TUSTIN : Frustrated Council OKs Repayment Plan

Sending a message of anger and frustration to the Board of Supervisors, the City Council has endorsed a plan for distributing the $5.7 billion remaining in the county’s collapsed investment pool, but it reserved the right to pursue legal action, at least for now.

Tustin’s action, taken Monday, was largely symbolic, because the city pulled its $4 million in principal out of the pool last spring and had less than $184,000 in accrued interest frozen in the pool Dec. 6, when the county filed for bankruptcy.

That makes it unlikely that the city would actually sue the county because of the high cost of litigation and the small amount of money at stake.

Council members are expected to re-evaluate their choice of pool repayment plans May 15.

If Tustin sticks with Option B, which it voted for Monday, the city would receive less money from the county but would be entitled to sue to regain more. Switching to Option A might be more financially prudent, however. Under that plan, Tustin would receive the maximum repayment but give up the right to litigate.

In debating the pool settlement, council members differed on some issues, but they seemed united on at least one topic--their opinion of county officials.

“I’m fed up with them, totally fed up,” said Councilman Michael J. Doyle, who hotly accused the supervisors of “sandbagging” pool participants and pushing the settlement agreement “down everybody’s throats.”

Councilman Jim Potts expressed frustration at being asked to bail out the county after former Treasurer-Tax Collector Robert L. Citron’s failed gamble on interest rates caused the pool to plunge $1.7 billion in value. Potts conceded, however, that it will take widespread cooperation to recover from the financial calamity.

“We either hang together or hang separately,” Potts said.