Two Views Of a Golden State Boom

From a rooftop high above the convergence of southern California's two busiest freeways, the view is all spaciousness and light. Verdant hills surround clusters of mirror-skinned high-rises and rural roads head to golden beaches.

Just three exits north, however, chockablock neighborhoods are congested and houses worn. Miles of commercial strips are lined by handmade signs in Korean, Vietnamese, and Spanish. The homeless push shopping carts through dirt alleys.

The land where the two highways and contrasting images converge is Orange County, once considered the end of the rainbow for Americans migrating West. Today, this sixth-most-populous county in the United States has become the country's leading laboratory of "post-suburbia" - a new kind of metropolitan area that lacks a traditional, urban core but provides citizens with most of the employment, consumer, and entertainment options formerly associated only with large cities.

Four years after garnering ignoble national visibility as the largest US municipality ever to declare bankruptcy,

Orange County is back on an economic roll. But it comes with a unique challenge that holds lessons for other booming municipalities: Can its prosperity be embraced by the heavy concentrations of immigrants and minorities who now make up 40 percent of the sprawling 2.6 million population?

Indeed, the changing ethnic makeup of this longtime conservative bastion has made headlines before. Voters here turned out 24-year congressional veteran, Republican Robert Dornan, for a Democratic woman with an Hispanic surname, Loretta Sanchez.

"Orange County today has literally everything going for it from economic wealth and diversity to cutting-edge vision," says Joel Kotkin, a senior fellow at Pepperdine University's Institute for Public Policy. "The question is will it repeat the mistakes of other places in letting large pockets of poverty continue to thrive and grow."

Like all of California, Orange County is riding the same wave of economic prosperity that is buoying the US stock market. The state had endured its worst recession since the Great Depression beginning about 1990, losing about 550,000 jobs, primarily to defense downsizing.

Along with Los Angeles County to the north, Orange County has helped regain those jobs with the expansion of high-tech computers, software, and biomedical services. Since about 1994, the county has added 103,360 jobs, about 46,335 more than when recession began.

The continued strength of international exports is an important reason for the county's resurgence, with huge overseas markets in aircraft and electronic equipment. "International trade has filled up the gaps [created] by defense cutbacks," says Esmail Adibi, director of the Anderson Centre for Economic Research at Chapman University, which tracks the county economy.

Expanding economy

While the US economy expanded last year by 2.2 percent in jobs, Orange County expanded at 3.8 percent, well ahead of California as a whole (at 3.2 percent). Countywide unemployment is now a paltry 3 percent. Predictions for the next four years remain good, Mr Adibi says, although Asia currency crises will keep gains about 10 percent below what they could be.

One of the biggest indicators of good times, say several economists, is the relocation of Lincoln-Mercury, one of the world's leading automobile design firms, from Detroit to Irvine.

With the turnaround of the economy has come an influx in the population - at 54,733 the fourth-highest county increase in the nation last year. That has contributed to a rise in tax revenue which has taken the bite out of the county's expensive plan to get itself out of bankruptcy.

Despite the county's efforts to overcome that December 1994 bankruptcy, its effects still linger. A former county treasurer's questionable practices cost Orange County $1.9 billion, and two years later only about half the sum had been paid off. While many county officials say that the problems have been resolved, other observers say debts and credit problems will long hamper county plans to build a laundry list of public facilities such as jails and children's shelters.

"The same exact conditions exist now that existed when Orange County went into bankruptcy," says Mark Baldassare, a senior fellow at the Public Policy Institute of California and author of a new book on the county's bankruptcy. Noting that one-quarter of the county's yearly discretionary funds are earmarked to pay off bond debt for the next 30 years, he says: "As long as the economy is running smooth, they may be OK, but when the next iceberg hits, they will be in a more restrictive position to deal with it."

By one measure of confidence, that of bond ratings, Orange County still has a way to go. Once regularly at the top of a survey done by national ratings firms, county bonds are near the cellar.

"The outlook for continued improvement in Orange County is positive," says Amy Doppelt, managing director for Fitch IBCA, a national bond-ratings firm. "But it is going to take time."

The other concern in Orange County's rosy scenario, say observers, is conditions for both poor and minorities. Because of the bankruptcy, social programs from spousal abuse to gang rehabilitation have had to be dropped altogether. Although the public-assistance rolls are a small percentage of the 2.6 million population, the numbers are, at 75,000, higher than in several states.

"Our county has been energized from the business sector as well as church and community organizations who want to make welfare reform work," says Larry Leaman, county director of social services. "But there is major concern over the giant gap between the skills and abilities of immigrants and minorities in being able to fill the explosion of jobs."

Don't forget the positives

Without minimizing those concerns, others say the rising county wealth can't help but buoy all boats.

"If you look around, roads are being fixed, buildings are shooting up, and jobs are coming in hand over fist," says Rick Reiff, editor of the Orange County Business Journal. Conceding that bond ratings hurt investor confidence, he also notes a No. 1 rating for livability by Places Rated Almanac out of more than 351 communities rated nationwide.

He and others also boast of a gross county product near $100 billion. Harnessing that wealth evenly for rich and poor, they say, is a matter of public will.

"To me it's up to the cities and towns in Orange County to balance their own budgets and spend money in the areas that are most important to them for improving all-round quality of life," says Christina Shea, mayor of Irvine. "Some of the older cities don't have the revenues like we do to expand and market our city, but there are creative ways to do that. Each jurisdiction has their own responsibility."