Auction Bids Fall Below High Hopes : Bankruptcy: After rejecting low-ball offers, O.C. isn't close to $30-million goal for asset sale. $9.5 million raised.

By MATT LAIT

June 21, 1995 12 AM PT

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TIMES STAFF WRITER

COSTA MESA — In a desperate and novel attempt to raise cash, bankrupt Orange County on Tuesday tried to auction 19 properties, but fell short of its goal of generating sales of $30 million by more than two-thirds.

“It’s very disappointing,” Supervisor William G. Steiner said of the auction. “I think this shows that some solutions appear simple on the surface but are more difficult to pull off.”

The auction, complete with a colorful auctioneer barking out bids in rapid-fire cadence, was the county’s most ambitious and unique effort so far to sell county assets as part of a plan to recover from a $1.7-billion investment pool loss that triggered the largest municipal bankruptcy in U.S. history.

But despite the glitz, the auction yielded bids of only $15.05 million with most of the properties coming in well under the county’s estimates.

County officials, who had the discretion to either accept or reject the bids, accepted only six transactions worth about $9.5 million. Eleven bids were rejected for being under market value. The county is negotiating with the two remaining investors.

The properties that sold included: a library in Seal Beach, an old fire station in Santa Ana, a drug rehabilitation clinic in Santa Ana and a vacant lot across from The Pond of Anaheim.

Robert Griffith, head of the county’s General Services Agency and one of the organizers of the auction, downplayed the underwhelming financial outcome, saying the original goal of $30 million “was always a hopeful number, a best-case scenario, but it was never realistic.”

Nonetheless, he said the auction results did not meet the county’s expectations.

“I think it’s like all of the other recovery plans,” he said. “None of them turn out to be as lucrative as you would want, but it all fits into part of the puzzle.”

He said the county is tentatively planning to hold at least one more auction of county property, most likely in September.

Even though the bids were lower than the county had wanted, Tuesday’s auction--which was held in a hotel ballroom in Costa Mesa--was well attended by about 200 investors, business people, city officials, real estate brokers, attorneys and spectators.

Conducted in the style of expensive car or art auctions, the property sales saw furious back-and-forth bidding among investors. Auctioneer Hal Hines prodded participants in a sing-song voice to open their checkbooks and up the ante.

“What do you want to do? I’ve got to know,” Hines repeatedly said to one bidder, while telling another, “Is that a cigar in his mouth? Don’t let him light it just yet.”

Hines, who is nationally known for his auction banter, stood atop a stage flanked by two picture screens that would show the properties on the block. Holding a microphone in one hand and pointing to bidders, Hines did his best to hawk the county possessions.

Bidders, who held cashier’s checks for down payments, frequently huddled in groups to discuss how many times they would lift their bidding card during the frenzy of the sales.

Many who attended said the auction was quite a spectacle.

“It’s really exciting,” said Linda Sorensen, an employee with the county Department of Education. “We were sitting on our hands so there would be no mistakes.”

Others said it was odd seeing the public assets of a county be shopped around.

“In my 20 years of public service I haven’t seen anything like this,” said Anaheim Deputy City Manager Tom Wood, who, along with other city officials, successfully outbid other investors for a 7.7-acre parcel near The Pond of Anaheim. “This is definitely unique.”

The city won the property with a $5.9-million bid. The officials said they plan to use it for parking for the arena. Before the auction, the county had estimated the value of the property at $9 million.

Some of the bidders, such as officials from the Phoenix House drug rehabilitation clinic in Santa Ana, sought to buy properties to maintain the status quo.

“We’re in the house now and we certainly wanted to stay there,” said Richard Davison, a member of the organization’s board of directors. “We were prepared to go higher. We couldn’t face the thought of leaving there.”

After the auction, the organization raised its final bid of $1.5 million to $1.75 million when the county threatened to reject the bid.

Residents from Leisure World in Seal Beach submitted the one and only bid for the library building near the community.

Howard McCurdy, a spokesman for Leisure World’s Golden Rain Foundation, said the residents chipped in $225,000 to buy the library.

“We think it’s a good deal,” he said.

Some of the deals may have been too good and therefore not good enough for the county to accept, officials said.

Santa Ana City Manager David N. Ream said the county was receiving bids well below market value on some of the properties.

“It would be ludicrous and embarrassing if the county actually sold them for that,” he said. “I don’t expect the county to accept most of these.”

Not everyone thought they got a great deal.

“I think the county got the bargain,” said Robert O’Hill, who purchased a commercial building facing a marina in Newport Beach for $1.6 million. “I guess I’m being a good citizen.”

Later, the county, which had estimated the value of that parcel at $2.5 million to $3.2 million, rejected his bid.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

On the Block

Orange County tried to auction 19 properties in an effort to raise money for bankruptcy recovery. Thirteen of the bids were rejected as being too low. Here’s a look at which bids won and lost:

WINNERS

City: Anaheim

County valuation: $9 million

Bid price: $5.9 million

Description: Parking lot at northwest intersection of Katella Avenueand Douglass Road

****

City: Anaheim

County valuation: $318,643

Bid price: $300,000

Description: First trust deed loan with principal balance of about $318,643 secured by eight acres of land located near Frontera Street and Riverside Freeway

****

City: Seal Beach

County valuation: $225,000

Bid price: $225,000

Description: Library building and land at 2300 Beverly Manor Road.

****

City: Santa Ana

County valuation: $80,000

Bid price: $40,000

Description: Public building zoned residential, 521 N. Figueroa St.

Negotiated purchase price: $51,000

****

City: Santa Ana

County valuation: $1.48 million

Bid price: $1.25 million

Description: First trust deed loan with principal balance of about$1.4 million secured by fully occupied commercial office building at 511 and 515 N. Sycamore St.

****

City: Santa Ana

County valuation: $2 million

Bid price: $1.5 million

Description: Phoenix House drug rehabilitation clinic building at 1207 E. Fruit St.

Negotiated purchase price: $1.75 million

****

LOSERS

City: Anaheim

County valuation: $6.1 million

Bid price: $1.8 million

Description: Commercial buildings and land at 1000-1010 S. Harbor Blvd.