The population in Southern California might grow by as much as six million people by the year 2010, posing a massive challenge for the area, the region's major government planning group said last week.

The Southern California Association of Governments, which encompasses six major counties, forecasted that the region will grow to 21 million people in less than two decades. The estimate exceeds previous projections issued by the group.

The association revised its forecast after 1990 census figures showed that the group had underestimated birth rates and the amount of illegal immigrants moving into the area.

Some economists questioned the association's growth estimate, saying factors such as a stumbling economy could lead to a slower growth rate.

Nevertheless, the association said that continuing growth will put pressure on the region's employment and housing needs, and compound infrastructure challenges in areas such as transportation.

A population increase of six million would be equivalent to two cities the size of Los Angeles.

California's IOUs offer a silver lining for short-term investors, according to one recipient of the promissory notes.

Attracted by a 5% interest rate, Lost Angeles County is holding more than $110 million of the registered warrants from the state and has purchased more than $237,000 of them at face value from a number of local bodies, a county official said last week.

The IOUs are attractive to Los Angeles County because the 5% rate outstrips the return on many short-term investment instruments, which are paying about 3%, the official added.

The state began issuing registered warrants, commonly known as IOUs, in early July because lawmakers failed to reach a budget agreement for the fiscal year that began July 1.

As of July 30, the state had issued $1.57 billion of warrants to pay various bills.

Sandra Davis, the country's treasure-tax collector, in early July advised local governments through a letter that the county would buy their warrants if their banks declined to cash them.

Maureen Oster, development officer for the county treasurer-tax collector's office, said the county has purchased warrants from about 10 schools and community colleges because they are a "reasonable investment."

The county will continue to buy warrants from local entities, she said, adding that the county has received numerous calls from smaller counties throughout the state.

"We don't see it as a bailout" of the state, she said. "We see it as a necessity. Local governments are all in this together."

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