Contra Costa County last week issued its first long-term obligations since rating agencies voiced credit concerns over an anti-discrimination lawsuit filed against the county in federal district court.
Eight underwriting syndicates submitted sealed bids last Tuesday for the county's $23.1 million of certificates of participation. The award went to a syndicate headed by BA Securities Group, Stone & Youngberg, and Kidder, Peabody & Co. with a true interest cost of 6.4920%.
Jean M. Buckley, a vice president at Prager, McCarthy &Sealy, the county's financial adviser, said there was an "outstanding reception for the issue." Proceeds will fund various capital projects,
The COPs were rated provisional A-plus by Standard & Poor's Corp. and conditional A1 by Moody's Investors Service. The provisional and conditional designations will be removed following project completion in June 1995.
Both rating agencies earlier this month said they were closely monitoring developments in Contra Costa County in the wake of an anti-discrimination suit filed against the county by the National Association for the Advancement of Colored People's Legal Defense and Educational Fund. The suit claims that the county has not provided sufficient access to health care for the county's minority low-income residents.
On Aug. 11, U.S. District Judge Saundra Brown Armstrong set a Dec. 1 trial date.
However, last Thursday, Buckley said that "as this process unfolds, all sides hope that something will develop to forestall the trial or get a lot of the issues settled before the trial begins."
Reacting to the NAACP suit, Armstrong on Aug. 1 issued a preliminary injunction to halt construction of the county's Merrithew Memorial Hospital project, funded with $125.6 million of certificates of participation issued in 1992.
A Moody's release said that if the litigation results in the hospital project's not being constructed, it "could lessen the credit quality of the county."
Standard & Poor's said that if the settlement process is prolonged and the preliminary injunction is not lifted, "a rating action may be taken."
-- Brad Allman, Los Angeles
