LOS ALAMITOS : City Officials Air Bankruptcy Concerns

City officials said Monday that they are worried cities like Los Alamitos, which have money invested in the county portfolio but do not have emergency financial needs, may be left fighting for the fiscal crumbs when money from the failed Orange County investment fund is finally distributed.

City Manager Robert C. Dunek said that the city has not requested an emergency distribution from the fund because the $2.2 million the city invested was from a cash reserve and did not affect day-to-day operations.

“If we piecemeal this to death, and the cities are at the bottom of the feeding chain, we might get less than everybody else,” Councilman Ronald Bates said Monday as the council heard Dunek provide an update on the county bankruptcy.

Bates said that as some cities, school districts and other pool investors scramble to get 100% of their investments back, cities with no immediate obligations or bond payments to meet may be last to receive their shares, and that by then there may not be enough to go around.

Under a plan approved by U.S. Bankruptcy Judge John E. Ryan, agencies with critical cash-flow needs were allowed to request payment of up to 30% of their money, which is being held along with other frozen county accounts.

City officials said, however, that Los Alamitos may have lost about $239,000 in county grants earmarked for improvements to five city parks and lighting for the athletic field at McAuliffe Middle School. In addition, about $70,000 in property taxes collected before the county bankruptcy filing Dec. 6 remains trapped in the county treasury.

Ryan is expected to rule Friday on whether the county should release the so-called pre-petition money, as county officials have promised to do.