BILL NUMBER: AB 182 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 11, 2013
AMENDED IN SENATE JULY 1, 2013
AMENDED IN SENATE MAY 21, 2013
AMENDED IN ASSEMBLY APRIL 2, 2013
AMENDED IN ASSEMBLY MARCH 12, 2013
INTRODUCED BY Assembly Members Buchanan and Hueso
(Principal coauthor: Assembly Member Alejo)
(Principal coauthors: Senators Block and Wyland)
(Coauthors: Assembly Members Ian Calderon, Chávez, Roger
Hernández, and Williams)
(Coauthor: Senator Torres)
JANUARY 24, 2013
An act to amend Section 15146 of, and to add Sections
15140.5, 15144.1, 15144.2, and 15144.3 to, the Education Code,
and to add Section 53508.5 to, and to add and repeal Section
53508.6 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 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 bond, as defined, that allows for the compounding
of interest, including, but not limited to, a 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 that allows for the compounding of interest 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
a 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 bonds that
allow for the compounding of interest, including, but not limited to,
capital appreciation bonds, the agenda item to identify that
capital appreciation bonds that allow for the
compounding of interest 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
specified information concerning the
capital appreciation bonds, a comparison to the overall cost of
current interest bonds, the reason capital appreciation bonds are
being recommended, a copy of a certain disclosure made by the
underwriter, and disclosure of the financing term and time of
maturity, repayment ratio, and the estimated change in assessed value
of local property bonds . 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.
(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.
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 by resolution shall not have a
maturity exceeding 30 years , except, until January 1,
2019, bonds that do not allow for the compounding of interest
may have a maturity that is greater than 30 years, but that does
not exceed 40 years, if certain requirements are satisfied .
The bill would require a school district or community college
district that intends to issue a capital appreciation bond
bonds that allow for the compounding of interest,
including, but not limited to, capital appreciation bonds,
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 , as specified .
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 15140.5 is added to the
Education Code , to read:
15140.5. For purpose of this article, "bonds" means bonds, notes,
warrants, or other evidence of indebtedness payable, both principal
and interest, from the proceeds of ad valorem property taxes that may
be levied without limitation as to rate or amount upon property
subject to taxation by the governing board of the school district or
community college district.
SECTION 1. SEC. 2. 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. SEC. 3. Section 15144.2 is
added to the Education Code, to read:
15144.2. A bond that allows for the compounding of interest,
including, but not limited to, a capital appreciation
bond 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 that allows for the compounding of interest
was issued.
SEC. 3. SEC. 4. 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
2, 3, 5, and 6 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
2, 3, 5, and 6 of Assembly Bill 182 of the
2013-14 Regular Session that are the subject of the waiver.
SEC. 4. SEC. 5. 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) (1) Before the sale, the governing board shall adopt a
resolution, as an agenda item at a public meeting, that includes all
of the following:
(A) Express approval of the method of sale.
(B) Statement of the reasons for the method of sale selected.
(C) 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.
(D) Estimates of the costs associated with the bond issuance.
(E) If the sale includes bonds that allow for the compounding
of interest, including, but not limited to, capital
appreciation bonds, disclosure of the financing term and time of
maturity, repayment ratio, and the estimated change in the
assessed value of local property taxable
property within the school district or community college district
over the term of the bonds .
(2) If the sale includes bonds that allow for the compounding
of interest, including, but not limited to, 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.
(c) If the sale includes bonds that allow for the compounding
of interest, including, but not limited to, capital
appreciation bonds, the agenda item shall identify that
capital appreciation bonds that allow for the
compounding of interest 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 that allow for the
compounding of interest .
(2) A comparison to the overall cost of current interest bonds.
(3) The reason capital appreciation bonds
that allow for the compounding of interest 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 school district or community college 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 school district or community college 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 school district or
community college 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
school district or community college 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 school district or community college district.
SEC. 5. SEC. 6. Section 53508.5 is
added to the Government Code, to read:
53508.5. (a) Notwithstanding any other law and except as provided
in subdivision (b), the number of years the whole or any
part of (b) or Section 53508.6, 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 pursuant to this article shall not
have a maturity exceeding 30 years .
(b) Notwithstanding any other law and except as provided in
Section 53508.6 , a school district or community college
district that intends to issue a capital appreciation bond
bonds that allow for the compounding of interest,
including, but not limited to, capital appreciation bonds,
pursuant to this article shall comply with the requirements of
Sections 15143, 15144, 15144.1, 15144.2, and 15146 of the Education
Code.
SEC. 7. Section 53508.6 is added to the
Government Code , to read:
53508.6. (a) Notwithstanding any other law, a school district or
community college district may, pursuant to this article, issue bonds
that do not allow for the compounding of interest and that have a
maturity greater than 30 years, but that does not exceed 40 years, if
the school district or community college district does both of the
following:
(1) Complies with the requirements of Section 15146 of the
Education Code.
(2) Makes a finding that the useful life of the facility financed
with the bonds that do not allow for the compounding of interest and
that have a maturity greater than 30 years, but that does not exceed
40 years, equals or exceeds the maturity date of those bonds.
(b) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.