ORANGE COUNTY IN BANKRUPTCY : San Diego Warns of Penalties for Withdrawal : Funds: Treasurer says he will require cash flow statement and impose fees up to 11% on voluntary investors. Chula Vista officials hint at legal action.

In a bid to prevent a further erosion of the San Diego County investment fund, county Treasurer Paul Boland told voluntary investors Wednesday that he will impose penalties of up to 11% on cities and districts that try to withdraw their funds.

The $3.3-billion fund has lost about 11% in value because of rising interest rates and accelerated withdrawals during the last year. Although the San Diego fund has no leveraged investments like those that caused havoc for Orange County, it has lost money on its portfolio of derivatives and is facing a severe cash shortage, county officials say.

Boland told a 15-member advisory committee that each investor must submit cash flow statements in the next month to justify why and when they need the money. The proposed penalties could stay in place as long as 3 1/2 years, which is the average maturity of the fund’s investments, sources said.

But at least one investor--the city of Chula Vista--hinted that it would consider legal action to get its money. The city informed the county Dec. 9 that it wanted to withdraw its $14.5 million from the pool.

Chula Vista finance director Bob Powell said the city was acting according to state law that ensures access to funds as long as investors give 30 days notice. “We wouldn’t necessarily accept what the advisory committee came out with,” Powell said of the possible penalties. “That’s not my decision to make. That’s for the (Chula Vista) City Council.”

According to a statement by Boland, any investor seeking to withdraw funds will receive a pro rata share of “the market value of the pool.” Initially, Boland said Wednesday that investors taking money out would receive market value of the “lowest performing securities in the pool,” which would have amounted to a 20% loss.

But the county’s lawyers informed him later that he could only assess a penalty equal to the fund’s average overall loss, according to Wayne Sink, director of finance and administration at San Diego Assn. of Governments, the second-largest participant in the county fund with $290 million invested.

The discretionary investors include cities, water districts and other municipal entities whose funds represent about 25% of the total investment pool. But Boland has said previously that the rights of these investors making withdrawals have to be balanced against those which must stay in, such as the San Diego School District and the county retirement fund.

Because of its problems, the county intends to sell $400 million in investments at losses to meet its cash obligations. The losses from those sales will cause the yield on the fund to drop to as low as 4% this year from 5.8% in 1993, Boland said.