Check It Out: $829 Million Pays Bankruptcy Settlements

Former state Treasurer Thomas W. Hayes spent most of Thursday at an Irvine hotel writing checks.

Appointed by the court to oversee the lawsuits of about 200 municipal and governmental agencies that lost billions of dollars in the 1994 Orange County bankruptcy, he made good on their final settlements from a table at the Hyatt Regency.

“Everybody’s happy to get their money,” said Hayes, who doled out about $829 million Thursday. The total disbursement, he said, was closer to $864 million, counting the payouts to other agencies made last week. “In fact,” he said, “they’re delighted with the outcome.”

Those sentiments were echoed by representatives of various cities, school districts and other agencies who had to pass an armed guard at the door, present identification and sign in before collecting their checks.

“It was a good day,” said Jeff Niven, deputy treasurer of Irvine, which collected a cool $29.6 million. Niven originally had an appointment at 1:30 p.m. but showed up early, he said, because “I wanted to be able to invest the money over the weekend. I feel relieved. It’s been five years. I feel satisfied that we all had the fortitude to stick it out.”

Bret Colson, a spokesman for Anaheim, which got $24.2 million, said the city sent its treasurer over to the hotel for the money, and “she was glad to go. We’re glad to finally be receiving these funds. I’m not sure anyone will ever be completely over the bankruptcy, but getting this money goes a long way toward making us whole.”

County Supervisor Jim Silva had mixed feelings, however.

“I’m very pleased to hear that the funds are being distributed,” he said, “but this closes the next-to-the-last chapter. The last chapter is paying off that bankruptcy.”

Still far from full recovery, the county has more to do, Silva said, including paying off about $1.2 billion in recovery bonds issued in 1995 and 1996 to cover the costs of the bankruptcy. “I think it’s a scheduled payout over a 26-year period,” he said, “though my feeling is we’ll be paying that much sooner.”

County Treasurer-Tax Collector John M.W. Moorlach, who as a private citizen was the first to warn of risky county investments nine months before the bankruptcy, echoed Silva’s concerns. “When you put your hands in the fire you’ll be burned and hopefully won’t be burned again,” he said. “I have a real personal desire to see the debt paid off as quickly as possible.”

Supervisors and county officials noted recent top ratings with Wall Street agencies that have boosted the county’s once-dismal credit rating to its highest level since the financial crisis that began in December 1994.

Last September, Moody’s Investors Service gave county government the second-highest bond rating of any county in the state, trailing only Contra Costa. County officials said that will drop the cost of borrowing money for jail construction and other major projects.

Since the Moody’s change, two other ratings agencies have elevated the county’s bond status, evidence that Wall Street is taking notice.

“I think the county is still tightening its purse strings while paying off the debt,” Silva said. “That has been my goal since Day One.”