O.C. Supervisor Roth Got Break From Builder : Local government: Votes involving firm that made undervalued home upgrades may have broken state law.

SANTA ANA —  Orange County Supervisor Don R. Roth received thousands of dollars in free or undervalued additions to his Anaheim Hills home from a builder, and may have violated state law by later voting on four matters directly affecting the firm, a Times investigation has found.

Top corporate officials at the Presley Co. of Southern California, who supervised the 1990 home purchase, enlarged the dining room at the home by more than 100 square feet and broke down a support wall to enlarge a family room, among other improvements, records and interviews show.

Roth’s attorney, Dana Reed, acknowledged that additions were made to the house, but maintained that it was Roth’s then-wife who sought and accepted the extras. Reed denied any impropriety and said Roth recalled paying Presley about $3,700 for the additions, all made before the couple moved into the new house.

Remodeling experts said such upgrades typically cost more than $15,000. And several of Roth’s neighbors said such major upgrades were unavailable to them at the time Presley was building their homes. One neighbor offered to pay for a dining room expansion similar to the Roths’ and was rebuffed.

“I told the Presley Co. and they didn’t want to do it--they don’t want to do anything extra,” said Chris Sarantos, who lives across the street. “Once they build the house, that’s it. They say they don’t do any changes.”

The Times has learned that the Orange County district attorney’s office has begun questioning Presley officials about the $348,669 house that the Roths bought two years ago on Mountvale Court in an upscale, new community overlooking the canyons of Anaheim Hills.

Adele Borton, an assistant to Presley’s vice president for sales, said investigators recently contacted company officials about “the Roth house.” Borton indicated that company files on the sale would be turned over to the district attorney.

“I can’t talk about it,” said L.C. (Bob) Albertson Jr., president of the Newport Beach-based home construction company, who met with Roth personally at the housing site in mid-1989 before the purchase. “We’re good guys, honest and diligent, and I would like to be helpful. But not on this one.”

The Presley inquiry marks a new direction in the ongoing Roth investigation by the district attorney’s office, which since April has been reviewing whether Roth violated criminal conflict-of-interest laws by accepting trips, meals, shares of stock, an $8,500 rent deferral and other gifts from local business people and then voting on matters involving them.

The house improvements could pose more conflict-of-interest problems for Roth under state law if investigators determine that he voted on Presley matters after accepting substantial gifts from the firm in the form of home upgrades, officials familiar with the case said.

Local officials are required by state law to report the fair market value of all gifts totaling more than $50. They are also banned from voting on matters affecting anyone who has given them gifts worth more than $250 in the previous year. Violations can be prosecuted as criminal misdemeanors.

Roth and the Board of Supervisors have voted nearly two dozen times within the past five years on land-use issues affecting Presley. Four of those votes came in the 12-month period after the Roths moved into their new home.

Reed said there was no indication that Roth’s votes had anything to do with the improvements done earlier at the home.

And he defended the supervisor’s relationship with Presley, saying that the improvements were all requested by Roth’s wife, Jackie, from whom he is now divorced. Roth moved out of the home in mid-1990, and the couple are now trying to sell it as part of their divorce agreement.

“This is all Jackie’s deal,” Reed said. “Don had no interest in these changes.”

Asked about Reed’s comments, Jackie Roth said: “Dana Reed should talk to his client again if he says I did all this.” She declined to discuss the home improvements in detail, but said, “I am not the one that handled it. I am not the one that was out playing golf with Bob Albertson. Don handled it.”

Reed said Roth did not know the total value of the upgrades. “Don did not request any gifts from Presley and he is unaware of having received any. . . . If it is determined that what Jackie did resulted in some reportable transactions by Don or some requirement that he disqualify himself from voting, we’ll have to look at that,” Reed said.

Asked whether it would have been in the supervisor’s best interest to abstain from voting on Presley matters, Reed said: “It appears as if it would have been in Don’s best interest to divorce Jackie earlier than he did.”

Reed maintained Jackie Roth was the one who repeatedly contacted staff members in Roth’s county office in 1989 while the home was under construction, in an attempt to persuade them to request floor plan changes from Presley. The lawyer said the staff members had repeatedly resisted these requests, saying they did not want to get involved.

But Steven E. Malone, now Roth’s chief of staff, acknowledged in an interview Thursday that he had called Presley in late 1989 at Jackie Roth’s behest to ensure that certain structural changes were made.

“Jackie (Roth) wanted some special features included in the house and asked me to communicate that to Presley, so I called” company president Albertson, Malone said. “I was a liaison. . . . Apparently, Don was reluctant to (make the call). Jackie wanted him to do it, but he didn’t want to, so I did.”

A review of building permits shows that before Roth and his wife moved into the home in May, 1990, the Presley Co. tore down a wall in the already completed dining room and expanded the room by more than 100 square feet. The remodel included plumbing and electrical work, documents show. The company also enlarged the family room by tearing down a weight-bearing wall and putting in several new steel support beams, plus new electrical wiring.

As a result of the reconstruction, the Roths’ 2,700-square-foot house ended up as the largest house among the 37 homes built in the first phase of Presley’s Highland development, records show.

In addition, the company replaced a sliding door in the home with more elaborate French doors at the Roths’ request, and moved an air-conditioning unit twice, from one side of the house to the other. Presley helped pay for a dividing wall alongside the yard, according to Roth’s next-door neighbor, Dennis Flynn, who said he shared part of the cost.

Roth wanted the air conditioner moved because of noise problems, Reed said. But aside from that, he said, “Don flatly denies that he asked the Presley Co. to make any of these changes.”

None of the changes were written into the Roths’ escrow agreement, contrary to what real estate experts say is standard practice. Escrow closed in May, 1990.

During today’s slow housing market, such upgrades may be used frequently as incentives for home buyers, several industry experts said. But they were far less common at the time of the Roths’ purchase in late 1990, when the market was at the tail end of its boom in Orange County.

Homes in the Highland project in Anaheim Hills were in “red hot” demand, with waiting lists to buy in, said Flynn, the project architect and the Roths’ neighbor.

The Roths’ improvements were also unusual because Presley, as a matter of policy, had almost always declined to make any significant changes in the set floor plans it uses for its tract-home communities, said Luanne DeWitt, a former Presley sales agent who worked on the Roth purchase.

That was certainly true in the Highlands project, with just two exceptions. Aside from Flynn, the project architect, the Roths were the only home buyers in the development’s 37-home first phase to receive upgrades from Presley that were considered significant enough to require permit approval from the city of Anaheim, records show.

Sources say the district attorney’s office is now trying to determine the value of the improvements and how much Roth paid for them to see if the upgrades should have been reported as gifts.

Presley has had repeated business with the Board of Supervisors in recent years, much of it involving the company’s Nellie Gail Ranch housing community in South County.

County records show that within a year after the Roths moved into their house in May, 1990, Roth voted along with the rest of the board on four Presley items. The most recent came in April, 1991, when the board certified that Presley had adequately completed required improvements in sewers, streets, lighting and water facilities as part of the Nellie Gail project.

Within that year, Roth also voted along with the board to reimburse Presley $45,544 for drainage work done in the Mission Viejo area and voted twice to accept security deposits from Presley totaling $48,000 for property taxes due on company subdivisions in Anaheim--near his new home.

About a year before Roth became interested in buying into the Highlands development, he proved to be a critical swing vote in a rare 3-2 decision by the Board of Supervisors to approve a 600-unit, multimillion-dollar expansion of Presley’s Nellie Gail project.

The Presley expansion came at a time when the supervisors were bitterly divided over several key growth issues in South County, and Roth ultimately joined Supervisors Thomas F. Riley and Harriett M. Wieder, who had led the push for approval of the development agreements.

However, because Roth’s April, 1988, vote in the matter came before he purchased a Presley home, it would not be subject to conflict-of-interest regulations. Roth has also cast numerous votes in recent years on matters involving William Lyon, the chairman of the board and part-owner of the Presley Cos. One of Orange County’s biggest builders, Lyon has had at least 60 items before the Board of Supervisors in the past five years, including 21 votes in the year after Roth moved into his new home, according to county records.

Robert M. Stern, a political finance expert who co-authored the state’s 1974 Political Reform Act, said when asked about the Roth house that the key issue is whether the supervisor paid “fair market value” for the work.

“You have to determine what others would have paid to get the same work done in the house,” said Stern. “The difference would have to be considered a gift from the company and should be reported as a gift.”

Roth aide Malone said he is unsure what his boss paid for the improvements, but he said: “I know he paid for something, because he was grousing about it.”

DeWitt said the Roths’ $3,700 payment for the improvements reflected the difference between the home’s list price of $344,990 and the final sale of $348,660, and it apparently was intended to cover the cost of expanding the family room, according to property records.

Documents and interviews with several remodeling and construction experts, however, indicate that the ordinary cost of all the improvements done to the Roth home would be anywhere from three to five times that total.

The two costliest jobs came from adding 100 square feet to the dining room and putting in a vaulted ceiling there, and from expanding the family room by demolishing a support wall, according to remodeling experts who work with the Building Industry Assn. of Southern California and were asked by The Times to assess the cost of the projects.

Contractor Jim Dieckmeyer of Upland, a trustee of the National Assn. of Homebuilders’ Remodelers Council, said the two expansion jobs together would normally cost a homeowner between $16,000 and $18,000.

Phil Shirreffs Jr. of Shirreffs Construction in Fullerton estimated the projects would cost at least $11,560. “That’s about as low as they could ever get it--walk in, walk out, get it done” without any complications, he said.

The dining room was apparently finished and painted by relatives of the Roths who were paid about $1,000, two sources said.

Other changes could run into the thousands of dollars in value, experts said:

* Several local air-conditioning contractors estimated the cost of moving the outside air-conditioning unit twice, from one side of the house to the other, at a minimum of between $550 and $800.

* Contractors said the upgraded French doors could cost more than $1,300.

* City permits estimate the cost of the 86-foot, stone dividing wall alongside Roth’s yard, which Presley helped pay for, at $2,300.

Area residents said they typically shared the cost of the walls with each of their neighbors. But Roth did not pay for either of his walls. Roth’s other neighbor, James W. Hess, said he paid the full cost of the dividing wall he shares with Roth.

Several Presley employees who were involved in the Roth sale said that unlike other transactions, they were generally not consulted about changes in the house, and top company officials bypassed the normal chain of procedure.

“Most of those decisions were out of our hands,” said DeWitt, the former sales agent. “They were made in the corporate office.”

Similarly, Presley purchasing official Richard Sohn said: “I don’t know what took place in that house. The thing was taken care of between (Vice President) Dean Stewart and the field people.”

It was the top officers of the company, said Holden Presley, a nephew of the company founder and the site superintendent on the Roths’ dining room expansion, who made clear that keeping the Roths satisfied was a high priority.

“I knew (Roth) had influence, and you tried to do whatever you could,” he said.

Times researcher Sheila Kern contributed to this report.