O.C. Pool Investors to Get Overdue Interest Payments : Bankruptcy: $50 million is freed by the county’s agreement with cities, schools and other agencies, which had threatened to sue in dispute over the amount owed.

Orange County officials have agreed to pay local schools, cities and other agencies more than $50 million next week in a long-overdue settlement of interest earned on the municipalities’ money held in the county-run investment pool from last December until May.

According to an agreement scheduled to be signed today, accountants for the county and the pool participants have finally resolved a dispute that had dragged on for months and escalated last week when an attorney for the local agencies described the county’s delayed interest payment as a default and threatened to go to court to get his clients’ money.

The disputed amount, finally set at $76 million, plus about $10 million earned since then, will be released next week. But about one-third of the money is due to the county itself, which had by far the largest balance in the pool.

Officials are still calculating how much each agency is owed, and plan to issue wire transfers to the pool participants July 19 or 20.

“It’s about time. They held our money hostage and they shouldn’t have,” said Jon Schotz of Saybrook Capital Corp., financial adviser to the pool participants. “Now they’ve done the right thing.”

In fact, the payout reflects what the county has argued all along is the right amount.

Arthur Andersen & Co., the county’s accountants, calculated the interest owed by tracking all the money moving in and out of the pool since the bankruptcy filing and figuring out what was left: $76 million.

The pool’s accountants, Price Waterhouse, analyzed each transaction in the pool and estimated the interest that had been earned at $91 million.

Over the past week, the two teams of numbers-crunchers have revisited their math and determined that the $15-million difference was accidentally distributed as part of the pool participants’ principal payout May 19.

“At the end of the day, the approach that we were taking and the approach that they were taking turned out to come up with the same thing,” said Paul Sachs, leader of the Arthur Andersen team. “It took a lot of time. The reason it took a lot of time is--I’m not going to say it was like looking for a needle in a haystack--but really, what you were trying to do is understand a $15-million difference in a $22-billion transaction.”

But Patrick C. Shea, the attorney who had accused the county of purposely defaulting on the interest owed pool participants, said the battle was not just about calculations.

“I don’t think the county had the resolution of this interest issue at the top of their priority list, because as long as it wasn’t resolved, it was $75 million in the bank account,” he said Tuesday. “Unfortunately, that’s the way things seem to go in this case. You have to go to guns to get people to return your phone calls and address the issues.”