O.C. IN BANKRUPTCY : OCTA Outlines Plan for Next 100 Days : Transportation: The agency seeks to reassure bondholders that it will pay interest. Bus operations and most freeway construction projects will continue.

Even though at least one major freeway project will be delayed, the Orange County Transportation Authority launched a 100-day plan Monday to reassure jittery investors that the agency will go forward with other freeway construction, continue bus and rail operations and still make a $46-million bond interest payment in February.

OCTA Chief Executive Officer Stan Oftelie said that construction on five major freeway projects will move ahead as planned, but that other projects still in the design stage will be put on hold, including the widening of the northbound Santa Ana Freeway through Anaheim.

He said the agency’s strategy relies heavily on assurances given by state and federal officials that transportation funds already approved for local projects will be distributed early so the transit agency can continue operating while a large chunk of its operating funds are tied up in Orange County’s bankrupt portfolio.

Oftelie announced the operational plan, which was hammered out by the transit agency’s staff over the weekend, at a somber board of directors meeting, where members spent more time discussing strategy behind closed doors then they did in open session.

The board also voted to hire the Los Angeles-based law firm of Sulmeyer, Kupetz, Baumann & Rothman to represent the agency in Orange County’s bankruptcy proceedings. OCTA has more than $1 billion invested in the county’s portfolio, which was ordered frozen by a bankruptcy judge last week.

In addition to the $46 million needed to pay bond holders by Feb. 15, the transportation authority will need $28 million to continue bus and rail operations during the next 100 days and $17 million to fund the agency-sponsored freeway projects.

Oftelie said that the transportation authority is counting on the already approved early release of state and federal funds for Orange County to make the plan work. He said the strategy is designed to reassure the investment community and the public that OCTA is “moving prudently” to work its way out of the financial crisis.

“The program we outlined is very heavily dependent on state and federal funds. But I’m comfortable that we’ll get the money,” Oftelie said. “We’re not asking for new entitlements, but simply claiming money that’s already earmarked for us. I’m confident that we will get the cooperation of the state and federal governments.”

The transit agency is scheduled to receive $16 million in payments from the state next spring. However, state transportation officials have agreed to hurry the money along before the next interest payment on the bonds is due in two months, said Oftelie. State officials could not be reached Monday for confirmation.

The $16 million will be used with $30 million expected from Measure M funds before the end of February to pay bondholders, Oftelie said. Measure M, passed in 1991, authorized a half-cent sales tax in Orange County to pay for transportation projects.

Oftelie said the transit agency has received inquiries from nervous investor groups worried about the scheduled February interest payment. Although most of the bonds are insured, Oftelie said the transportation authority has obtained a line of credit from the Industrial Bank of Japan to make sure bond holders are paid in the event that the $16 million payment from the state is delayed.

“We’ve secured a protected source of revenue to make sure there is no loss,” Oftelie said. “We can meet our obligation to investors and still provide bus service.”

The Japanese bank provided the agency with a $78-million loan last week so it could pay off notes that were due last Wednesday, a source close to the bank said Monday. The loan was made available under terms of a line of credit that the OCTA has had with Industrial Bank of Japan since 1993.

The source indicated that the bank did not view the $78-million short-term loan as risky because it is secured with certain collateral, which was not identified.

In addition, federal officials are willing to send within 45 days $8.8 million in transportation funds that the transit agency normally would receive in May, Oftelie said. The federal money would be used along with $1.4 million in property tax revenue that was due Monday and $17.4 million in state gas tax funds to pay for bus and rail operations for the next 100 days, he added.

The transportation authority also expects to have available the $17 million needed to continue construction on the following freeway projects:

* Widening of El Toro Y, where the San Diego and Santa Ana freeways meet.

* Car-pool lanes on the Riverside Freeway.

* Interstate 5 car-pool lanes in South County.

Work on the interchange of the Santa Ana and Costa Mesa freeways and the interchange of the Santa Ana, Orange and Garden Grove freeways--the so-called Orange Crush--is being funded by the state and these projects are not affected by the county’s financial troubles, said OCTA spokesman John Standiford.

The transportation authority, which operates on a $625-million annual budget, provides bus service for about 55,000 passengers, who take more than 43 million trips each year. It also provides Metrolink service for 2,500 commuters, Standiford said.

Supervisor Gaddi H. Vasquez, chairman of the transit agency’s board of directors, praised the 100-day operational plan as “positively aggressive.”

“The staff has identified 100 days of essential action that has to be taken,” Vasquez said. “Action will be taken in increments.”

However, Vasquez warned that “we haven’t seen the full assessment” of the county’s financial crisis and how it might affect long-term plans.

Oftelie said that he still does not know how the transit agency’s $1 billion investment in the county’s portfolio has fared.

“The least optimistic expectation is that we will lose everything. The most optimistic is that we will lose only the interest. At this point, your guess is as good as mine,” said Oftelie.

On Monday, the OCTA board appointed Oftelie as the agency’s treasurer, replacing Robert L. Citron, who was treasurer for the transit agency as well as the county before his resignation two weeks ago.

Times staff writer Don Lee contributed to this report.

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100-Day Plan

The Orange County Transportation Authority has announced a 100-day operating plan that outlines which projects will be completed or temporarily suspended:

To Continue

* Widen interchange of San Diego and Santa Ana freeways (the El Toro Y)

* Add 15 miles of car-pool lanes on Interstate 5 from El Toro Y to Dana Point

* Complete car-pool lanes on Riverside Freeway

* Restructure Santa Ana and Costa Mesa freeways interchange

* Complete the interchange of Santa Ana, Garden Grove and Orange freeways (the Orange Crush)

Suspended

* Right of way purchases north of Santa Ana Freeway

* Design projects, such as study of transportation corridor between Fullerton and Irvine

* Discretionary purchases

Source: Orange County Transportation Authority