Amended in Senate June 22, 2016

Amended in Senate June 9, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 450


Introduced by Assembly Member McCarty

February 23, 2015


begin deleteAn act to amend Sections 5898.12, 5898.21, 5898.24, 5898.28, and 5899.2 of, and to add Section 5899.4 to, the Streets and Highways Code, relating to contractual assessments. end deletebegin insertAn act to add Section 26157 to the Penal Code, relating to firearms.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 450, as amended, McCarty. begin deleteContractual assessments. end deletebegin insertFirearms: concealed carry license.end insert

begin insert

Existing law authorizes specified local law enforcement agencies to issue to an applicant a license to carry a concealed firearm if certain requirements are met, including, among others, that the applicant has good cause for the license.

end insert
begin insert

This bill would require local agencies issuing those licenses to charge an applicant a fee sufficient to cover the reasonable costs of issuing and enforcement of the license.

end insert
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The Improvement Act of 1911 authorizes the legislative body of any public agency, as defined, to determine that it would be convenient, advantageous, and in the public interest to designate an area within the public agency, as specified, within which authorized public agency officials and property owners may enter into voluntary contractual assessments to finance, among other improvements, the installation of distributed generation renewable energy sources or energy or water efficiency improvements that are permanently fixed to real property, as specified. The act prohibits the use of voluntary contractual assessments to finance facilities for parcels in connection with the initial construction of residential buildings unless the initial construction is undertaken by the intended owner or occupant.

end delete
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This bill would authorize the use of voluntary contractual assessments to finance authorized improvements in connection with the initial construction of residential buildings with 3 or fewer units if the initial construction of the residential buildings are undertaken by the intended owner or occupant. The bill would authorize the use of voluntary contractual assessments to finance authorized improvements in connection with the initial construction of nonresidential buildings or residential buildings with 4 or more units. The bill would authorize the use of voluntary contractual assessments by one or more property owners to finance authorized improvements on real property other than the property on which the assessment is levied.

end delete
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The act authorizes a public agency to issue bonds to finance improvements that are repaid through voluntary contractual assessments.

end delete
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This bill would specify that the interest rate on a bond that is payable from one or more contractual assessments levied on nonresidential or residential property with 4 or more units is considered to be fixed as long as the interest rate on each unpaid contractual assessment that secures the bonds is fixed at the time of the bond issuance.

end delete
begin delete

The act authorizes a public agency to transfer its right, title, and interest in and to any voluntary contractual assessments if bonds are not issued. The act requires the public agency and transferee to enter into an agreement that, among other things, identifies the specific period of time during which the transfer of voluntary contractual assessments will be operative.

end delete
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This bill would additionally require the agreement, among other things, to identify the amounts to be paid by the transferee as consideration for the transfer. The bill would authorize public agencies to issue bonds to repay a transferee of the right, title, and interest in and to any voluntary contractual assessments that were transferred.

end delete
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The act specifies that, with respect to bonds issued to finance improvements to nonresidential property or residential property with 4 or more units, the redemption premium associated with a redemption of bonds as a result of a contractual assessment repayment is to be determined by agreement of the public agency issuing the bonds, the property owner, and the initial purchaser of the bonds.

end delete
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This bill would specify that, with respect to bonds payable from contractual assessments levied on residential property with 3 or fewer units, the redemption premium associated with a redemption of bonds as a result of a contractual assessment prepayment is to be determined by agreement of the public agency issuing the bonds and the initial purchaser of the bonds, but not to exceed 5%. The bill would specify, with respect to bonds that are payable from contractual assessments levied on nonresidential properties or residential properties with 4 or more units, the manner in which the redemption premium associated with a redemption of bonds as a result of a contractual assessment prepayment is to be determined.

end delete

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

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

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 26157 is added to the end insertbegin insertPenal Codeend insertbegin insert, to
2read:end insert

begin insert
3

begin insert26157.end insert  

The sheriff, chief, or other head of a municipal police
4department issuing a license pursuant to Section 26150 or 26155
5shall charge an applicant for the license a fee sufficient to cover
6the reasonable costs of issuing and enforcement of the license.

end insert
begin delete
7

SECTION 1.  

Section 5898.12 of the Streets and Highways
8Code
is amended to read:

9

5898.12.  

(a) It is the intent of the Legislature that this chapter
10should be used to finance public improvements to lots or parcels
11that are developed and where the costs and time delays involved
12in creating an assessment district pursuant to other provisions of
13this division or any other law would be prohibitively large relative
14to the cost of the public improvements to be financed.

15(b) It is also the intent of the Legislature that this chapter should
16be used to finance the installation or prepaid service contract, or
17both, of distributed generation renewable energy sources or energy
18efficiency improvements that are permanently fixed to residential,
19commercial, industrial, agricultural, or other real property.

20(c) It is also the intent of the Legislature to address chronic
21water needs throughout California by permitting voluntary
22individual efforts to improve water efficiency. The Legislature
23further intends that this chapter should be used to finance the
24installation of water efficiency improvements that are permanently
P4    1fixed to residential, commercial, industrial, agricultural, or other
2real property, including, but not limited to, recycled water
3connections, synthetic turf, cisterns for stormwater recovery, and
4permeable pavement.

5(d) This chapter may be used to finance authorized
6improvements in connection with the initial construction of a
7residential building with three or fewer units, only if the initial
8construction of the residential building is undertaken by the
9intended owner or occupant.

10(e) This chapter may be used to finance authorized
11improvements in connection with the initial construction of a
12nonresidential building or a residential building with four or more
13units.

14(f) This chapter shall not be used to finance the purchase or
15installation of appliances that are not permanently fixed to
16residential, commercial, industrial, agricultural, or other real
17property.

18(g) Assessments may be levied pursuant to this chapter only
19with the free and willing consent of the owner of each lot or parcel
20on which an assessment is levied at the time the assessment is
21levied.

22(h) This chapter may be used by one or more property owners
23to finance the improvements authorized by this chapter that are
24permanently affixed on real property other than the property on
25which the assessment is levied.

26(i) An improvement is permanently affixed to real property for
27purposes of this chapter even though the improvement may be
28temporarily removed for repairs or maintenance.

29

SEC. 2.  

Section 5898.21 of the Streets and Highways Code is
30amended to read:

31

5898.21.  

Notwithstanding any other provision of this chapter,
32upon the written consent of an authorized public agency official,
33the proposed arrangements for financing the program pertaining
34to the installation of distributed generation renewable energy
35sources or energy or water efficiency improvements that are
36permanently fixed to real property may authorize the property
37owner, the owner of the attached system, or a designee of that
38owner, to purchase directly the related equipment and materials
39for the installation of distributed generation renewable energy
40sources or energy or water efficiency improvements and to contract
P5    1 directly, or pay, for the installation of distributed generation
2renewable energy sources or energy or water efficiency
3improvements that are permanently fixed to the residential,
4commercial, industrial, agricultural, or other real property.

5

SEC. 3.  

Section 5898.24 of the Streets and Highways Code is
6amended to read:

7

5898.24.  

(a) A legislative body shall publish notice of a hearing
8pursuant to Section 6066 of the Government Code, and the first
9publication shall occur not later than 20 days before the date of
10the hearing.

11(b) (1) A legislative body administering a voluntary contractual
12assessment program shall designate an office, department, or
13bureau of the public agency that shall be responsible for annually
14preparing the current roll of assessment obligations by assessor’s
15parcel number on property subject to a voluntary contractual
16assessment.

17(2) The designated office, department, or bureau shall establish
18procedures to promptly respond to inquiries concerning current
19and future estimated liability for a voluntary contractual
20assessment. Neither the designated office, department, or bureau,
21nor the legislative body, shall be liable if any estimate of future
22voluntary contractual assessment liability is inaccurate, nor for
23any failure of any seller to request notice pursuant to this chapter
24or to provide the notice to a buyer.

25(c) For purposes of enabling sellers of real property subject to
26a voluntary contractual assessment to satisfy the notice
27requirements of Section 1102.6b of the Civil Code, and, except as
28provided in subdivision (e), the legislative body shall cause to be
29recorded in the office of the county recorder for the county in
30which the real property is located, concurrently with the notice
31required by Section 5898.32, a separate document that meets all
32of the following requirements:

33(1) The title of the document shall be “Payment of Contractual
34Assessment Required” in at least 14-point boldface type.

35(2) The document shall include all of the following information:

36(A) The names of all current owners of the real property subject
37to the contractual assessment and the legal description and
38assessor’s parcel number for the affected property.

39(B) The annual amount of the contractual assessment.

P6    1(C) The date or circumstances under which the contractual
2assessment expires, or a statement that the assessment is perpetual.

3(D) The purpose for which the funds from the contractual
4assessment will be used.

5(E) The entity to which funds from the contractual assessment
6will be paid and specific contact information for that entity.

7(F) The signature of the authorized representative of the
8legislative body to which funds from the contractual assessment
9will be paid.

10(d) The recorder shall only be responsible for examining the
11document required by subdivision (c) and determining that it
12contains the information required by subparagraphs (A), (E), and
13(F) of paragraph (2) of subdivision (c). The recorder shall index
14the document under the names of the persons and entities identified
15in subparagraphs (A) and (E) of paragraph (2) of subdivision (c).
16The recorder shall not examine any other information contained
17in the document required by subdivision (c).

18(e) In order to reduce the costs associated with contractual
19assessments, a legislative body administering a voluntary
20contractual assessment program may authorize the document
21described in subdivision (c) to be combined with the notice required
22by Section 5898.32, and recorded as a single document. If the
23legislative body authorizes the single document described in this
24subdivision and that document is presented for recordation to a
25county recorder, the county recorder shall accept that document
26for recordation and shall not require the public agency to separately
27prepare and record the document described in subdivision (c) and
28the document required by Section 5898.32.

29

SEC. 4.  

Section 5898.28 of the Streets and Highways Code is
30amended to read:

31

5898.28.  

(a) (1) A public agency may issue bonds pursuant
32to this chapter, the principal and interest for which would be repaid
33by voluntary contractual assessments. A public agency may
34advance its own funds to finance work to be repaid through
35voluntary contractual assessments, and may from time to time sell
36bonds to reimburse itself for those advances. A public agency may
37enter into a relationship with an underwriter or financial institution
38that would allow the sequential issuance of a series of bonds, each
39bond being issued as the need arose to finance work to be repaid
40through voluntary contractual assessments. The interest rate of
P7    1each bond may be determined by an appropriate index, but shall
2be fixed at the time each bond is issued unless the bond is payable
3from one or more contractual assessments levied on nonresidential
4private property or residential private property with four or more
5units. The interest rate on that bond shall be considered fixed as
6long as the interest rate on each unpaid contractual assessment that
7secures the bond is fixed at the time the bond is issued. Bond
8proceeds may be used to establish a reserve fund for debt service
9or paying the costs of foreclosure on properties participating in
10the program, to fund capitalized interest for a period up to two
11years from the date of issuance of the bonds, to fund the
12administrative fee required for participation in the PACE Reserve
13Program established pursuant to Chapter 4 (commencing with
14Section 26050) of Division 16 of the Public Resources Code, and
15to pay for expenses incidental to the issuance and sale of the bonds.
16Division 10 (commencing with Section 8500) shall apply to any
17bonds issued pursuant to this section, insofar as that division is
18not in conflict with this chapter.

19(2) An assessment contract may define the term of the voluntary
20contractual assessment and the rate at which interest will accrue
21on the voluntary contractual assessment, describe the terms under
22which the assessment may be prepaid, identify a schedule of
23installments that include principal, interest, and administrative
24expense components, and provide for the use of the proceeds that
25may be generated as a result of the voluntary contractual
26assessment. During the term of a voluntary contractual assessment,
27the public agency may levy the installments described in the
28assessment contract. If bonds are issued after an assessment
29contract is executed and delivered by a public agency and a
30property owner, the installments payable under the assessment
31contract shall thereafter be used only to pay debt service on the
32bonds, a power purchase agreement or lease pursuant to Section
335899.2, or the public agency’s costs incidental to financing,
34administration, and collection of the voluntary contractual
35assessment.

36(b) (1) Notwithstanding any provision of this division or the
37Improvement Act of 1915 (Division 10 (commencing with Section
388500)), a public agency may transfer its right, title, and interest in
39and to any voluntary contractual assessments, if bonds are not
40payable for the assessments. The public agency and the transferee
P8    1shall enter into an agreement that, among other things, identifies
2the amount to be paid by the transferee as consideration for the
3transfer and use of that amount paid by the transferee to the public
4agency, the commencement date for the accrual of interest on the
5voluntary contractual assessment, the capitalizing of interest, if
6applicable, the timing for payment of the voluntary contractual
7assessment installments of the transferee if received by the public
8agency, and the specific period of time during which the transfer
9of voluntary contractual assessments will be operative, not to
10exceed three years. The agreement may provide that if at the end
11of the term of the transfer of the voluntary contractual assessments
12the public agency is unable to repay the transferee, the public
13agency may transfer the voluntary contractual assessments for the
14length of their term, so long as, notwithstanding any other
15limitations set forth in this chapter, no installment of the voluntary
16contractual assessments will increase as a result of the transfer
17without the prior written consent of the affected property owner.
18The public agency may enter into an agreement with a trustee,
19fiscal agent, or payment agent to hold, invest, and distribute the
20amounts paid by the transferee to the public agency as
21consideration for the transfer and the voluntary contractual
22assessments if received by the public agency. Except as provided
23in paragraph (2), a transfer of any voluntary contractual
24assessments under this subdivision shall be treated as a true and
25absolute transfer of the asset so transferred for the period of the
26transfer and not as a pledge or grant of a security interest by the
27public agency for any borrowing. The characterization of the
28transfer of any of those assets as an absolute transfer by the public
29agency shall not be negated or adversely affected by the fact that
30only a portion of any voluntary contractual assessment is
31transferred, nor by any characterization of the transferee for
32purposes of accounting, taxation, or securities regulation, nor by
33any other factor whatsoever. As used in this section, “transfer”
34means sale, assignment, or other transfer.

35(2) Nothing in this subdivision shall be construed to authorize
36the transferee to initiate and prosecute a foreclosure action resulting
37from a delinquency in the payment of the voluntary contractual
38assessment. Initiation and prosecution of a foreclosure action shall
39remain the responsibility of the public agency, which shall retain
40the sole right to enforce its senior lien status for the benefit of the
P9    1public agency and any transferee. As a cumulative remedy, if any
2assessment or installment thereof, or any interest thereon, together
3with any penalties, costs, fees, and other charges accruing under
4applicable taxation provisions are not paid when due, the public
5agency may order that the same be collected by an action brought
6in the superior court to foreclose the lien as provided in this
7division, and this division shall be construed in a manner that
8accomplishes the purposes of this paragraph. In connection with
9the transfer of its right, title, and interest in and to any voluntary
10contractual assessment, the public agency may covenant for the
11benefit of the transferee to commence and diligently prosecute any
12foreclosure action regarding delinquent installments of any
13assessments.

14(3) A public agency may issue bonds under this chapter to repay
15a transferee of the right, title, and interest in and to any voluntary
16contractual assessment under this subdivision. The public agency
17may transfer or cause to be transferred, to the trustee, fiscal agent,
18or payment agent for the bonds, as applicable, funds held with
19respect to a transfer at the time the bonds are issued.

20(c) Division 10 (commencing with Section 8500) shall apply to
21any bonds issued pursuant to this section, insofar as that division
22is not in conflict with this chapter. Notwithstanding Part 16
23(commencing with Section 8880) of Division 10, if any reserve
24fund is established in whole or in part with legally available
25moneys of one or more public agencies other than bond proceeds,
26the public agency or agencies may provide that a property owner
27who prepays all or a portion of the assessment shall not be credited
28with the public agency moneys in the reserve fund and there shall
29be no reduction in the assessment pursuant to Sections 8884 or
308881, and the public agency moneys in the reserve account shall
31not be used to redeem bonds pursuant to Section 8885 and any
32public agency moneys remaining in the reserve fund at the maturity
33of the bonds shall be disbursed to the public agency free and clear
34of the lien of the issuing instrument. Any excess bond proceeds
35may be used to pay principal of and interest on the bonds in
36addition to any other use permitted by Division 10 (commencing
37with Section 8500).

38(d) Notwithstanding any other law, the public agency may
39conclude that it is in the public interest for bonds issued by the
40public agency pursuant to this chapter to not be subject to
P10   1redemption prior to their scheduled maturity date except as a result
2of the prepayment in whole or in part of contractual assessments.
3 Notwithstanding any other limitations set forth in law, (1) with
4respect to bonds that are payable from one or more contractual
5assessments levied on residential property with three or fewer
6units, the redemption premium associated with a redemption of
7bonds as a result of a contractual assessment prepayment shall be
8determined by agreement of the public agency issuing the bonds
9and the initial purchaser of the bonds, but shall not exceed 5
10percent, and (2) with respect to bonds that are payable from one
11or more contractual assessments levied on nonresidential property
12or residential property with four or more units, (A) the public
13agency and the property owner may agree that the contractual
14assessment shall not be subject to prepayment for all or a portion
15of the time it is unpaid or (B) if the contractual assessment will be
16subject to prepayment, the redemption premium associated with
17a redemption of bonds as a result of a contractual assessment
18prepayment shall be determined by agreement of the public agency
19issuing the bonds, the property owner, and the initial purchaser of
20the bonds. Notwithstanding any other law, the public agency
21issuing bonds pursuant to this chapter may provide for the bonds
22to be subject to redemption on any date. The public agency may
23provide for the redemption of bonds issued pursuant to this chapter
24from unspent bond proceeds following the completion of the
25installation of the improvements at a redemption price equal to the
26principal amount of the bonds to be redeemed, plus accrued interest
27to the redemption date, plus a redemption premium specified in
28the assessment contract, if any, which premium may exceed 5
29percent of the principal amount of the bonds to be redeemed only
30in the case of bonds that are payable from one or more contractual
31assessments levied on residential property with three or fewer
32units.

33(e) (1) Without the prior written approval of the property owner,
34and notwithstanding any other law, a public agency may issue
35bonds pursuant to this chapter to refinance outstanding bonds
36payable from contractual assessments levied pursuant to this
37chapter if all of the following are true:

38(A) The total interest cost to maturity on the refunding bonds
39is less than the total interest cost to maturity on the bonds to be
40refunded.

P11   1(B) The final maturity date of the refunding bonds is not later
2than the final maturity date of the refunded bonds, except that if
3the bonds to be refunded are variable rate bonds, the final maturity
4date of the refunding bonds may extend to, but not beyond, the
5useful life of the financed improvements.

6(C) The total interest component of the scheduled contractual
7assessment installments to maturity, after issuance of the refunding
8bonds, is less than the total interest component of the scheduled
9contractual assessment installments to maturity prior to issuance
10of the refunding bonds.

11(2) For purposes of this section, in connection with the issuance
12of fixed rate bonds to refinance variable rate bonds, the interest
13rate on the refunded bonds for purpose of demonstrating
14compliance with this section may be assumed to be the maximum
15possible interest rate on the bonds to be refunded as long as the
16legislative body concludes that the public interest will be served
17by issuing fixed rate bonds to refinance the outstanding variable
18rate bonds. In connection with an issuance of refunding bonds
19under this chapter, the legislative body may direct that an
20amendment to the document required by subdivision (c) of Section
215898.24 be recorded to reflect the revised contractual assessment
22installment schedule.

23(f) With the prior written approval of the owner of nonresidential
24property or residential property with four or more units, and
25notwithstanding any other law, a public agency may issue bonds
26pursuant to this chapter to refinance outstanding bonds payable
27from contractual assessments levied pursuant to this chapter
28without complying with subdivision (e). The final maturity date
29of the refunding bonds issued pursuant to this subdivision may be
30later than the final maturity date of the bonds being refunded as
31long as the final maturity date of the refunding bonds does not
32extend beyond the useful life of the financed improvements.

33(g) The assessment contract between the public agency and a
34property owner shall provide for the use of proceeds of any bonds
35or other financing arrangement authorized by this chapter, and
36may provide that the proceeds may be used to make progress
37payments to a contractor as work is completed on portions of the
38improvements in a manner that the public agency determines to
39be reasonable.

P12   1

SEC. 5.  

Section 5899.2 of the Streets and Highways Code is
2amended to read:

3

5899.2.  

For the purpose of financing the installation of
4distributed generation renewable energy sources pursuant to this
5chapter, “permanently fixed” includes, but is not limited to, systems
6attached to a residential, commercial, industrial, agricultural, or
7other real property pursuant to a power purchase agreement or
8lease between the owner of the system and the owner of the
9assessed property, if the power purchase agreement or lease
10contains all of the following provisions:

11(a) The attached system is an eligible renewable energy resource
12pursuant to the California Renewables Portfolio Standard Program
13(Article 16 (commencing with Section 399.11) of Chapter 2.3 of
14Part 1 of Division 1 of the Public Utilities Code).

15(b) The term of the power purchase agreement or lease is at
16least as long as the term of the related assessment contract.

17(c) The owner of the attached system agrees to install, maintain,
18and monitor the system for the entire term of the power purchase
19agreement or lease.

20(d) The owner of the attached system is not permitted to remove
21the system prior to completion of the term of the contractual
22assessment lien.

23(e) After installation, the power purchase agreement or lease,
24including the costs of operating and maintaining the systems and
25services incidental to the systems, is paid, either partially or in
26full, using the funds from the contractual assessment program. For
27purposes of this subdivision, “funds from the contractual
28assessment program” includes bond proceeds, contractual
29 assessment installments, grants, or other funding sources available
30to the contractual assessment program, and savings and other
31monetary benefits that are available as a result of the contractual
32assessment financing.

33(f) The right to receive the electricity from the system, through
34a power purchase agreement or lease or the right to the system
35itself, is tied to the ownership of the assessed real property and is
36required to be automatically transferred with the title to the real
37property whether the title is transferred by voluntary sale, judicial
38or nonjudicial foreclosure, or by any other means.

39(g) The power purchase agreement or lease identifies the public
40agency that is a party to the assessment contract on the real property
P13   1as a third-party beneficiary of the power purchase agreement or
2lease until the assessment lien on the property has been fully paid
3and, only until that time, prohibits amendments to the power
4purchase agreement or lease without the consent of the public
5agency.

6(h) In order to ensure that the property owner is guaranteed the
7electric power from the system for the length of the lien, the system
8shall not be removed if the owner of the attached system is not
9performing its obligations under the contract, and one of the
10following is true:

11(1) The owner of the attached system does both of the following:

12(A) Covenants in its contract with the property owner that
13neither the owner of the attached system nor any successor in
14interest will remove or permanently decommission the attached
15system during the term of the contract.

16(B) Warrants in the contract with the property owner that no
17assignee, creditor, partner, or owner of the attached system’s owner
18has, as of the date of the contract or during the remaining term of
19the contract, the right to remove or permanently decommission
20the attached system.

21(2) The owner of the attached system must be a bankruptcy
22remote special purpose entity that is bankruptcy remote and meets
23all of the following conditions:

24(A) It does not engage in any business other than owning the
25attached systems and entering into electricity contracts with the
26 property owner.

27(B) It has no material debt.

28(C) Its contracts are either entered into with unrelated third
29parties or have terms negotiated at arms length.

30

SEC. 6.  

Section 5899.4 is added to the Streets and Highways
31Code
, to read:

32

5899.4.  

The Legislature finds and declares that a public purpose
33will be served by giving public agencies substantial flexibility to
34establish arrangements that will address concerns of participating
35bond owners, property owners, mortgage lenders, or state and
36federal regulatory agencies about the financing available under
37this chapter. These arrangements may include, but are not limited
38to, the issuance by a public agency of bonds pursuant to this chapter
39to redeem outstanding bonds issued by the public agency pursuant
40to this chapter to accommodate an arrangement authorized by this
P14   1chapter so long as, notwithstanding any other limitations set forth
2in this chapter, no installment of a voluntary contractual assessment
3will increase without the prior written consent of the affected
4property owner, and unspent proceeds of the outstanding bonds to
5be redeemed may be applied by the public agency in the manner
6that it determines will further an arrangement authorized by this
7chapter.

end delete


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