cash now,” the county is using the “promise of immediate cash . . . to obtain their acceptance now ,” the filing states. “Only later, once the acceptances are safely tucked away and the pool participants are precluded by the settlement from objecting,” will the county attempt to explain to the court how the amount to be repaid to pool participants was calculated.

County officials and the pool committee set April 17 as the deadline for investors to approve or reject the settlement offer. More than two dozen agencies, including the two with the most money at stake, have already voted to accept the agreement.

Compiled by Shelby Grad, with Russ Loar and Jodi Wilgoren