HomeMy WebLinkAboutResolution 17-95 RESOLUTION NO. 17-95
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ATASCADERO
DEMANDING THAT THE ORANGE COUNTY BOARD OF SUPERVISORS
ACCEPT RESPONSIBILITY FOR THE ORANGE COUNTY INVESTMENT POOL
BANKRUPTCY AND THAT IT RETURN 100% OF THE DEPOSITED FUNDS
TO THE CITY OF ATASCADERO AND ALL OTHER POOL INVESTORS
WHEREAS, Orange County is authorized by Government Code Section 53684
to receive investment funds from local agencies; and
WHEREAS, Said investments are deemed to be held in trust by Orange County
pursuant to Government Code Section 27100.1; and
WHEREAS, The City of Atascadero is among the 194 public agencies which
elected to open an account with the Orange County Investment Pool (OCIP) and did
so in 1991; and
WHEREAS, Most of the OCIP participants are public agencies including schools,
cities, community colleges and service agencies with dependent responsibility for the
security of their investments to their individual constituencies; and
WHEREAS, The Orange County Treasurer/Tax Collector represented to the City
that it adhered to all provisions of State law regulating the activities of county
treasurers, as well as the specific provisions of Orange County's own investment
policy; and
WHEREAS,The Orange County Treasurer/Tax Collector made assurances to the
City of Yorba Linda concerning the safety and liquidity of the City's deposits in the
OCIP; and
WHEREAS,The Orange County Treasurer/Tax Collector did not invest the funds
prudently, suitably or effectively, resulting in an estimated 22% loss in the OCIP,
attributable to over-leveraging the portfolio and the use of high-risk investment
instruments; and
WHEREAS, The Orange County Board of Supervisors is required by law to
exercise oversight of the activities of the Orange County Treasurer/Tax Collector; and
WHEREAS, The Orange County Board of Supervisors, in failing to exercise such
oversight, failed in its fiduciary duties and was forced to file Chapter 9 Bankruptcy on
behalf of Orange County and the OCIP on December 6, 1994; and
WHEREAS, The Orange County Board of Supervisors has subsequently failed
to acknowledge its responsibility to insure the full return of the funds deposited in the
OCIP by other agencies; and
Resolution No. 17-95
Page 2 of 3
WHEREAS, By accepting its responsibility to participants and paying them
promptly and in full, Orange County will minimize the chaos caused by its investment
practices, reducing costs by centralizing the management of the crisis, providing for
the most efficient refinancing of debt, reallocation of resources and collection of
damages from brokerages and other third parties, instead of disrupting the operations
of 187 participant public agencies, all providing vital public services; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Atascadero, as follows:
The Orange County Board of Supervisors should accept its fiduciary
responsibility to the participants in the OCIP and acknowledge its failure to
exercise appropriate fiscal oversight of the activities of the Orange County
Treasurer/Tax Collector by immediately returning or immediately seeking court
authorization to return to the City of Atascadero its proportionate share of the
funds in the now fully-liquid investment pool, acknowledge its duty to do so,
and therefore not require any waiver of further claims and/or showing of
immediate hardship; and
To the extent the funds remaining in the OCIP may be insufficient to
make investors whole, that the Orange County Board of Supervisors should
guarantee full repayment of any balance due, and any interest due on said
balance, on a timely basis, pursuing governmental efficiencies, local service
reductions, revenue increases and third party claims as the Board of
Supervisors considers to be appropriate; and
The City Council of the City of Atascadero emphatically rejects the
"share the pain" theory being promoted by the Orange County Board of
Supervisors; and
The City Council of the City of Atascadero demands that the Orange
County Board of Supervisors immediately return 100% of the funds the City of
Atascadero had invested in the OCIP and adopt a workout plan in which the
Orange County Board of Supervisors assumes the entire responsibility for this
crisis and which makes every victim of this crisis whole; and
If the Orange County Board of Supervisors continues to fail to accept its
responsibility and continues to fail to demonstrate the leadership necessary to
protect the investing agencies, the City Council of the City of Atascadero will
take all legal measures necessary to secure the return of all of Atascadero's
investments.
Resolution No. 17-95
Page 3 of 3
ON MOTION BY Councilmember Luna , seconded by Councilmember Highland
the foregoing resolution is hereby adopted on the following roll-call vote:
AYES: Councilmembers Carden, Highland, Johnson, Luna and Mayor Bewley
NOES: None
ABSENT: None
ADOPTED: February 28, 1995
CITY OF ATASCADERO:
C
R. DAVID BEWLEY, May
ATTE T:
LEE PRICE, City Clerk
APPROVED AS TO FORM:
AR ER . MO TAN N, City Attorney