Orange Cty, Calif., to consider tobacco bond deal
Orange County Calif., is set to consider a plan to use its share of the national tobacco settlement to retire $1 billion in bankruptcy debt and build a new jail, a top county official said Thursday.
Gary Burton, the county's chief financial officer, said he will present the plan to the Board of Supervisors at a meeting on October 20.
``What I was recommending is that initially the tobacco settlement money that comes in be utilized to reduce debt,'' he said in a telephone interview. ``And after the debt has been removed then the possibility of utilizing it, perhaps securitizing it in order to have the capital amount to construct a jail.''
Orange County filed for bankruptcy protection in 1994, after the county's investment pool suffered losses of more than $1.6 billion in a wrong-way bet on interest rates made by former county Treasurer Robert Citron.
It was the largest municipal bankruptcy in U.S. history.
Orange County is set to receive an estimated $30 million to $38 million a year as part of the 25-year, $206 billion settlement reached last November between the tobacco industry and 46 states.
But Orange County Treasurer John Moorlach said if the county does issue tobacco-backed bonds then it had better move cautiously to ensure the county is not left open to lawsuits if the tobacco money ever dries up.
``My posture is wait and see how this revenue stream comes along,'' Moorlach said in a telephone interview. ``It's not an income stream where we have a sense of control.''