O.C. Investors Line Up Early to Get Checks

Rare is the rush to the tax collector’s office. On Friday, people started stacking up at sunrise.

They came not to pay, of course, but to collect.

First in line was a trio from Santa Barbara who started the road trip at 3 a.m., chauffeured in a beige Ford Taurus by a cop. They walked away with $20,506,130.24.

“Standing in line is standing in line--it just happens to be a big check,” sighed Santa Barbara Councilman Phil Bugay, a stockbroker, as he waited for the doors to open at 9.

“We’re just going to head to the bank,” Robert Peirson, the city’s acting finance director, said as he departed about 9:05, clutching his two checks. “I’ll feel better when we get the check home.”

Nearly six months after declaring bankruptcy, Orange County has now emptied its pockets, handing out more than 200 checks totaling $2.2 billion to government agencies that had invested in its sunken portfolio. Sheriff’s deputies, guns in holsters, stood guard around the tax collector’s office as bankers and bureaucrats waited their turn.

Money in the investment pool had been frozen until a settlement approved earlier this month by a U.S. bankruptcy judge led to Friday’s disbursement.

By 11 a.m., all but seven agencies had picked up their checks. The last one left at 2 p.m.

Even gadfly Will B. King, who rarely misses a Board of Supervisors meeting, showed up, offering people Monopoly money and wondering whether there were any checks with his name.

“This office has probably never been so popular in its history,” observed Patrick C. Shea, attorney for the pool participants’ committee. “People come outside, they hold up a check, and they get their picture taken. . . . They said, ‘I feel like I won the lottery.’ ”

The money represents about 77% of each agency’s balance at bankruptcy, and was released as part of a settlement agreement in which schools, cities and special districts will get another chunk in bonds next month and the rest in IOUs.

“We don’t have a door prize, do we?” mused Paul Sachs, chief of the Arthur Andersen & Co. number-crunching team that orchestrated the massive payout. “Maybe we should give out a toaster.”

The county did offer free chocolate chip cookies and coffee, though there were few takers. Most had already slurped some gourmet brew from a First Interstate Bank table set up outside the building, starting at 8 a.m.

The bank’s coffee, muffins and bagels were just the beginning of its special client services.

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While most investors had to race up freeways to deposit their checks early enough to earn interest over the weekend, First Interstate hired a helicopter to ferry the funds to a Los Angeles processing center in time for a noon deposit deadline.

“One night’s interest on $55 million is a heck of a lot of money,” said Andrew Czorny, finance director of the Orange County Water District, after he deposited a dozen checks at First Interstate’s makeshift teller station on the Civic Center Plaza. Though his agency paid $500 for the helicopter, Czorny said, “it’s worth it.”

Stakes were even higher for Mike Jensen of the Orange County Transportation Authority. With $704,985,407 coming out of the county fund, OCTA risked missing out on $300,000 in interest over the weekend if the money didn’t get to State Street Bank by 11 a.m.

Making matters worse, OCTA got the payout in 41 separate checks--three of them the maximum that can be printed, $99,999,999.99--because it had so many different accounts with the county. Jensen, hand shaking, had to initial each one.

“Let’s go,” OCTA attorney Ken Smart nudged as Jensen signed and signed and signed.

Friends took things a bit lighter, composing a little ditty fantasizing that the checks were made out to J-E-N-S-E-N instead of O-C-T-A.

But alas, county officials had been too careful. About two dozen employees of the treasurer-tax collector’s office and Arthur Andersen & Co. worked through the night Thursday preparing paperwork.

Jim McConnell of the auditor-controller’s office spent from 9:30 p.m. Thursday until 2:30 a.m. Friday stamping “S.E. Lewis,” the auditor’s name, on each check.

Each investor had to send notarized disbursement papers Thursday. Then, once they reached the front of the line, investors had to show a driver’s license or passport and verify their signature before even casting a gaze on the baby blue checks with all those glorious numbers.

“Feels good, good,” Jeanne Arehart of the city of Orange said as she hurried out. “I’ll feel better when I get to the bank.”

Most of the money was headed for banks, later to be funneled through private investment managers. But more than $300 million from 33 Orange County agencies went straight to the state’s Local Agency Investment Fund, the $8.9-billion portfolio run by California Treasurer Matt Fong’s office.

Irvine sent $130 million to LAIF, and the Irvine Ranch Water District deposited $20 million. Several cities and agencies, including Huntington Beach, could not make LAIF’s 9:30 a.m. deposit deadline for same-day interest, but planned to dump money there next week.

Orange County’s 31 school districts will keep their money in the county investment pool because that is required by state law. A handful of other agencies have also agreed to give the pool run by Treasurer John M.W. Moorlach a try.

On Friday, Moorlach hovered around the tax collector’s office, validating people’s parking slips.

“Anything I can do to make this a positive experience,” Moorlach said. “It’s customer-service time.”

Times staff writer Eric Bailey in Sacramento contributed to this report.

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Payoff Time

Nearly six months after filing for bankruptcy protection, Orange County emptied its pockets Friday, issuing more than 200 checks totaling $2.2 billion to government agencies that invested in its collapsed pool. Here are the agencies that got the largest amounts:

Agency Amount Orange County Transportation Authority $704,985,407 Orange County Sanitation Districts 295,958,030 Irvine Ranch Water District 231,089,160 Transportation Corridor Agencies 165,466,078 City of Irvine 129,178,058 City of Anaheim 67,671,141 Orange County Water District 55,055,219 City of Santa Ana 53,998,200 Orange County Employees Retirement System 52,841,257

Source: Arthur Andersen & Co., Price Waterhouse LLP; Researched by JODI WILGOREN / Los Angeles Times