Amended in Senate July 1, 2013

Amended in Senate May 21, 2013

Amended in Assembly April 2, 2013

Amended in Assembly March 12, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 182

Introduced by Assembly Members Buchanan and Hueso

(Principal coauthor: Assembly Member Alejo)

(Principal coauthors: Senators Block and Wyland)

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(Coauthor: Senator Torres)

end insert

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

January 24, 2013

An act to amend Section 15146 of, and to add Sections 15144.1, 15144.2, and 15144.3 to, the Education Code, begin delete and to amend Sections 53506, 53507, 53508.7, and 53530 of end delete begin insert and to add Section 53508.5 to, end insert 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 sold to raise money for specified purposes. Existing law requires 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 redemption before its fixed maturity date, as specified, beginning no later than the 10th anniversary of the date the capital appreciation bond was issued. The bill would authorize a school district or community college district with a note issued before December 31, 2013, to seek from the State Board of Education or the Chancellor of the California Community Colleges, as applicable, a one-time waiver from certain requirements of this bill if 2 specified conditions are satisfied.

(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, begin delete and end delete a copy of a certain disclosure made by the begin delete underwriter. end delete begin insert underwriter, and disclosure of the financing term and time of maturity, repayment ratio, and the estimated change in assessed value of local property. The bill would require the resolution to be publicly noticed on at least 2 consecutive meeting agendas, first as an information item and 2nd as an action item. end insert

(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 begin delete bonds and defines “issuer” to include, among other public entities, a school district and a community college district. Existing law also authorizes these 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, and defines “local agency” to include, among other public entities, a public district. end delete begin insert bonds. end insert

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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.

end delete begin insert

This bill would provide that the number of years the whole or any part of a general obligation bond issued by a school district or community college district is to run shall not exceed 30 years. The bill would require a school district or community college district that intends to issue a capital appreciation bond pursuant to its authority to issue bonds or refunding bonds by resolution to conform the capital appreciation bond issuance to certain requirements otherwise applicable to bonds issued by a school district or community college district pursuant to an election.

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

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

SECTION 1.  

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

15144.1.  

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

SEC. 2.  

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

15144.2.  

A capital appreciation bond maturing more than 10
years after its date of issuance shall be subject to redemption before
its fixed maturity date, with or without a premium, at any time, or
from time to time, at the option of the issuer, beginning no later
than the 10th anniversary of the date the capital appreciation bond
was issued.

SEC. 3.  

Section 15144.3 is added to the Education Code, to
read:

15144.3.  

A school district or community college district with
a note issued before December 31, 2013, pursuant to Section 15150
may seek from the state board or the Chancellor of the California
Community Colleges, as applicable, a one-time waiver from one
or more of the requirements of Sections 1, 2, and 4 of Assembly
Bill 182 of the 2013-14 Regular Session, if both of the following
are satisfied:

(a) The proceeds of the issuance subject to the waiver will be
used only for the purpose of paying the note.

(b) The school district or community college district has
provided to the state board or the Chancellor of the California
Community Colleges, as applicable, an analysis from a financial
adviser unaffiliated with the school district, the community college
district, or the underwriter used by the school district or community
college district, showing the total overall costs of the proposed
bond, how the issuance is the most cost-effective method, and the
reasons why the school district or community college district is
unable to meet those requirements of Sections 1, 2, and 4 of
Assembly Bill 182 of the 2013-14 Regular Session that are the
subject of the waiver.

SEC. 4.  

Section 15146 of the Education Code is amended to
read:

15146.  

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

(b)  begin insert (1) end insert begin insert   end insert Before the sale, the governing board shall adopt a
resolution, as an agenda item at a public meeting, that includes all
of the following:

begin delete

(1)

end delete

begin insert (A) end insert  Express approval of the method of sale.

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(2)

end delete

begin insert (B) end insert  Statement of the reasons for the method of sale selected.

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(3)

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begin insert (C) end insert  Disclosure of the identity of the bond counsel, and the
identities of the bond underwriter and the financial adviser if either
or both are used for the sale, unless these individuals have not been
selected at the time the resolution is adopted, in which case the
governing board shall disclose their identities at the public meeting
occurring after they have been selected.

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(4)

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begin insert (D) end insert  Estimates of the costs associated with the bond issuance.

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(E) If the sale includes capital appreciation bonds, disclosure
of the financing term and time of maturity, repayment ratio, and
the estimated change in assessed value of local property.

end insert begin insert

(2) If the sale includes capital appreciation bonds, the resolution
shall be publicly noticed on at least two consecutive meeting
agendas, first as an information item and second as an action item.

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

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

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

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

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

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

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

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

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

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

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

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

(i) The governing board may cause to be deposited proceeds of
sale of any series of the bonds in the interest and sinking fund of
the district in the amount of the annual reserve permitted by Section
15250 or in any lesser amount, as the governing board shall
determine from time to time. The deposit of bond proceeds
pursuant to this subdivision shall be a proper charge against the
building fund of the begin insert school district or community college end insert district.

(j) The governing board may cause to be deposited proceeds of
sale of any series of the bonds in the interest and sinking fund of
the district in the amount not exceeding the interest scheduled to
become due on that series of bonds for a period of two years from
the date of issuance of that series of bonds. The deposit of bonds
proceeds pursuant to this subdivision shall be a proper charge
against the building fund of the begin insert school district or community
college end insert district.

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SEC. 5.  

Section 53506 of the Government Code is amended
to read:

53506.  

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

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

SEC. 6.  

Section 53507 of the Government Code is amended
to read:

53507.  

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

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

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

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

end delete begin delete

SEC. 7.  

Section 53508.7 of the Government Code is amended
to read:

53508.7.  

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

(b)  Bonds sold at a discount below the par value of the bonds
shall be sold in compliance with the provisions of Section 53532.

SEC. 8.  

Section 53530 of the Government Code is amended
to read:

53530.  

As used in this article:

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

(b) “Bonds” means bonds, warrants, notes, or other evidences
of indebtedness of a local agency or zone or improvement district
thereof.

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begin insert SEC. 5. end insert   

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begin insert Section 53508.5 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 53508.5. end insert   

(a) Notwithstanding any other law and except as
provided in subdivision (b), the number of years the whole or any
part of a bond issued by a school district or community college
district is to run shall not exceed 30 years from the date of the
bonds or the date of any series thereof.

(b) Notwithstanding any other law, a school district or
community college district that intends to issue a capital
appreciation bond pursuant to this article shall comply with the
requirements of Sections 15143, 15144, 15144.1, 15144.2, and
15146 of the Education Code.

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