O.C. Decides to Foreclose on Baldwins : Real estate: The bankrupt home-building unit owes nearly $1 million in back taxes on property in South County.

Orange County officials on Tuesday agreed to begin foreclosure proceedings against Baldwin Builders, the bankrupt Newport Beach firm that is delinquent on nearly $1 million of taxes for its Portola Hills development.

As of August, the Baldwin firm or its affiliates owed the county $405,665 in late property taxes and $523,515 in special taxes on a Mello-Roos Community Facilities District in the 1,000-acre South County development.

Although the action is expected to have little impact on the enclave of Portola Hills and the people who live there, it means one more chink in the armor of the embattled Baldwin brothers, Alfred and James, who filed bankruptcy for their home-building company in July.

The Baldwin Co. filed for Chapter 11 protection from creditors after its chief lender, General Electric Capital, declared that $23 million worth of Baldwin property could no longer be used as collateral. Earlier this month, Baldwin Builders received court-approval of a $70-million financing plan to enable the firm to continue operations.

Now that the financing is in place, the Baldwins plan to make good on the back taxes “very soon” and will not let the property go into foreclosure, promised Annette McCluskey, a spokeswoman for the Baldwins.

But according to regulations, the county is forced to start foreclosure proceedings when taxes become that delinquent, officials said.

If the beleaguered Baldwins do not pay up, the county would eventually get its money through a foreclosure sale of 100 acres of undeveloped land zoned for industrial use owned by the Baldwins in Portola Hills, officials said.

Portola Hills is planned for more than 2,000 homes in south Orange County and is about 80% completed, according to McCluskey. Other builders, including J.P. Peters of Newport Beach, have built there. Richmond American Homes of California Inc. in Irvine recently bought 56 lots in Portola Hills from Baldwin Builders, company officials said.

The county sold a combined $24 million of special tax bonds in 1988 and 1991 to fund streets, lighting and other infrastructure improvements for the Portola Hills development, and most of the bonds are still outstanding, county officials said.

Bondholders are currently receiving payments from other bond money the county has, officials said. The bonds are not in danger of default, they said.

While homeowners in the district are paying their Mello-Roos fees, the Baldwins are delinquent on taxes for a 100-acre portion of land zoned for industrial use. Residents would not be forced to pay extra Mello-Roos taxes to cover the Baldwin delinquencies, county officials said.

“No one is losing any money--yet,” said Zane Mann, publisher of the California Municipal Bond Advisor in Palm Springs.

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Times correspondent Shelby Grad contributed to this report