Placentia Bond Sales in Works as Last-Ditch Action

The City Council has authorized the finance director to begin negotiations that would let the city sell $17 million worth of bonds if the county bankruptcy settlement takes longer than expected.

“It’s a worst-case, fall-back contingency plan in case the county does not disburse funds when it says it will,” Finance Director Howard Longballa said.

The city has $14 million in bonds to pay by June 30--about $3.9 million in tax revenue anticipation notes and about $10.1 million in taxable notes.

If the bankruptcy settlement comes off without a hitch, the city expects to receive by June 5 about $12.9 million of its $20.7 million initially invested in the county pool. The city has already received $1.4 million of its invested funds to meet payrolls and pay contracts, Longballa said.

He stressed that selling new bonds--certificates of participation--would be a last resort and would not be undertaken until late June. Some of the money would go to underwriters and attorney fees, but the notes would be structured so the city could repay them at any time without penalty.

“Any funds that would come in from the bankruptcy would go to that first,” he said.

Although the city would not recover its full losses from the county bankruptcy, Longballa said he did not foresee the city “having to go back to the bond market in the very near future” if the settlement payment proceeds as expected.

The potential new bonds are not a done deal, Longballa said, adding, “We will definitely go back to the council every step of the way.”