BILL NUMBER: AB 182 CHAPTERED
BILL TEXT
CHAPTER 477
FILED WITH SECRETARY OF STATE OCTOBER 2, 2013
APPROVED BY GOVERNOR OCTOBER 2, 2013
PASSED THE SENATE SEPTEMBER 3, 2013
PASSED THE ASSEMBLY SEPTEMBER 6, 2013
AMENDED IN SENATE AUGUST 29, 2013
AMENDED IN SENATE AUGUST 14, 2013
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
Sections 53508.5 and 53508.6 to the Government Code, relating to
bonds.
LEGISLATIVE COUNSEL'S DIGEST
AB 182, 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 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 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 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 specified information concerning the 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 bonds issued pursuant to this
authority by a school district or community college district that do
not allow for the compounding of interest may have a maturity that is
greater than 30 years, but not greater than 40 years, if certain
requirements are satisfied. The bill would require a school district
or community college district that intends to issue bonds that allow
for the compounding of interest, including, but not limited to,
capital appreciation bonds, pursuant to this authority to conform the
bond issuance to certain requirements otherwise applicable to bonds
issued by a school district or community college district pursuant to
the authority specified in (1), above.
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 purposes 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.
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. 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, 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 bond
that allows for the compounding of interest was issued.
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 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 2, 3, 5, and 6 of
Assembly Bill 182 of the 2013-14 Regular Session that are the subject
of the waiver.
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 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 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 bonds
that allow for the compounding of interest.
(2) A comparison to the overall cost of current interest bonds.
(3) The reason 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. 6. Section 53508.5 is added to the Government Code, to read:
53508.5. Notwithstanding any other law and except as provided in
Section 53508.6, a school district or community college district that
intends to issue 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, and 15144.2, and subdivisions (b) and (c) of Section
15146, of the Education Code.
SEC. 7. Section 53508.6 is added to the Government Code, to read:
53508.6. 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 not greater than 40 years, if the
school district or community college district does both of the
following:
(a) Complies with the requirements of subdivisions (b) and (c) of
Section 15146 of the Education Code.
(b) 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 not greater than 40
years, equals or exceeds the maturity date of those bonds.