HomeMy WebLinkAbout15 O.C. BANKRUPTCY 02-20-96 LAW OFFICES OF
ROURKE. WOODRUFF & SPRADLIN
MEMORANDUM
NO. 15
2-20-96
tO:
Honorable Mayor and Members of the City Council
City of Tustin
FROM: City Attorney
DATE:
RE:
February 15, 1996
Approval of Joint Agreement/Orange County Bankruptcy
RECOMMENDATION:
Approve execution of the Joint Agreement by the City Manager, subject to the letter
dated January 3, 1996, from the County's attorneys. (Attachment "A")
DISCUSSION:
This matter was previously discussed in Closed Session in December of 1995. The
Joint Agreement is proposed as a way to resolve the outstanding issues between the
County and other public agencies, such as the City of Tustin, in the County's bankruptcy
case.
VVhile the Agreement does not insure that. the City will be made whole, it is the best
current option for getting the County to release City funds held in County-administered
accounts. Once the Bankruptcy Court approves the Agreement the City could receive
$938,753.99 in principal and interest owed. This includes monies from the 800 MHZ fund,
road funds, and property tax impounds previously set aside to cover taxpayer disputes.
This distribution could occur in the next 60 days. If the City does not sign, its other option
is to litigate its claims in the Bankruptcy Court while the Court considers the County's Plan
of Adjustment. This "Plan" is separate from the Joint Agreement; it is anticipated that the
Joint Agreement will be submitted to the Court for approval in advance of the May 1996
hearing on the Plan. The release of funds, sooner rather than later is a primary reason why
we recommend approval of this Agreement.
In addition to providing for an early release of about 75% of the City's deposits in the
County-administered accounts, the Joint Agreement formalizes the consensus agreement
among the County, the OCTA, the cities, schools and special districts on how to help
resolve the County's bankruptcy. For example, the Agreement recognizes transfers of
funds from OCTA to the.County. As to cities, it provides for the exchange of cities' rights
to recover their Repayment Claims (pool-related) from the County, for a right to recover
Honorable Mayor and Members of the City Council
City of Tustin
February 15, 1996
Page 2
from the net proceeds of the County' Litigation. The cities also agree to a priority of
distribution for such litigation proceeds that permits schools to be paid first.
From the Pool Bankruptcy settlement, Tustin has a Settlement Secured Claim of
$22,368.14 and a Repayment Claim of $24,532.27. The City also has a claim for Withheld
proceeds of $3,179.49.1 Under the Joint Agreement all or a part of Tustin's Settlement
Secured Claim could be paid from net litigation proceeds after approximately $55 million
dollars is received and distributed to the schools. After that, Tustin's Repayment Claim and
the remainder of its Settlement Secured Claim are subject to partial or total repayment,
depending upon the amount of net litigation proceeds received. If the net litigation
proceeds do not exceed $55 million, Tustin may never see its $46,900.41 in Settlement
Secured and Repayment Claims. This result may not be any different if the City did not
sign the Agreement, and its recourse was to proceed against the County in Bankruptcy
Court. By agreeing to relieve the County of this debt (in exchange for net litigation
proceeds), the City has assisted the County in refinancing its recovery. A County with
fewer debts should be in a better position to borrow and make cities whole on their County-
administered accounts.
Attachments "B-1 and B-2" are the most up to date summaries of the City's claims.
In Attachment "B-I" the County indicates how the City's non-pool related claims will be
treated under the Joint Agreement and the Plan of Adjustment. Attachment "B-2"
summarizes the City's pool-related claims.
LOIS E. J ~-
Attachments
~ This claim is to be paid pro rata as the County receives such proceeds from
brokerage firms. The letter dated January 3, 1996, from the County's attorneys
confirms this County promise.
1100-00018
24745_1
J4J'NN|OAN~ MIr. RGI:R & §I:NNETT
ATTACHMENT A
'J~N--3-gB ~D 12:~
I
NON-
RELATEDICLAIMS
;T THE ~OUNTY
I
ATTACHMENT B-1
FEB-13-1996 11:~0
P. ~4
POOL-RELATED CLAIMS
Participant Name
Cash
Distributions Withheld
Revised Book though Proceeds
Balance' 12/20/95 ': as of 17d20/95
To~l
Settlement To~l
. Stcur~d Repayment
Claim4 Claim s
('ITY t 1F 'lAN ('LEMENTE
IT%' t 1F %ANTA ANA
ITY t ~F .%ANTA ANA RDA
'ITY t IF SEAL BEACH
'I'FY t IF %TANT( IN
TI'Y ( ~F TUSTIN
'[TY ( IF VILLA PARK
'ITY t IF WEqTMINKTER
Total/or OC MUNICIPALITIE$:
36.462,090.77 28,675,302.74 494,369.g8
118,237,670.59 95,204,009.76 1,720,559.38
.M,692,~02-9 i 27,283,7123.99 470.37824
2.079,549.14 1,635.4.13.82 28,195.49
3,002.042.50 2,360,930.92 40,703.08
234,50Z05 -- 184.422.15 ---3,179.49
1,298,100.15 1.020,879.88 17,600.24
14 5,59q.03 114,505.12 1,974.10
$857,348,697.26 5676,592.243.74 $ i 1,755,294.17
Lt X 'AL TRANSI:~7,RTATION
AUTHoR/FY
t ).C. TRANSIT DISTRICT
o.C. TRANSPORTATION
AUTHORITY
.qERVICE AUTHOR!FY FOR
ABANDONED VEHICLES
%ERVICE AUTHORI3~ FOR
FREEWAY EMERGENCIES
Total f~r OC-I'A :
3,477,961.48 3,814,456.68
8,943,748.44 12.369353.00
3,309,177.67 3,629,342.91
198,359.22 217.550.61
286,351.88 314,056.62
"- ~.14 = 24,532.27
123,820.17 135,79q.86
13,888.06 15,231.74
$79,31021104 S89,69O,94732
RANK OF ¢'ALIFORNIA,/PARS
BUENA PARK L/BR.ARY
('APLqTRANO BAY COMMUNITY
.qERVICE
CAPLqT'RANO RAY PARK
(~A - AGE. AN MILLS #12
EMERALD BAY COMMUNITY
.qERVlc'E
HC/D qELF HElP PROGRAM
Fl'PA - FY 88-9O IN3'
LAGUNA BEACH WATER DISTRICT
LAW LIBRARY
NEWPORT BEACH L.[BRARY
o.C. CEMETERY
O.C. FIXED GUIDEWAY AGENCY
t XC. MARINE INS'ITTU'~
OPTIMA OF ORANGE COUN'~
t }RANGE COUN'~ EMPLOYEE
PLA¢.'ENTIA UBRARY: ~
RGSSMCK3R COMMUNI'~ $ERVICE
797,170,955.02 634,734,5 19.01 i 1,471,138.99 67,569,803.03 83,395,493.99
92,/-58,718.07 /-2,926,285.98 1 280,688.48 8,847853.79 9,703~.~
251,561,497.51 1 97,/138,410.97 3,4 i0,787.04 23,995,365.57 26,316,933.93
6dY92,924 ;72 4,791,7'29.09 82,610.69 581,177.79 637,407.15
·
$1,149,739,634.26. $911,986,150.41 $16,274,450.99 S101,199,807.74 $120,279,225.12
16268246.20 12,794,024.56 220,572.40 1,551,757.80 1,701,891.44
563,149_34 442,g84.03 7,635.44 53,716.39 58,913.48
187,370.10 147,355.63 2,540.45 17,872.43 19,601 39
96,071.29 75554.46 1,302.57 9,163.83 10,050.43
4,736.22 3,724.76 64.22 451.77 495.48
1,803,225.73 1.418,131.61 24,448.97 172d~1.92 188,643.23
293.14 230.54 . 3.97 27.96 30.67
16.13 IZ68 .22 1.54 1.69
89,397.62 70,306.0 i 1,212.09 S,5272S 9,352.27
7,925,158.73 6,232-674.02 107,452.96 755,946.69 829,085.06
34,367.g7 27,028.32 465.9~ 3,27~.20 3,595.37
6,341,043.32 4.986351.80 86,482.86 604,844.76 663,363.91
476.53 374.76 6.46 45.45 49.R5
2,037.66 1,602.50 27.63 194.36 213.17
1,004,779.60 790200.42 13,623.26 95,841.59 105,114..33
131,773,116.71 103,631,~52-56 1,786,640.81 12,569,2~.90 13,785,354.44
585,510.90 460,470.10 7,938.62 55,84 9.36 61,25Z82
726,856.74 571,630.33 9,855.06 69,331.73 76,039.62
Prmt~l - 12/2_0/'9.5 - 1(7 4~ 19 PM
UNAUDITED.Subject to Rnal Modification(S)
ATTACHMENT B-2