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HomeMy WebLinkAbout08/28/1995 - City Council Special Meeting'J82 SPECIAL MEETING OF THE CITY COUNCIL CITY OF COSTA MESA AUGUST 28, 1995 The City Council of the City of Costa Mesa, California, met in special session August 28, 1995, at 5:30 p.m., in the Council Chambers of City Hall, 77 Fair Drive, Costa Mesa. Notice of the special meeting was ' given as required by law. The meeting was called to order by the Mayor, followed by the Pledge of Allegiance to the Flag led by Mayor Pro Tem Buffa. ROLL CALL Council Members Present: Mayor Joe Erickson Mayor Pro Tem Peter Buffa Council Member Mary Hornbuckle Council Member Sandra Genis Council Member Gary Monahan Council Members Absent: None Officials Present: City Attorney Thomas Kathe Finance Director Susan Temple Assistant to the City Manager Ann Gyben Deputy City Clerk Mary Elliott Orange County The Deputy City Clerk' presented a joint agreement of the County of Bankruptcy Recovery Orange, .the Official Investment Pool Participants' Committee, and Plan each Option "A" pool participant, for resolution of all claims .relating to the Orange County bankruptcy; and to, consider the Consensus Bankruptcy Recovery Plan. The Finance Director reported that a special meeting was necessary so that Council's input on the Consensus Plan could be submitted at the League of California Cities meeting scheduled for the next day, August 29, 1995. She referrer' .a the., Agenda Report dated August 24, 1995, which ine ales concerr_s- tha League Technical Committee had with the Consensus Plan -as=coffipared to the plan previously endorsed by ouncil ar_d 4p1) deli the League of Cities on August 10, 1995. The Finance Director reviewed :ii: major. c,mponents of the County's Consensus Plan: City's secured settlement claims and recovery notes. (The League Plan called for all of those claims, the recovery claims and secured claims, being paid off before the County received any funding.) ' Under the Consensus Plan, distribution of litigation proceeds would be $53 million to schools; payment of all secured settlement claims; $176 million to the County; and payment of remaining recovery claims, 65 percent to cities and special districts, and 35 percent to the County until completely paid off. Establishes a $50 million litigation trust in order to show Merrill Lynch and the other brokers that the County does have the funding to proceed with the claim against the brokers. Establishes a litigation trustee, Tom Hayes, former State Treasurer who worked for several months as interim treasurer for the County immediately following the bankruptcy. ' Establishes a three-member oversight committee as advisory to Mr. Hayes and County officials, to consist of one Orange County Investment Pool (OCIP) representative, one County representative, and one representative from the cities. The City Attorney referred to his Report No. 95-72 of July 27, 1995, and reported that there is a request to execute an agreement modifying the Comprehensive Settlement Agreement in connection with the Orange County Investment Pool. He reported that he has reviewed an agreement sent to the City Manager dated August 21, 1995, which essentially contains the issues outlined by the Finance Director. He noted, however, that there are issues which have not been addressed, .those being claims for Orange County administered accounts; the money which the City placed in the 800 Megahertz account; and the 23 cents on the dollar in OCIP pre-petition property taxes. He advised that under the proposed agreement, 'the City is being asked to waive any recourse against the County, leaving only the right to litigation proceeds and third party suits which the County is bringing on the City's behalf. He stated that based on this new agreement, the funds owed to the City and the Redevelopment Agency are at greater risk. The Finance Director reported on another issue which she previously omitted, and that is a County need for approximately $18 million over the next five years from OCIP to pay long-term obligations of the County in connection with their road funds. She stated that if this money were divided on a pro rata, fair -share basis, the City and Redevelopment Agency would contribute approximately $13,400.00 and $2,650.00, respectively, over five years. -Council Member Hornbuckle felt the request -for OCIP to contribute $18 million, and the return on funds the City deposited for the 800 Megahertz system are extremely unfair. She referred to a communication from Janet Huston, League of Cities, which indicated that the return for money on deposit for the 800 Megahertz system would be 50 cents on the dollar. The Finance Director stated that the City has approximately $1.2 million being held in escrow, and it was her understanding that 77 cents on the, collar W' o;v1.d be made available for the 800 Megahertz project,. -and. the remain, Vierf 23 cents would be repaid without interest ok -Ir 20 years. Mayor Pro Tem Buffa commented that the 8.00Mgahe=tz monbV- was missing for some time, and it was his'understa;idiiig-that thosP- funds were never deposited with the Cibunty; the -funds' we* ­ deposited with the Bank of America., and the _bank was_ su" .0secNot be the trustee of that money; therefore, one of the unsolved mysteries of this bankruptcy is how did the money get into the County's hands. The Finance Director responded that the County did not address that issue, but there is an agreement which states that the money was to be held in a third party escrow account with Bank of America, it was her understanding that the agreement was not adhered to, and the money was placed in the pool. The City Attorney added that under the proposed agreement for the Consensus Plan, the City would waive all claims to that money. Mayor Pro Tem Buffa wanted staff to find out how the 800 Megahertz money was transferred from the trust account to the County, because if the County transferred the money, it was an illegal action. The City Attorney reported that the City would not be waiving any rights against the Bank of America by approving the proposed agreement. Council Member Genis asked if the City may have already relinquished its right to pursue fraud type charges at the time Council changed from Option B to Option A. The City Attorney responded that under the Comprehensive Settlement Agreement, an argument could be made that any claims the City has on the administrative money related ' to the pool, to the extent that 800 Megahertz funds were placed in the pool, those have been assigned to the County to prosecute. He added that if Council agrees to accept the Plan of Adjustment (the Consensus Plan), support its confirmation, and accept the results of the confirmation, claims against the County would be waived, and third party claims would be prosecuted by the County for the City. MOTION/Approved A motion was made by Council Member Hornbuckle, seconded by Consensus Plan in Mayor Pro Tem Buffa, and carried 5-0, adopting the Consensus Plan Concept in concept pending agreement language that the Consensus Plan would not include diversion of City sales taxes, property taxes, or other City revenues; that the $18 million County general fund shortfall costs would be shared pro rata among all OCIP participants; directing the City Attorney, City Manager, and Finance Director to provide by the next Council meeting, information on pursuing the Bank of America transfer of the 800 Megahertz funds; authorizing the Steering Committee and the Technical Team to continue negotiations to resolve future and current differences, including the 800 .Megahertz situation; and authorizing the City Manager to sign the agreement approving the Consensus Plan. ADJOURNMENT Regarding the League of Cities meetings scheduled at noon, Tuesday, August 29, 1995, in the City of Irvine Council Chambers, and at noon, Thursday, August 31, 1995, in the City of Westminster, Mayor Erickson appointed Council Member Genis to be the City's representative. The Mayor also directed the Assistant to the City Manager to verify the date and time of the Thursday meeting, and to advise Council Member Genis. The Mayor declared the meeting adjourned at 6:05 p.m. Mayo the City of Costa Mesa ATTEST: Deputy City erk of the City of Costa Mesa i G 1 J