MONTEBELLO : City to Seek Release of Investment Pool Funds
City officials plan to ask a federal bankruptcy judge today to free up $14 million from the ill-fated Orange County investment pool to help pay off a looming $25-million debt.
The city borrowed the money to invest in the high-paying Orange County pool and had counted on withdrawing $25 million to meet a Dec. 30 deadline for paying the debt.
But the county filed for protection under the federal Bankruptcy Code earlier this month, after the $7.5-billion investment pool dropped nearly $2 billion in value. The bankruptcy move left Montebello and scores of other cities, school districts and special districts in the lurch.
In addition to requesting the court to release the $14 million, Montebello officials will ask creditors to give the city another six to nine months to pay off the remainder of the debt, City Administrator Richard Torres said.
Torres revealed the city’s plan after a City Council meeting Tuesday in which some residents criticized officials for investing in the pool. The city invested $47 million in the pool this year, borrowing $31 million at low-interest rates in hope of earning a higher return.
“We’re seeing that what goes up must come down,†said activist Larry Salazar. “I think it’s up to you to take the blame for this and to try and correct it.â€
Torres said the city will have no immediate problem paying for its day-to-day operations. “It’s business as usual, and in the foreseeable future it will be business as usual,†he said, adding that there are no plans to change the city’s investment policies.
Mayor Art Payan defended the city’s investments, saying: “The city acted in total good faith in supporting the recommendations given to us.â€
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