IRVINE : Council Advised Not to Discuss Fund Crisis

Critics of the city’s participation in the failed county investment pool want to know if early warning signals were heeded by city staff. But council members earlier this week were prohibited by legal advisers from answering those questions.

Stephen Smith, a former city budget analyst, said there were clear indications long before the county declared bankruptcy on Dec. 6 that the city’s investments were in trouble due to rising interest rates.

During a City Council meeting Tuesday night, Smith asked council members if they had been warned by city finance officers of the threat to Irvine’s investments in the county pool.

City Atty. Joel D. Kuperberg and the city’s bankruptcy attorney, Paul Glassman, advised council members not to discuss the issue, saying their answers could threaten attempts to recover all of the city’s $109 million frozen in the county pool.

But Smith and other critics said that if council members are muzzled by attorneys, it could erode public trust in their leadership. “It will leave citizens with the impression that the city staff is trying to cover up the facts,” Smith said.

Councilwoman Christina L. Shea said she is troubled by the advice of the city’s attorneys and will seek her own legal advice on how to respond to questions from the public.