ORANGE COUNTY IN BANKRUPTCY : Detailed Plan for Trustee Takeover Taking Shape


State lawmakers are drafting final language for a bill that would establish a powerful trustee over the Board of Supervisors to handle the Orange County bankruptcy recovery efforts.

According to a document being circulated among members of the county’s legislative delegation in Sacramento, the trustee would answer to the governor and provide annual reports to the Legislature.

The creation of a trustee is a key element of a possible bailout plan that would give the county access to at least $70 million in transportation funds each year for 15 years. The money would be used to offset the $1.7-billion investment loss the county suffered last December, which prompted the nation’s largest-ever municipal bankruptcy.

According to the document, the governor would have the authority to appoint a trustee on Jan. 1 if the county has not gained court approval for a plan to emerge from bankruptcy.


The trustee would assume power April 1, 1996, if a court-approved plan still “appears unlikely,” the one-page document states.

The broad powers the trustee would have under the terms of the proposal include: The freedom to use county revenue in any way the trustee sees fit; the ability to issue county debt not extending beyond Jan. 1, 2011; the discretion to sell, lease or dispose of any county asset; and all powers granted the Board of Supervisors.

The trustee would remain in place for up to 15 years, or until the county has balanced two consecutive budgets and has re-established independent access to the municipal bond market.

Johnson said none of the trustee details are written in stone and could change depending on circumstances.


Times political writer Peter M. Warren contributed to this report.