Countywide : 3 Agencies OK Borrowing Funds From Water District

Three county education agencies have approved a contingency plan to borrow funds from the Irvine Ranch Water District to meet approximately $150 million in bond payments due June 13.

School board members in the Irvine and Newport-Mesa unified districts approved the proposed loan agreements Tuesday night, expressing hope that they will not be needed. The Orange County Department of Education approved the loan agreement last week.

The Irvine Ranch Water District has offered to purchase revenue notes issued by the three agencies up to a total $34.4 million, which must be repaid within a year. School district officials say the debts will probably be repaid within 30 days.

The three agencies, along with the North Orange County Community College District, borrowed about $50 million each last June to make additional investments in the county pool. The Placentia-Yorba Linda Unified School District also borrowed heavily to invest in the pool, but its loan repayment is not due until August.

Irvine Unified owes $54.5 million in bond debt. But if funds are received from the county’s “recovery notes” in time, there may be no need for the loan, according to Deputy Supt. Paul Reed. The county had promised to issue funds from the recovery notes on June 5, but challenges to the county’s bankruptcy settlement agreement could delay disbursements.

“We have some trepidation as to whether the magic day of June 5 will arrive,” Reed said.

Irvine Unified had $107 million on deposit in the investment pool, more than any other school district, when the county declared bankruptcy on Dec. 6.

Newport-Mesa owes $47 million in taxable notes. The school district had $80 million in the failed county pool.

The resolutions allow Newport Mesa to either refinance its share of the revenue notes--$12 million--or win an extension from the lender to postpone repayment of up to $12.6 million until Sept. 13.

The board approved the refinancing option 6 to 1, with Wendy Leece opposed, and was unanimous in approving the extension alternative. The board must vote again before entering into a formal agreement.