O.C. Adopts Reforms on Bond Sales

SANTA ANA —  Orange County supervisors Tuesday unanimously approved a major overhaul of the way the county handles municipal bonds and investments and instructed the county staff to return with yet more reform proposals dealing with the influence of lobbyists.

The Board of Supervisors’ action formalized some of the most sweeping reforms proposed in the wake of the county bankruptcy--reforms that were designed to assure the public and Wall Street that the misdeeds that brought about the financial crisis will not be repeated.

Drafted by county Chief Executive Officer Jan Mittermeier, the reforms prohibit the county from issuing any bonds or notes to speculate in financial markets, and disqualify financial professionals who contribute money to a supervisor’s campaign from receiving county business.

The changes have met with widespread praise, though some ethics activists faulted the rules for not explicitly banning contributions from lobbyists who work for financial services firms.

In response, some board members asked Mittermeier to consider new language that would clarify who is covered by the prohibition.

“It’s something we have to look at carefully,” said Supervisor Donald J. Saltarelli. “We might need to make some word changes here and there to make sure it is exactly the way we want it.”

At Saltarelli’s request, officials will also examine whether the county can place restrictions on lobbyists who receive contingency commissions for helping secure contracts for financial services firms.

Mittermeier’s reforms mark a significant change from the way the county did business before the Dec. 6, 1994, bankruptcy, which was prompted by a $1.7-billion loss suffered by the county-run investment pool.

The losses were blamed on former Treasurer Robert L. Citron’s risky investment strategies--many of which are banned under the reforms.

The plan requires outside lawyers and financial advisors to provide written assurances that bond issues are legal, financially prudent and that proper disclosures have been made to potential bond buyers. The county has been criticized for not telling those buying its notes and bonds about the risky nature of some of the county’s investments.

The reforms also establish a five-member panel with veto power to oversee all county debt issues. Mittermeier proposed that the board be made up of herself, the auditor-controller, the county counsel and two members of the public appointed by the supervisors.

But Supervisor William G. Steiner said he would like three public representatives on the panel, and that the county counsel serve as an advisor, not as a voting member.