Mayors from 27 Orange County cities have signed a letter demanding 100% repayment of funds frozen in the county's bankrupt investment pool--but offering to accept a note backed by county assets or revenue for some of the money.
"You must recognize (that) cities are not seeking special consideration, only the return of all of our funds to the full extent authorized by law," the mayors wrote in the letter to the Board of Supervisors, pledging cooperation in coming up with solutions to the financial crisis. "Anything less is not in the best interests of our residents."
County municipalities had more than $898 million invested in the pool when the county declared bankruptcy Dec. 6.
A recent county settlement proposal guarantees return of 77 cents per dollar to investors. But many have criticized the proposal, saying they want greater guarantees that they will someday recoup the balance.
"It can't just be a hope and a prayer and a promise," said Irvine City Manager Paul O. Brady Jr. "It has to be secure."
In the letter, which many signed in Santa Ana Thursday evening before a meeting of the Orange County division of the California League of Cities, the mayors outlined their own plan to recoup all of the investments, plus interest.
The plan calls for immediate return of 77 cents on the dollar in cash with no conditions attached. The plan also includes return of 3 cents per dollar through "recovery notes" which might be guaranteed by the state but use the county's assets as collateral, and return of 20 cents per dollar over time through secured notes, backed by existing funds, assets, loans or possible funds won through bankruptcy-related lawsuits.
The cities say they are further entitled to 6 cents per dollar in interest.
"We feel the county has a moral obligation (to pay the cities in full), even if it does take years," said Charles V. Smith, mayor of Westminster and president of the county chapter of the league.
The mayors wrote that the only obstacle to an agreement with the cities is the county's "unwillingness to secure the balance not covered by cash or the recovery note."
Janet Huston, executive director of the county division of the league, said the mayors hope the letter will reassert their position that all funds must be returned.
"Our goal is to keep repeating it and repeating it and repeating it until they understand it, or until they convince us that it can't be done," she said.
But not all cities signed off on the letter.
Garden Grove Mayor Bruce A. Broadwater, whose city did not have any money invested in the county fund, said pool investors should not be considered ahead of the creditors and bondholders. He said the county owes his city about $3.5 million for such things as funds seized by police in drug busts and a countywide emergency radio system.
"The cities are being very, very arrogant," he said.
Mayors from Santa Ana, Anaheim and Costa Mesa also declined to sign the letter for various reasons, from concerns over wording of the letter to satisfaction with the present county proposal.
The letter will be sent to the supervisors in the next few days.
Times correspondent Bert Eljera contributed to this story.