Amended in Assembly March 12, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 182


Introduced by Assembly Members Buchanan and Hueso

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(Principal coauthor: Assembly Member Alejo)

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(Principal coauthors: Senators Block and Wyland)

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(Coauthors: Assembly Members Ian Calderon, Roger Hernandez, and Williams)

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January 24, 2013


An act to amend Section 15146 of, and to add Sections 15144.1 and 15144.2 to, the Education Code, and to amend Sections 53506, 53507, 53508.7, and 53530 of the Government Code, relating to bonds.

LEGISLATIVE COUNSEL’S DIGEST

AB 182, as amended, Buchanan. Bonds: school districts and community college districts.

(1) Existing law authorizes the governing board of any school district or community college district to order an election and submit to the electors of the district the question whether the bonds of the district should be issued and soldbegin delete for the purposes of raisingend deletebegin insert to raiseend insert money for specified purposes. Existing law requiresbegin delete the interest rate onend delete the bonds to bear a rate of interest that does not exceed 8% per annum and requires the number of years the whole or any part of the bonds are to run to not exceed 25 years.

This bill would require the ratio of total debt service to principal for each bond series to not exceed 4 to one. The bill would require each capital appreciation bond maturing more than 10 years after its date of issuance to be subject to mandatory tender for purchase or redemption before its fixed maturity date, as specified, beginning no later than the 10th anniversary of the date the capital appreciation bond was issued.

(2) Existing law requires the governing board of the school district or community college district, before the sale of bonds, to adopt a resolution as an agenda item at a public meeting that includes specified information.

This bill would require, if the sale includes capital appreciation bonds, the agenda item to identify that capital appreciation bonds are proposed and require the governing board of the school district or community college district to be presented with an analysis containing the overall cost of the capital appreciation bonds, a comparison to the overall cost of current interest bonds, the reason capital appreciation bonds are being recommended, and a copy of a certain disclosure made by the underwriter.

(3) Additionally and alternatively to the authority described above, existing law authorizes the legislative body of an issuer, by resolution, to provide for the issuance of bonds or refunding bonds and defines “issuer” to include, among other public entities, a school district and a community college district. Existing law also authorizesbegin insert theseend insert bonds to bear an interest rate at a coupon rate or rates as determined by the legislative body of a local agency in its discretion but not to exceed 12% per year payable and defines “local agency” to include, among other public entities, a public district.

This bill would instead specify that issuer and local agency, as defined for purposes of this source of bonding authority, do not include a school district or a community college district.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 15144.1 is added to the Education Code,
2to read:

3

15144.1.  

The ratio of total debt service to principal for each
4bond series shall not exceed four to one.

5

SEC. 2.  

Section 15144.2 is added to the Education Code, to
6read:

7

15144.2.  

A capital appreciation bond maturing more than 10
8years after its date of issuance shall be subject to mandatory tender
9for purchase or redemption before its fixed maturity date, with or
P3    1without a premium, at any timebegin insert at the option of the issuerend insert, or from
2time to time, beginning no later than the 10th anniversary of the
3date the capital appreciation bond was issued.

4

SEC. 3.  

Section 15146 of the Education Code is amended to
5read:

6

15146.  

(a) The bonds shall be issued and sold pursuant to
7Section 15140, payable out of the interest and sinking fund of the
8district. The governing board may sell the bonds at a negotiated
9sale or by competitive bidding.

10(b) Before the sale, the governing board shall adopt a resolution,
11as an agenda item at a public meeting, that includes all of the
12following:

13(1) Express approval of the method of sale.

14(2) Statement of the reasons for the method of sale selected.

15(3) Disclosure of the identity of the bond counsel, and the
16identities of the bond underwriter and the financial adviser if either
17or both arebegin delete utilizedend deletebegin insert usedend insert for the sale, unless these individuals have
18not been selected at the time the resolution is adopted, in which
19case the governing board shall disclose their identities at the public
20meeting occurring after they have been selected.

21(4) Estimates of the costs associated with the bond issuance.

22(c) If the sale includes capital appreciation bonds, the agenda
23item shall identify that capital appreciation bonds are proposed
24and the governing board shall be presented with all of the
25following:

26(1) An analysis containing the total overall cost of the capital
27appreciation bonds.

28(2) A comparison to the overall cost of current interest bonds.

29(3) The reason capital appreciation bonds are being
30recommended.

31(4) A copy of the disclosure made by the underwriter in
32compliance with Rule G-17 adopted by the federal Municipal
33Securities Rulemaking Board.

34(d) After the sale, the governing board shall do both of the
35following:

36(1) Present the actual cost information for the sale at its next
37scheduled public meeting.

38(2) Submit an itemized summary of the costs of the bond sale
39to the California Debt and Investment Advisory Commission.

P4    1(e) The governing board shall ensure that all necessary
2information and reports regarding the sale or planned sale of bonds
3by thebegin delete schoolend delete district it governs are submitted to the California
4Debt and Investment Advisory Commission in compliance with
5Section 8855 of the Government Code.

6(f) The bonds may be sold at a discount not to exceed 5 percent
7and at an interest rate not to exceed the maximum rate permitted
8by law. If the sale is by competitive bid, the governing board shall
9comply with Sections 15147 and 15148. The bonds shall be sold
10by the governing board no later than the date designated by the
11governing board as the final date for the sale of the bonds.

12(g) The proceeds of the sale of the bonds, exclusive of any
13premium received, shall be deposited in the county treasury to the
14credit of the building fund of the school district, or community
15college district as designated by the California Community
16Colleges Budget and Accounting Manual. The proceeds deposited
17shall be drawn out as other school moneys are drawn out. The
18bond proceeds withdrawn shall not be applied to anybegin delete otherend delete purposes
19begin insert otherend insert than those for which the bonds were issued. Any premium
20or accrued interest received from the sale of the bonds shall be
21deposited in the interest and sinking fund of the district.

22(h) The governing board may cause to be deposited proceeds
23of sale of any series of the bonds in an amount not exceeding 2
24percent of the principal amount of the bonds in a costs of issuance
25account, which may be created in the county treasury or held by
26a fiscal agent appointed by the district for this purpose, separate
27from the building fund and the interest and sinking fund of the
28district. The proceeds deposited shall be drawn out on the order
29of the governing board or an officer of the district duly authorized
30by the governing board to make the order, only to pay authorized
31costs of issuance of the bonds. Upon the order of the governing
32board or duly authorized officer, the remaining balance shall be
33transferred to the county treasury to the credit of the building fund
34of the school district or community college district. The deposit
35of bond proceeds pursuant to this subdivision shall be a proper
36charge against the building fund of the district.

37(i) The governing board may cause to be deposited proceeds of
38sale of any series of the bonds in the interest and sinking fund of
39the district in the amount of the annual reserve permitted by Section
4015250 or in any lesser amount, as the governing board shall
P5    1determine from time to time. The deposit of bond proceeds
2pursuant to this subdivision shall be a proper charge against the
3building fund of the district.

4(j) The governing board may cause to be deposited proceeds of
5sale of any series of the bonds in the interest and sinking fund of
6the district in the amount not exceeding the interest scheduled to
7become due on that series of bonds for a period of two years from
8the date of issuance of that series of bonds. The deposit of bonds
9proceeds pursuant to this subdivision shall be a proper charge
10against the building fund of the district.

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SEC. 4.  

Section 53506 of the Government Code is amended
12to read:

13

53506.  

(a) This article is full authority for the issuance of
14bonds or refunding bonds by any city, county, city and county, or
15special district, secured by the levy of ad valorem taxes, authorized
16in accordance with the Constitution and, in the case of a chartered
17city, county, or city and county, with the charter thereof, or in the
18case of a special district, with the district’s principal act. This
19article shall not apply to a school district or a community college
20district.

21(b) This article is intended to provide a complete additional and
22alternative method for doing the things authorized by this article.
23The powers conferred by this article are supplemental and
24additional to the powers conferred by any other laws, and the
25limitations imposed by this article do not affect the powers
26conferred by any other law.

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SEC. 5.  

Section 53507 of the Government Code is amended
28to read:

29

53507.  

As used in this article, the following terms shall have
30the meanings assigned to them in this section.

31(a) “Bonds” means bonds, notes, warrants, or other evidence of
32indebtedness payable, both principal and interest, from the proceeds
33of ad valorem taxes that may be levied without limitation as to
34rate or amount upon property subject to taxation by the legislative
35body.

36(b) “Issuer” means a city, county, city and county, or special
37district, secured by the levy of ad valorem taxes, authorized to
38issue bonds pursuant to this article. “Issuer” shall not include a
39school district or community college district.

40(c) “Legislative body” means the governing body of the issuer.

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SEC. 6.  

Section 53508.7 of the Government Code is amended
2to read:

3

53508.7.  

(a) The bonds shall be sold at a public or private sale
4and at a price at, above, or below par, as the legislative body
5determines.

6(b) begin deleteAny bonds end deletebegin insertBonds end insertsold at a discount below the par value of
7the bonds shall be sold in compliance with the provisions of Section
853532.

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SEC. 7.  

Section 53530 of the Government Code is amended
10to read:

11

53530.  

As used in this article:

12(a) “Local agency” means county, city, city and county, public
13district, public entity or authority, or other public or municipal
14corporation, including redevelopment agencies, housing authorities,
15and industrial development authorities. “Local agency” shall not
16include a school district or community college district.

17(b) “Bonds” means bonds, warrants, notesbegin insert,end insert or other evidences
18of indebtedness of a local agency or zone or improvement district
19thereof.



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