PLACENTIA : City Asks 100% Return on Pool Investment

The City Council unanimously passed a resolution Tuesday demanding that Orange County repay 100% of the investments to 186 public agencies that put money into the county’s failed bond pool.

“It’s stronger than I like to make resolutions, but if that’s what it takes, they (county supervisors) have to know,” Mayor Michael L. Maertzweiler told the audience at the council meeting.

While the county is not bound by any city, school or water district’s demand, Placentia joined the ranks of creditors in the county bankruptcy, stating its intent not to settle for less than full restitution.

The resolution states that investors relied on county assurances that their money was invested safely and demands that the county “assumes the entire responsibility of this crisis and . . . makes every victim of this crisis whole.”

The resolution came on the heels of an Orange County business group’s proposal to seek 77 cents on the dollar in cash, another 3 cents on the dollar in secured notes and a possible 20 cents on the dollar in returns later.

Placentia had $20.7 million invested with the county when it filed for bankruptcy. Of that, $13.7 million was money borrowed at a lower rate of interest and invested to earn a higher rate.

Councilman Norman Z. Eckenrode pointed out that the city spent $5,000 for a Standard & Poor’s analysis of the pool in June, 1994, before it plowed its money back into the fund, and was told the fund was safe.

That assurance, coupled with indications that the investment rating agency knew the pool was less than stable, may give the city grounds to sue to recoup some of the funds from Standard & Poor’s, he said.