OCTA Rebuffs Advances on Measure M Funds : Transportation: Agency votes twice against any moves to divert revenue to help the county surmount bankruptcy. The action angers Supervisor Stanton.

Transportation officials on Monday twice voted against exploring ways for Orange County to tap into the sales tax revenue generated by Measure M, the transportation improvements initiative whose proceeds are eyed by some as an alternative to the bankruptcy recovery tax being submitted to voters this summer.

The board of directors of the Orange County Transportation Authority rejected a plea by County Supervisor Roger R. Stanton to study possible amendments to the 1990 ballot measure, which imposed a half-cent increase in the sales tax. Then a majority of board members voted against considering any alternate uses for Measure M revenue.

The second vote especially angered Stanton, who has been a vocal proponent of looking for ways to divert some of the Measure M money so that a smaller tax increase would be needed for the county’s bankruptcy recovery plan, or to reduce the Measure M rate to offset the impact of Measure R, which calls for a half-cent increase in the sales tax to 8.25%.

“I think it’s overkill, I think it’s premature,” said Stanton, who sits as a director of OCTA and cast a minority vote. “At least we should keep the door open,” he said after the meeting.

In other action, the OCTA board voted to accept the county’s plan to settle with the other investors in the county-run investment pool, which suffered $1.7 billion in losses and forced the county into bankruptcy Dec. 6.

With $1.1 billion frozen in the investment pool, OCTA was the largest pool investor other than the county itself.

The transportation agency’s chief, Stan Oftelie, headed the committee of investors who negotiated the settlement with the county. But still, OCTA’s acceptance was not a foregone conclusion. The board’s unanimous support Monday is seen as critical to helping the county move beyond the largest municipal bankruptcy in U.S. history.

The investors--including OCTA and nearly every city and school district in the county--must decide by April 17 whether to accept the settlement plan for disbursing the $5.7 billion remaining in the pool.

The settlement plan calls for investors to get on average 77 cents on the dollar in cash, and their balances in a combination of recovery notes the county promises will be as “good as gold,” and county IOUs that it is pledges its “best efforts” to pay off some day.

The settlement needs the support of the elected officials of 80% of the agencies holding 90% of the money in the investment pool. The Orange County Board of Supervisors and U.S. Bankruptcy Judge John E. Ryan also must approve the settlement.

About 75 agencies have approved the settlement so far. Like OCTA, the vast majority have selected so-called Option A, under which they give up their right to sue for their remaining money unless the county fails to make good on its promise to make the recovery notes convertible into cash by June 6.

A handful of investors, including the cities of Tustin, Yorba Linda and Montebello, have selected Option B, under which investors reserve the right to sue.

“It was an absolutely critical step toward putting the bankruptcy behind us,” said Supervisor William G. Steiner said of Tuesday’s OCTA vote.

After the OCTA meeting, Stanton said he was disappointed that the county transportation officials are not continuing to look for ways to bail out the bankrupt county.

“I’d like to see more done in this area,” Stanton said.

The board meeting included a presentation that outlined several legal and financial obstacles to tampering with Measure M, which raises an estimated $130 million each year for transportation project.

Some accused the board of not trying hard enough. W. Snow Hume, a Fullerton activist and tax foe, said at the meeting that he believes Measure M monies can be diverted, but suspects OCTA officials are only interested in protecting their financial interests.

But Oftelie, who was key to negotiating the proposed pool settlement, countered that suggestion, saying the transportation agency could default on the millions of dollars in bonds it has issued if Measure M funds are diverted in any way.

A study prepared for the meeting also said that several transportation projects could be jeopardized if Measure M funds were diverted.