LOS ANGELES -- Local governments in Orange County that fought unsuccessfully against the county decision to sell off portions of its troubled investment portfolio are continuing to try to influence the fund's future.

A lawyer representing six local agencies said yesterday they are not angered by a federal judge's decision on Tuesday to allow the sale, but they want to be more involved in the process because they do not trust the county.

"They're saying, `Look, we placed too much confidence in the old management of the county fund, and we're not going to do it again,'" said Ronald Rus, an attorney with the Irvine, Calif.-based firm of Rus, Miliband, Williams & Smith.

The law firm is representing the cities of Newport Beach, Fountain Valley, and Laguna Hills, as well as the Yorba Linda Water District, the Santiago Water District, and the Metropolitan Water District of Orange County.

Those entities along with several other local governments filed motions opposing the sale of pool securities, which was announced Tuesday morning by the county's new financial restructuring team.

"For a long time, they had a lot of confidence in the management of that fund," Rus said. "The fact that prior management let them down so dramatically has heightened their sensitivities about the propriety of what the new management is going to do."

Despite that argument, Judge John Ryan of the federal bankruptcy court in Santa Ana said Tuesday that he would not stop the county from selling off portions of the investment pool, which has already declined in value by $2.02 billion because of risky investments and rising interest rates.

Ryan said he could not tell Orange County what to do, but he made his ruling "on an interim basis."

On Friday, the federal court will make a final determination as to whether county officials may continue to carry out their bankruptcy proceedings with a free hand.

Local agency officials are still trying to decide whether they should show up again to fight the county's plan.

The county's financial advisers "are probably doing the right thing," said Tim O'Donnell, assistant city manager of Brea, which also filed a motion against the county before Tuesday's hearing. "Nevertheless, we feel like we have not been a part of the strategy."

O'Donnell said local governments want to have a city manager, a city finance director, or a city attorney in the county meetings where decisions are being made.

Local officials would also like periodic briefings on the fund's status, O'-Donnell said.

"We're being put in the position of having to answer very difficult questions to bondholders, to city council people, to residents, and to everyone involved in this thing," O'Donnell said.

Brea has $9 million in the now-frozen bond pool. The city doesn't need the money today, O'Donnell said, but next month it wants to withdraw some of its cash to make good on debt service payments.

Orange County blocked access to the pool on Dec. 6 by declaring bankruptcy following the announcement of a $1.5 billion loss caused by complex derivative securities, which decline in value with rising interest rates.

County officials said Tuesday that the value had declined an additional half a billion dollars, and that they plan to sell off the risky securities and replace them with more conservative investments.

Friday's court ruling will determine whether the county can go ahead with that strategy.

Rus said whether local officials show up to contest the strategy depends on the information local agencies receive today regarding the current structure of the portfolio.

"It all depends on what analysis our clients are able to make between now and Friday," Rus said.

In the best case, local officials would like to get back all the money they invested in the pool. But Rus said they realize that may not be possible.

"What is really going to be decided in this flurry of activity through the bankruptcy court is how that loss is borne," Rus said. "The big difficulty will be in trying to prevent it from rippling too dramatically across the county."

In other developments:

* A spokesman for Salomon Brothers said the firm will not buy any pool securities. "We restricted ourselves from buying the securities in the portfolio" when the firm was named financial adviser to the county Dec. 8, said Robert Baker, Salomon's corporate communications director.

* A Transportation Corridor Agencies' spokeswoman said officials with the Santa Ana-headquartered agencies "are preparing to manage up to an $82 million loss" on their roughly $300 million invested in the county fund.

Agencies' spokeswoman Lisa Telles said the county announcement of a 27% loss for the pool fund "gave us a credible estimate of the gross impact" to the Transportation Corridor Agencies, which are building several Orange County toll roads.

Telles said the agencies' money was placed in the county's bond investment account, not the much-larger commingled pool, and officials are hoping this distinction might ultimately mean the loss to the agencies' will be less than $82 million.

However, "If we do have a $82 million loss, we believe that is a manageable amount, if that is the worst-case scenario," she added.

The agencies are moving forward with plans next spring to issue $1.25 billion of revenue bonds to finance toll road construction on the 23-mile Eastern Transportation Corridor road, Telles said.

"We are not halting that process," she said.

Andrea R. Bozzo, a Fitch Investors Service senior vice president, said "we will lift" a FitchAlert Negative placed on the San Joaquin Hills Transportation Corridor Agency last Friday once the rating agency has more information on the agencies' strategy and actual losses. Fitch has a BBB rating on the agencies' $1 billion outstanding senior lien toll revenue bonds, sold in March 1993 to finance a toll road now under construction.

* Gov. Pete Wilson on Tuesday asked state Treasurer-elect Matt Fong to chair a task force to recommend changes in state law in order to prevent local governments from pursuing high-risk investment practices.

The task force, whose members will be chosen by Fong, will report their findings to Wilson by early February.

"Given the fact that Matt is going to be the state's chief fiscal officer come next month, it was appropriate for Matt to chair this kind of task force," said H.D. Palmer, assistant director of the state Department of Finance.

Former Orange County treasurer-tax collector Robert L. Citron, who resigned Dec. 4 three days after announcing the investment pool loss, in 1979 helped draft legislation giving counties more freedom to borrow for the purpose of investing in high-yield securities.

The Fong task force will "review the securities law, and investment regulations," Palmer said. That overview will be combined with an analysis of the Orange County financial crisis and the task force will determine "what changes may be necessary in state law to ... better protect investments of this kind."

Fong spokesman Stan Devereux said Fong, who takes office Jan. 3, will not immediately go to Orange County because former state Treasurer Thomas W. Hayes, a member of Fong's transition team, is "there on sight and we are getting input from Tom."

* California Senate president pro tempore Bill Lockyer, D-Hayward, on Tuesday announced the formation of a "select committee on local government investment practices" that will hold its inaugural "fact-finding" meeting Monday in Sacramento.

"The state Senate will immediately begin a review of investment practices to survey the exposure of other local government agencies and determine the need for statutory or regulatory changes," Lockyer said in a statement.

The committee will be chaired by Sen. Bill Craven, R-Oceanside, and it will have private sector individuals serving as advisers led by Eli Broad, chairman and chief executive of Sun American Inc.

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