Senate BillNo. 692


Introduced by Senator Hancock

February 22, 2013


An act to amend Sections 6588, 53316.2, 53340, 53350, and 53363.9 of the Government Code, relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

SB 692, as introduced, Hancock. Local government: community facilities districts.

(1) The Mello-Roos Community Facilities Act of 1982 authorizes the legislative bodies of 2 or more local agencies, at any time prior to the adoption of the resolution of formation creating a community facilities district or a resolution of change to alter a district, or a resolution or resolutions authorizing issuance of bonds, to enter into a joint community facilities agreement or into a joint exercise of powers agreement, pursuant to the Joint Exercise of Powers Act, to exercise any power authorized by the Mello-Roos Community Facilities Act of 1982 with respect to the community facilities district being created or changed if the legislative body of each entity adopts a resolution declaring that the joint agreement would be beneficial to the residents of that entity.

This bill would specify that this authorization is not intended to limit the ability of a joint powers authority created pursuant to the Joint Exercise of Powers Act to exercise powers authorized by the Marks-Roos Local Bond Pooling Act of 1985.

(2) Under the Mello-Roos Community Facilities Act of 1982, after a community facilities district has been created and authorized to levy specified special taxes, the legislative body may, by ordinance, levy the special taxes at the rate and apportion them in the manner specified in the resolution forming the community facilities district. The act also authorizes the annexation of territory to the community facilities district by unanimous approval of the owner or owners following the formation of that district.

This bill would authorize the legislative body, in the case of a community facilities district that includes property proposed to be annexed to the district at a future date by unanimous approval, to, by ordinance, provide for the imposition of special taxes on that property, as specified.

(3) The Mello-Roos Community Facilities Act of 1982 authorizes the legislative body to, by resolution, designate a portion or portions of the district as one or more improvement areas for purposes of the financing of, or contributing to the financing of, specified public facilities, as specified, and following the designation, authorizes all proceedings for purposes of a bond election and for the purpose of levying special taxes for payment of the bonds, or for any other change, to apply only to the improvement area for those specified facilities.

This bill would authorize the legislative body to, designate a parcel or parcels of property included in a community facilities district by unanimous approval, as specified, as an improvement area without additional hearings or procedures, as specified. The bill would specify that following the designation, all proceedings for approval of the appropriations limit, the rate and method of apportionment and manner of collection of special taxes, and the authorization to incur bonded indebtedness for the parcel or parcels applies only within the improvement area.

(4) The Mello-Roos Community Facilities Act of 1982 authorizes the legislative body to incur bonded indebtedness, as specified, and authorizes any refunding bonds issued to be exchanged for the bonds to be refunded on such basis as the legislative body determines is for the benefit of the district. The legislative body is also authorized to sell the refunding bonds at public or private sale, and to place the proceeds of any sale of refunding bonds for cash in the “refunding fund” in the treasury of the local agency. The funds in the “revolving account” are required to be secured and may be invested in accordance with any other laws applicable to the funds of the local agency. Existing law requires the proceeds and investments in the “refunding fund” at the time of issuance of the refunding bonds, as certified by a certified public accountant, to be in an amount sufficient to pay the principal, interest, and redemption premiums, if any, on the refunded bonds as they become due or at designated dates prior to maturity and the designated costs of issuance of the refunding bonds, or to pay the principal, interest, and redemption premiums, if any, on the refunding bonds prior to the maturity of the bonds to be refunded or prior to a designated date or dates before the maturity of the bonds to be refunded, the principal and any redemption premiums due on the refunded bonds at maturity or upon that designated date or dates, and the designated costs of issuance of the refunding bonds.

This bill would, with regard to the proceeds and any other cash in the “refunding fund,” require those funds to be held uninvested or invested in noncallable obligations of, or obligations guaranteed as to principal and interest by, the United States of America or any agency or instrumentality thereof, when those obligations are backed by the full faith and credit of the United States of America, and requires those proceeds to be in an amount sufficient to pay the principal, interest, and redemption premiums, if any, on the refunded bonds as they become due or at designated dates prior to maturity, in which case certification of a certified public accountant is not required.

(5) The Joint Exercise of Powers Act authorizes the legislative or other governing bodies of 2 or more public agencies to jointly exercise by agreement any power common to the contracting parties, as specified, and authorizes that joint powers authority to exercise various powers, including, among others, the power to take title to, and sell by installment sale or otherwise, lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands that are located within the state that the authority determines are necessary or convenient for the financing of public capital improvements, or any portion thereof.

This bill would additionally authorize the joint powers authority to lease lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands that are located within the state that the authority determines are necessary or convenient for the financing of public capital improvements, or any portion thereof.

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

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

P3    1

SECTION 1.  

Section 6588 of the Government Code is amended
2to read:

P4    1

6588.  

In addition to other powers specified in an agreement
2pursuant to Article 1 (commencing with Section 6500) and Article
32 (commencing with Section 6540), the authority may do any or
4all of the following:

5(a) Adopt bylaws for the regulation of its affairs and the conduct
6of its business.

7(b) Sue and be sued in its own name.

8(c) Issue bonds, including, at the option of the authority, bonds
9bearing interest, to pay the cost of any public capital improvement,
10working capital, or liability or other insurance program. In addition,
11for any purpose for which an authority may execute and deliver
12or cause to be executed and delivered certificates of participation
13in a lease or installment sale agreement with any public or private
14entity, the authority, at its option, may issue or cause to be issued
15bonds, rather than certificates of participation, and enter into a
16loan agreement with the public or private entity.

17(d) Engage the services of private consultants to render
18professional and technical assistance and advice in carrying out
19the purposes of this article.

20(e) As provided by applicable law, employ and compensate
21bond counsel, financial consultants, and other advisers determined
22necessary by the authority in connection with the issuance and sale
23of any bonds.

24(f) Contract for engineering, architectural, accounting, or other
25services determined necessary by the authority for the successful
26development of a public capital improvement.

27(g) Pay the reasonable costs of consulting engineers, architects,
28accountants, and construction, land-use, recreation, and
29environmental experts employed by any sponsor or participant if
30the authority determines those services are necessary for the
31successful development of public capital improvements.

32(h) Take title to,begin delete andend delete sell by installment sale or otherwise,begin insert or
33leaseend insert
lands, structures, real or personal property, rights,
34rights-of-way, franchises, easements, and other interests in lands
35that are located within the state that the authority determines are
36necessary or convenient for the financing of public capital
37improvements, or any portion thereof.

38(i) Receive and accept from any source, loans, contributions,
39or grants, in either money, property, labor, or other things of value,
40for, or in aid of, the construction financing, or refinancing of public
P5    1capital improvement, or any portion thereof or for the financing
2of working capital or insurance programs, or for the payment of
3the principal of and interest on bonds if the proceeds of those bonds
4are used for one or more of the purposes specified in this section.

5(j) Make secured or unsecured loans to any local agency in
6connection with the financing of capital improvement projects,
7working capital or insurance programs in accordance with an
8agreement between the authority and the local agency. However,
9no loan shall exceed the total cost of the public capital
10improvements, working capital or insurance needs of the local
11agency as determined by the local agency and by the authority.

12(k) Make secured or unsecured loans to any local agency in
13accordance with an agreement between the authority and the local
14agency to refinance indebtedness incurred by the local agency in
15connection with public capital improvements undertaken and
16completed.

17(l) Mortgage all or any portion of its interest in public capital
18improvements and the property on which any project is located,
19whether owned or thereafter acquired, including the granting of a
20security interest in any property, tangible or intangible.

21(m) Assign or pledge all or any portion of its interests in
22mortgages, deeds of trust, indentures of mortgage or trust, or
23similar instruments, notes, and security interests in property,
24tangible or intangible, of a local agency to which the authority has
25made loans, and the revenues therefrom, including payment or
26income from any interest owned or held by the authority, for the
27benefit of the holders of bonds issued to finance public capital
28improvements. The pledge of moneys, revenues, accounts, contract
29rights, or rights to payment of any kind made by or to the authority
30pursuant to the authority granted in this part shall be valid and
31binding from the time the pledge is made for the benefit of the
32pledgees and successors thereto, against all parties irrespective of
33whether the parties have notice of the claim.

34(n) Lease the public capital improvements being financed to a
35local agency, upon terms and conditions that the authority deems
36proper; charge and collect rents therefor; terminate any lease upon
37the failure of the lessee to comply with any of the obligations of
38the lease; include in any lease provisions that the lessee shall have
39options to renew the lease for a period or periods, and at rents as
40determined by the authority; purchase or sell by an installment
P6    1agreement or otherwise any or all of the public capital
2improvements; or, upon payment of all the indebtedness incurred
3by the authority for the financing or refinancing of the public
4capital improvements, the authority may convey any or all of the
5project to the lessee or lessees.

6(o) Charge and apportion to local agencies that benefit from its
7services the administrative costs and expenses incurred in the
8exercise of the powers authorized by this article. These fees shall
9be set at a rate sufficient to recover, but not exceed, the authority’s
10costs of issuance and administration. The fee charged to each local
11obligation acquired by the pool shall not exceed that obligation’s
12proportionate share of those costs. The level of these fees shall be
13disclosed to the California Debt and Investment Advisory
14Commission pursuant to Section 6599.1.

15(p) Issue, obtain, or aid in obtaining, from any department or
16agency of the United States or of the state, or any private company,
17any insurance or guarantee to, or for, the payment or repayment
18of interest or principal, or both, or any part thereof, on any loan,
19lease, or obligation or any instrument evidencing or securing the
20same, made or entered into pursuant to this article.

21(q) Notwithstanding any other provision of this article, enter
22into any agreement, contract, or any other instrument with respect
23to any insurance or guarantee; accept payment in the manner and
24form as provided therein in the event of default by a local agency;
25and assign any insurance or guarantee that acts as security for the
26authority’s bonds.

27(r) Enter into any agreement or contract, execute any instrument,
28and perform any act or thing necessary, convenient, or desirable
29to carry out any power authorized by this article.

30(s) Invest any moneys held in reserve or sinking funds, or any
31moneys not required for immediate use or disbursement, in
32obligations that are authorized by law for the investment of trust
33funds.

34(t) At the request of affected local agencies, combine and pledge
35revenues to public capital improvements for repayment of one or
36more series of bonds issued pursuant to this article.

37(u) Delegate to any of its individual parties or other responsible
38individuals the power to act on its behalf subject to its general
39direction, guidelines, and oversight.

P7    1(v) Purchase, with the proceeds of its bonds or its revenue, bonds
2issued by any local agency at public or negotiated sale. Bonds
3purchased pursuant to this subdivision may be held by the authority
4or sold to public or private purchasers at public or negotiated sale,
5in whole or in part, separately or together with other bonds issued
6by the authority.

7(w) Purchase, with the proceeds of its bonds or its revenue, VLF
8receivables sold to the authority pursuant to Section 6588.5. VLF
9receivables so purchased may be pledged to the payment of bonds
10issued by the authority or may be resold to public or private
11purchasers at public or negotiated sale, in whole or in part,
12separately or together with other VLF receivables purchased by
13the authority.

14(x) (1) Purchase, with the proceeds of its bonds or its revenue,
15Proposition 1A receivables pursuant to Section 6588.6. Proposition
161A receivables so purchased may be pledged to the payment of
17bonds issued by the authority or may be resold to public or private
18purchasers at public or negotiated sales, in whole or in part,
19separately or together with other Proposition 1A receivables
20purchased by the authority.

21(2) (A) All entities subject to a reduction of ad valorem property
22tax revenues required under Section 100.06 of the Revenue and
23Taxation Code pursuant to the suspension set forth in Section
24100.05 of the Revenue and Taxation Code shall be afforded the
25opportunity to sell their Proposition 1A receivables to the authority.

26(B) If these entities offer Proposition 1A receivables to the
27authority for purchase and duly authorize the sale of the Proposition
281A receivable pursuant to documentation approved by the
29authority, the authority shall purchase all Proposition 1A
30receivables so offered to the extent it can sell bonds therefor. If
31the authority does not purchase all Proposition 1A receivables
32offered, it shall purchase a pro rata share of each entity’s offered
33Proposition 1A receivables.

34(C) The authority may establish a deadline, no earlier than
35November 3, 2009, by which these entities shall offer their
36Proposition 1A receivables for sale to the authority and complete
37the application required by the authority.

38(3) For purposes of meeting costs incurred in performing its
39duties relative to the purchase and sale of Proposition 1A
40receivables, the authority shall be authorized to charge a fee to
P8    1each entity from which it purchases a Proposition 1A receivable.
2The fee shall be computed based on the percentage value of the
3Proposition 1A receivable purchased from each entity, in relation
4to the value of all Proposition 1A receivables purchased by the
5authority. The amount of the fee shall be paid from the proceeds
6of the bonds and shall be included in the principal amount of the
7bonds.

8(4) Terms and conditions of any and all fees and expenses
9charged by the authority, or those it contracts with, and the terms
10and conditions of sales of Proposition 1A receivables and bonds
11issued pursuant to this subdivision, including the terms of optional
12early redemption provisions, if any, shall be approved by the
13Treasurer and the Director of Finance, who shall not unreasonably
14withhold their approval. The aggregate principal amount of all
15bonds issued pursuant to this subdivision shall not exceed two
16billion two hundred fifty million dollars ($2,250,000,000), and the
17rate of interest paid on those bonds shall not exceed 8 percent per
18annum. The authority shall exercise its best efforts to obtain the
19lowest cost financing possible. Any and all premium obtained shall
20be used for either of the following:

21(A) Applied to pay the costs of issuance of the bonds.

22(B) Deposited in a trust account that is pledged to bondholders
23and used solely for the payment of interest on, or for repayment
24of, the bonds.

25(5) (A) In connection with any financing backed by Proposition
261A receivables, the Treasurer may retain financial advisors, legal
27counsel, and other consultants to assist in performing the duties
28required by this chapter and related to that financing.

29(B) Notwithstanding any otherbegin delete provision ofend delete law, none of the
30following shall apply to any agreements entered into by the
31Treasurer pursuant to subparagraph (A) in connection with any
32Proposition 1A financing:

33(i) Section 11040 of the Government Code.

34(ii) Section 10295 of the Public Contract Code.

35(iii) Article 3 (commencing with Section 10300) and Article 4
36(commencing with Section 10335) of, Chapter 2 of Part 2 of
37Division 2 of the Public Contract Code, except for the authority
38of the Department of Finance under Section 10336 of the Public
39Contract Code to direct a state agency to transmit to it a contract
P9    1for review, and except for Section 10348.5 of the Public Contract
2Code.

3(C) Any costs incurred by the Treasurer in connection with any
4Proposition 1A financing shall be reimbursed out of the proceeds
5of the financing.

6(y) Set any other terms and conditions on any purchase or sale
7pursuant to this section as it deems by resolution to be necessary,
8appropriate, and in the public interest, in furtherance of the
9purposes of this article.

10

SEC. 2.  

Section 53316.2 of the Government Code is amended
11to read:

12

53316.2.  

(a) A community facilities district may finance
13facilities to be owned or operated by a public agency other than
14the agency that created the district, or services to be provided by
15a public agency other than the agency that created the district, or
16any combination, only pursuant to a joint community facilities
17agreement or a joint exercise of powers agreement adopted pursuant
18to this section. A joint community facilities agreement or a joint
19exercise of powers agreement with a state or federal agency shall
20not be required if the local agency that created the district is the
21agency that would, in the absence of the district, enter into an
22agreement with the state or federal agency for the provision of the
23facilities or services, or if the local agency that created the district
24enters into a joint agreement with the public agency that would,
25in the absence of the district, enter into an agreement with the state
26or federal agency for the provision of the facilities or services.

27(b) At any time prior to the adoption of the resolution of
28formation creating a community facilities district or a resolution
29of change to alter a district, or a resolution or resolutions
30authorizing issuance of bonds pursuant to Section 53356, the
31legislative bodies of two or more local agencies may enter into a
32joint community facilities agreement pursuant to this section and
33Sections 53316.4 and 53316.6 or into a joint exercise of powers
34agreement pursuant to the Joint Exercise of Powers Act (Chapter
355 (commencing with Section 6500) of Division 7 of Title 1) to
36exercise any power authorized by this chapter with respect to the
37community facilities district being created or changed if the
38legislative body of each entity adopts a resolution declaring that
39 the joint agreement would be beneficial to the residents of that
40entity.begin insert This subdivision shall not be construed to limit the ability
P10   1of a joint powers authority created pursuant to the Joint Exercise
2of Powers Act to exercise the powers authorized by the Joint
3Exercise of Powers Act.end insert

4(c) Notwithstanding the Joint Exercise of Powers Act, a
5contracting party may use the proceeds of any special tax or charge
6levied pursuant to this chapter or, in the case of facilities, of any
7bonds or other indebtedness issued pursuant to this chapter to
8provide facilities or services which that contracting party is
9otherwise authorized by law to provide, even though another
10contracting party does not have the power to provide those facilities
11or services.

12(d) Notwithstanding subdivision (b), nothing in this section
13shall prevent entry into or amendment of a joint community
14facilities agreement or a joint exercise of powers agreement at any
15time, if the new agreement or amendment is necessary, as
16determined by the legislative body, for either of the following
17reasons:

18(1) To allow an orderly transition of governmental facilities and
19finances in the case of any change in governmental organization
20approved pursuant to the Cortese-Knox-Hertzberg Local
21Government Reorganization Act of 2000 (Division 3 (commencing
22with Section 56000) of Title 5) or other law governing the
23reorganization of any agency that is a party to the agreement.

24(2) To allow participation in the agreement by a state or federal
25agency, including, but not limited to, the California Department
26of Transportation. Participation in an agreement by a state or
27federal agency is purely optional.

28(e) Notwithstanding any other provision of this chapter, no local
29agency that is party to a joint exercise of powers agreement or
30joint community facilities agreement shall have primary
31responsibility for formation of a district, or for an extension of
32authorized facilities and services or a change in special taxes
33pursuant to Article 3 (commencing with Section 53330), unless
34that local agency is one or more of the following:

35(1) A city, a county, or a city and county.

36(2) An agency created pursuant to a joint powers agreement that
37is separate from the parties to the agreement, is responsible for the
38administration of the agreement, and is subject to the notification
39requirement of Section 6503.5.

P11   1(3) An agency that is reasonably expected to have responsibility
2for providing facilities or services to be financed by a larger share
3of the proceeds of special taxes and bonds of the district or districts
4created or changed pursuant to the joint exercise of powers
5agreement or the joint community facilities agreement than any
6other local agency.

7

SEC. 3.  

Section 53340 of the Government Code is amended
8to read:

9

53340.  

(a) After a community facilities district has been
10created and authorized to levy specified special taxes pursuant to
11Article 2 (commencing with Section 53318), Article 3
12(commencing with Section 53330), or Article 3.5 (commencing
13with Section 53339), the legislative body may, by ordinance, levy
14the special taxes at the rate and apportion them in the manner
15specified in the resolution adopted pursuant to Article 2
16(commencing with Section 53318), Article 3 (commencing with
17Section 53330), or Article 3.5 (commencing with Section 53339).
18begin insert After creation of a community facilities district that includes
19territory proposed for annexation in the future by unanimous
20approval as described in subdivision (b) of Section 53339.3, the
21legislative body may, by ordinance, provide for the levy ofend insert
begin insert special
22taxes on parcels that will be annexed to the community facilities
23district at the rate or rates to be approved unanimously by the
24owner or owners of each parcel or parcels to be annexed to the
25community facilities district and for apportionment and collection
26of the special taxes in the manner specified in the resolution of
27formation.end insert

28(b) The legislative body may provide, by resolution, for the levy
29of the special tax in the current tax year or future tax years at the
30same rate or at a lower rate than the rate provided by the ordinance,
31if the resolution is adopted and a certified list of all parcels subject
32to the special tax levy including the amount of the tax to be levied
33on each parcel for the applicable tax year, is filed by the clerk or
34other official designated by the legislative body with the county
35auditor on or before the 10th day of August of that tax year. The
36clerk or other official designated by the legislative body may file
37the certified list after the 10th of August but not later than the 21st
38of August if the clerk or other official obtains prior written consent
39of the county auditor.

P12   1(c) Properties or entities of the state, federal, or local
2governments shall, except for properties that a local agency is a
3landowner of within the meaning of subdivision (f) of Section
453317, or except as otherwise provided in Section 53317.3, be
5exempt from the special tax. No other properties or entities are
6exempt from the special tax unless the properties or entities are
7expressly exempted in the resolution of formation to establish a
8district adopted pursuant to Section 53325.1 or in a resolution of
9consideration to levy a new special tax or special taxes or to alter
10the rate or method of apportionment of an existing special tax as
11provided in Section 53334.

12(d) The proceeds of any special tax may only be used to pay,
13in whole or part, the cost of providing public facilities, services,
14and incidental expenses pursuant to this chapter.

15(e) The special tax shall be collected in the same manner as
16ordinary ad valorem property taxes are collected and shall be
17subject to the same penalties and the same procedure, sale, and
18lien priority in case of delinquency as is provided for ad valorem
19taxes, unless another procedure has been authorized in the
20resolution of formation establishing the district and adopted by
21the legislative body.

22(f) (1) Notwithstanding subdivision (e), the legislative body of
23the district may waive all or any specified portion of the
24delinquency penalties and redemption penalties if it makes all of
25the following determinations:

26(A) The waivers shall apply only to parcels delinquent at the
27time of the determination.

28(B) The waivers shall be available only with respect to parcels
29for which all past due and currently due special taxes and all other
30costs due are paid in full within a limited period of time specified
31in the determination.

32(C) The waivers shall be available only with respect to parcels
33sold or otherwise transferred to new owners unrelated to the owner
34responsible for the delinquency.

35(D) The waivers are in the best interest of the debtholders.

36(2) The charges with penalties to be waived shall be removed
37 from the tax roll pursuant to Section 53356.2 and local
38administrative procedures, and any distributions made to the district
39prior to collection pursuant to Chapter 3 (commencing with Section
P13   14701) of Part 8 of Division 1 of the Revenue and Taxation Code
2shall be repaid by the district prior to granting the waiver.

3(g) The tax collector may collect the special tax at intervals as
4specified in the resolution of formation, including intervals
5different from the intervals determining when the ordinary ad
6valorem property taxes are collected. The tax collector may deduct
7the reasonable administrative costs incurred in collecting the special
8tax.

9(h) All special taxes levied by a community facilities district
10shall be secured by the lien imposed pursuant to Section 3115.5
11of the Streets and Highways Code. This lien shall be a continuing
12lien and shall secure each levy of special taxes. The lien of the
13special tax shall continue in force and effect until the special tax
14obligation is prepaid, permanently satisfied, and canceled in
15accordance with Section 53344 or until the special tax ceases to
16be levied by the legislative body in the manner provided in Section
1753330.5. If any portion of a parcel is encumbered by a lien pursuant
18to this chapter, the entirety of the parcel shall be encumbered by
19that lien.

20

SEC. 4.  

Section 53350 of the Government Code is amended
21to read:

22

53350.  

begin insert(a)end insertbegin insertend insert For purposes of financing of, or contributing to
23the financing of, specified public facilities, the legislative body
24may by resolution designate a portion or portions of the district as
25one or more improvement areas. An area shall be known as
26“Improvement Area No. ____” of “Community Facilities District
27____.” After the designation of an improvement area, all
28proceedings for purposes of a bond election and for the purpose
29of levying special taxes for payment of the bonds, or for any other
30change pursuant to Article 3 (commencing with Section 53330),
31shall apply only to the improvement area for those specified
32facilities.

begin insert

33(b) In connection with the annexation by unanimous approval
34to a community facilities district of a parcel that was included in
35territory proposed for annexation in the future to the community
36facilities district, as described in Section 53329.6, the local agency
37may, without additional hearings or procedures, designate a parcel
38or parcels as an improvement area within the community facilities
39district. After the designation of a parcel or parcels as an
40improvement area, all proceedings for approval of the
P14   1appropriations limit, the rate and method of apportionment and
2manner of collection of special taxes, and the authorization to
3incur bonded indebtedness for the parcel or parcels shall apply
4only to the improvement area.

end insert
5

SEC. 5.  

Section 53363.9 of the Government Code is amended
6to read:

7

53363.9.  

begin insert(a)end insertbegin insertend insert The proceeds and investments in the “refunding
8fund” shall be in an amount sufficient to meet either the
9requirements ofbegin delete paragraph (a) or paragraph (b)end deletebegin insert end insertbegin insertparagraph (1) or end insert
10begin insertparagraph (2)end insert at the time of issuance of the refunding bonds, as
11certified by a certified public accountant licensed to practice in
12this state.

begin delete

13(a)

end delete

14begin insert(1)end insert The proceeds and investments, together with any interest or
15other gain to be derived from any such investment, shall be in an
16amount sufficient to pay the principal, interest, and redemption
17premiums, if any, on the refunded bonds as they become due or
18at designated dates prior to maturity and the designated costs of
19issuance of the refunding bonds.

begin delete

20(b)

end delete

21begin insert(2)end insert The proceeds and investments, together with any interest or
22other gain to be derived from any such investment, shall be in an
23amount sufficient to pay the principal, interest, and redemption
24premiums, if any, on the refunding bonds prior to the maturity of
25the bonds to be refunded or prior to a designated date or dates
26before the maturity of the bonds to be refunded, the principal and
27any redemption premiums due on the refunded bonds at maturity
28or upon that designated date or dates, and the designated costs of
29issuance of the refunding bonds.

begin insert

30(b) The proceeds and any other cash in the “refunding fund”
31shall be held uninvested or shall be invested in noncallable
32obligations of, or obligations guaranteed as to principal and
33interest by, the United States of America or any agency or
34instrumentality thereof, when those obligations are backed by the
35full faith and credit of the United States of America, and shall be
36in an amount sufficient to pay the principal, interest, and
37redemption premiums, if any, on the refunded bonds as they become
38due or at designated dates prior to maturity, in which case
39certification of a certified public accountant licensed to practice
40in this state shall not be required.

end insert


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