Orange County Financial Control - Financial Provisions - Government - CA

Section § 30400

The law highlights the importance of helping Orange County manage its bankruptcy effectively to maintain and enhance the credit reputation of California's public debt issuers. Resolving this financial issue is crucial for safeguarding the well-being of Orange County residents and the state overall.

To support this resolution, the law suggests appointing a state trustee as a backup plan to ensure that the county can successfully develop and confirm a financial recovery plan. This trustee would have the authority to manage and advocate for certain financial claims that cities or other public entities hold against Orange County, aiming to facilitate and speed up the process.

(a) It is in the interest of the state and all public debt issuers within the state to enable the County of Orange to finance an acceptable plan of adjustment in order to improve the credit standing of California public debt issuers and to preserve and protect the health, safety, and welfare of the residents of the county and the state. To that end, successfully resolving the county bankruptcy and restoring the financial position of county government is a matter of statewide interest and concern.

(b) As a further guarantee that the county will be able to prepare and obtain confirmation of an acceptable plan of adjustment, it is appropriate to create a back-up mechanism for appointment of a state trustee.

(c) It is in the further interest of the state to facilitate and expedite the confirmation of an acceptable plan of adjustment by vesting in a state trustee the authority and discretion to present and enforce certain claims held by cities, public districts, or other governmental agencies against the county.

Orange County bankruptcy public debt issuers credit standing ...

Section § 30400.5

This law outlines specific definitions for terms used in a financial recovery context involving Orange County, California. When the law refers to 'confirmation of the plan,' it means the approval of a financial recovery plan under U.S. bankruptcy law. 'County' specifically refers to Orange County. Two court cases are mentioned: an 'investment pools case' and a 'pending case,' which denote specific bankruptcy court cases in California. The 'plan of adjustment' is the strategy to adjust finances, based on a specific joint agreement concerning Orange County's financial recovery. 'Specified county officers' include key administrative roles like the treasurer-tax collector and chief executive officer. Lastly, a 'trustee' is someone appointed by the governor to oversee this process.

For purposes of this chapter, the following words have the following meanings:

(a) “Confirmation of the plan” means confirmation of the plan of adjustment pursuant to Section 943 of Title 11 of the United States Code.

(b) “County” means the County of Orange.

(c) “Investment pools case” means Case No. SA-94-22273-JR in the United States Bankruptcy Court for the Central District of California.

(d) “Pending case” means Case No. SA-94-22272-JR in the United States Bankruptcy Court for the Central District of California.

(e) “Plan of adjustment” means a plan of adjustment as that term is used in Sections 941 and 942 of Title 11 of the United States Code, that contains provisions incorporating the material terms of the county consensus recovery plan, as specified in the Joint Agreement of the County of Orange, the Official Investment Pool Participants’ Committee and Each Option A Pool Participant for Resolution of All Claims Against the County of Orange, September 6, 1995. A plan of adjustment may contain other terms and provisions that are not inconsistent with the joint agreement.

(f) “Specified county officers” means the treasurer-tax collector, auditor, chief executive officer, and assessor.

(g) “Trustee” means the person appointed by the Governor pursuant to Section 30401.

Orange County financial recovery plan of adjustment confirmation of the plan ...

Section § 30401

If a county doesn't file a financial adjustment plan in bankruptcy by January 1, 1996, the Governor can appoint a trustee to manage the county. This can happen anytime after January 1, 1996, if key parties can't agree on the plan's terms by May 1, 1996, making timely confirmation unlikely. Before the appointment, the Governor must consult with county officials, creditors, and investment pool participants.

The trustee appointed should be knowledgeable in management and public finance. They can put a financial plan in place if the county fails to maintain a balanced budget. They can use the county board of supervisors' powers, following the same legal rules, until the county adopts two consecutive balanced budgets with positive fund balances. The Governor decides when this emergency period ends.

(a) If the county has not filed a plan of adjustment with the bankruptcy court by January 1, 1996, the Governor may appoint an individual to serve as trustee of the county. The appointment may occur at any time after January 1, 1996, until confirmation of the plan. Notwithstanding the timely filing of a plan of adjustment, the Governor shall appoint a trustee if the Governor determines that, as of May 1, 1996, or any date thereafter, the parties specified below have failed to reach substantial agreement on the terms of the plan of adjustment and the timely confirmation of the plan appears unlikely. Before reaching the foregoing determination, the Governor or his or her designee shall first consult with (1) the specified county officers and the board of supervisors, (2) the Official Committee of Unsecured Creditors of the County of Orange appointed in the pending case, and (3) the Official Committee of Investment Pools Participants appointed in the investment pools case. The trustee is a public official of the state and shall serve at the pleasure of, and is responsible to, the Governor.

(b) The trustee shall have recognized expertise in management and public finance.

(d) In implementing a financial plan for the county, the trustee may exercise all necessary and appropriate powers of the county board of supervisors, subject to the same legal limitations that apply to the board of supervisors.

(e) The trustee shall exercise the powers granted pursuant to this chapter for an emergency period that ends upon the adoption, after the appointment of the trustee, of two consecutive balanced final budgets and achievement of two positive audited fund balances, as determined by the Governor or his or her designee.

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Section § 30402

This law details the role of a trustee when one is appointed to oversee a county's financial situation. The trustee takes over all the powers of the county board of supervisors. However, the trustee can allow the board to continue exercising some of their powers if deemed appropriate.

The trustee, after consulting with various stakeholders, can reassume any powers from the board if their continued exercise is not helpful in resolving the county's financial issues.

Once the emergency period ends, all powers return to the county board of supervisors.

(a) If a trustee is appointed pursuant to this chapter, all powers granted to the county board of supervisors, including, but not limited to, those powers granted by Section 29530.5, shall be withdrawn and delegated to the trustee. However, the trustee may provide for the continued exercise of all or specified powers by the board of supervisors. Further, the trustee shall oversee the pending case and may exercise the county’s right to file a plan of adjustment.

(b) If at any time, in the discretion of the trustee, after consultation with (1) the specified county officers and the board of supervisors, (2) the Official Committee of Unsecured Creditors of the County of Orange appointed in the pending case, and (3) the Official Committee of Investment Pool Participants appointed in the investment pools case, the trustee determines that the continued exercise of specified powers by the board of supervisors is not conducive to the most effective action for resolving the pending case, the trustee shall reassume those powers.

(c) Upon termination of the emergency period specified in subdivision (g) of Section 30401 all powers otherwise granted to the board of supervisors shall revert to the board of supervisors.

trustee appointment county board of supervisors powers delegation ...

Section § 30403

This section allows a trustee to hire necessary staff to assist in their duties without following certain standard hiring procedures for state contracts. The trustee can appoint state employees as staff, who will be paid by the county but maintain their state retirement benefits. Once their trustee service ends, these employees can return to their original state jobs with time counted towards their service.

(a) The trustee may employ any staff necessary to assist him or her.

(b) To facilitate the appointment of the trustee and the employment of any necessary staff, for the purposes of this section, the trustee is exempt from the requirements of Article 6 (commencing with Section 999) of Chapter 6 of Division 4 of the Military and Veterans Code and Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code.

(c) Notwithstanding any other provision of law, the trustee may appoint employees of the state to assist the trustee for up to the duration of the trusteeship. The salary and benefits of the employees shall be established by the trustee and paid by the county. During the time of the appointment, the employees shall be deemed to be employees of the county but shall remain in the same retirement system under the same plan as if the employee had remained an employee of the state. Upon the expiration or termination of the appointment, the employee shall have the right to return to his or her former position, or to a position at substantially the same level as that position, with the state. The time served in the appointment shall be counted for all purposes as if the employee had served that time in his or her former position with the state.

trustee employment staff hiring state employee appointment ...

Section § 30404

This section of the law outlines the types of financial obligations a trustee can issue for a county, such as notes, bonds, and certificates. The trustee can handle different forms of debt to manage the county's finances, including tax anticipation warrants and revenue bonds. They can also issue grant anticipation notes and refunding bonds. Another option available is the creation of certificates of participation for leasing purposes.

If any of these methods are used, the trustee may secure repayment by pledging the county's future income sources, like taxes or rents. How this pledge is prioritized and secured is regulated by another chapter focusing on financial security interests.

(a) The trustee may issue or execute and deliver for and in the name and on behalf of the county, any of the following forms of debt or other obligations:

(1) Notes, tax anticipation warrants, or other evidences of indebtedness pursuant to Article 7 (commencing with Section 53820), Article 7.5 (commencing with Section 53840), or Article 7.6 (commencing with Section 53850) of Chapter 4 of Part 1 of Division 2 of Title 5.

(2) Grant anticipation notes pursuant to Article 7.7 (commencing with Section 53859) of Chapter 4 of Part 1 of Division 2 of Title 5.

(3) Revenue bonds pursuant to Chapter 6 (commencing with Section 54300) of Part 1 of Division 2 of Title 5.

(4) Refunding bonds pursuant to Article 9 (commencing with Section 53550) or Article 10 (commencing with Section 53570) of Chapter 3 of Part 1 of Division 2 of Title 5.

(5) Certificates of participation or lease revenue bonds to finance the lease or lease-purchase of property and for this purpose may lease property, for and in the name and on behalf of the County of Orange, to or from any other public or private entity.

(b) If the trustee issues notes, tax anticipation warrants, or any other evidence of indebtedness or other obligation pursuant to subdivision (a), the trustee may provide, in the terms of the issuance, for the pledge of any taxes, income, revenue, cash receipts, rents, or other moneys of the county, including moneys deposited in inactive or term deposit accounts, or rights to receive the same, to the extent that the taxes, income, revenue, cash receipts, rents, or other moneys could have been used to pay principal or interest on the issuance. The priority and perfection of the pledge shall be governed by Chapter 5.5 (commencing with Section 5450) of Division 6 of Title 1.

trustee financial obligations county notes issuance tax anticipation warrants ...

Section § 30405

This section explains that if a trustee is appointed in cases involving financial claims against Orange County due to investment losses, the trustee can exercise certain powers to support confirming a financial recovery plan. These powers include the ability to vote on the plan, change or withdraw their decision, restructure claims, and take necessary actions in the court case to ensure the plan's confirmation. The trustee has to ensure that their actions aim for a fair and quick resolution without unfairly treating any parties involved.

(a) If a trustee is appointed pursuant to this chapter, the trustee may assume and exercise, solely to the extent necessary to prevent denial of confirmation of the plan of adjustment and consistent with the interests of the state to promote the timely confirmation of the plan, the following specified powers of those cities, public districts, or other governmental agencies holding claims against the county based upon investment losses incurred or derived from the failure of the Orange County Investment Pools:

(1) The authority to vote to accept or reject the plan of adjustment filed by the county in the pending case, or to change or withdraw such an acceptance or rejection.

(2) The authority to subordinate or otherwise restructure the claims specified in this subdivision against the county.

(3) The authority to take actions in the pending case that are consistent with the timely confirmation of the plan.

(4) Other powers that are necessary and proper to execute the authority conferred by this section.

(b) In exercising the authority conferred by subdivision (a), the trustee shall be serving the public purpose of a speedy and just resolution to the pending case. To that end, the trustee shall not act in a manner inconsistent with the fair treatment of any parties subject to this section.

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Section § 30406

This law states that if one part of this chapter is found to be invalid or unenforceable, it does not affect the rest of the chapter. The remaining parts can still be applied or enforced independently of the invalid part.

The provisions of this chapter are severable. If any provision of this chapter or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

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