ORANGE COUNTY PERSPECTIVE : The Best Deal That’s Available

The deal to begin repaying the cities, water districts and school districts that entrusted their money to Orange County’s ill-fated investment pool would appear to be the best one available, and the public agencies would be wise to ratify it.

It is no surprise that some are unhappy with the agreement reached over the weekend. With nearly 200 agencies involved, how could it be otherwise? Yet the fact remains that a pool once worth about $7.4 billion is now worth only $5.7 billion, thanks to the risky investments of then-Treasurer Robert L. Citron. The monetary loss and resultant pain need to be shared.

The agreement calls for returning at least 76 cents for each dollar invested by all agencies; some would get a bit more if their funds were in a lower-risk bond pool. Most school districts also have been promised later payments that will hike their return to 90% of their investments; other agencies stand to get a boost to 80% of what they put in.

The county also promised its “best efforts” to get everyone to 100% repayment eventually. It owes the investors those efforts, especially since school districts were told they had no choice under law but to invest in the pool.

The deal is realistic, building on a framework suggested by a committee of business people last month. It was rewritten several times to incorporate objections and suggestions by investors. Yet the proposed settlement is also vulnerable to politics, to greed, to roadblocks by districts or agencies understandably upset about a potential loss of their money but unwilling or unable to come up with a workable alternative plan.

This is no pie-in-the-sky proposal scribbled on the back of an envelope, and it is important to keep remembering that an enormous amount of money has been lost. Repaying investors has been one of the county’s major concerns since bankruptcy was declared on Dec. 6. It is a proper concern. The agreement still needs approval by the host of participants and the bankruptcy judge.

A county supervisor rightly said last week that the county has nothing more to give. The financial facts are stark; investors should take what they can and build for the future.