Gov. Pete Wilson has signed a bill authorizing the West Contra Costa Unified School District, formerly the Richmond Unified School District, to pay off its defaulted $9.8 million certificates of participation through a refinancing.
The law enables the school district and the state to settle an investor lawsuit over the defaulted issue originally filed in April 1992. In response to the suit, the Superior Court of Contra Costa County this spring ordered the school district to make more than $2 million in past due payments on the lease issue.
The state and school district were set back by a court ruling last December that found that the lease issue, which was used primarily to finance an operating deficit, was constitutional, despite their attempts to portray it as debt prohibited under the state constitution,
After their attempt to appeal the case earlier this year was rebuffed, the state and school district opted to disperse the cloud hanging over the school district - as well as over the broader lease market in California - and settle the issue.
In signing the bill, Wilson also is averting a pending trial in the superior court over the state's role in the August 1991 default. State officials said the threat of the trial did not prompt the state to reverse its previous position, however, against settling the case.
The refinancing of the 10-year certificates with a 30-year issue is expected early next year.
In addition to repaying all past-due principal and interest on the lease issue, the refinancing will cover penalties and attorneys fees engendered by the default, attorneys said.