BILL NUMBER: AB 2693 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 28, 2016
AMENDED IN ASSEMBLY APRIL 11, 2016
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Member Dababneh
( Coauthors: Assembly Members
Travis Allen, Hadley, and Linder
)
FEBRUARY 19, 2016
An act to amend Section 53313.5 of the Government Code, to amend
Section 26054 of the Public Resources Code, and to amend Sections
5898.15, 5898.28, and 5898.30 of of, and to
amend, renumber, and add Section 5898.16 of, the Streets and
Highways Code, relating to contractual assessments.
LEGISLATIVE COUNSEL'S DIGEST
AB 2693, as amended, Dababneh. Contractual assessments: financing
requirements: property improvements.
Existing law defines "property assessed clean energy bond,"
commonly known as a PACE bond, to mean a bond that is secured by a
voluntary contractual assessment or by certain special taxes on
property, as specified.
This bill would delete the reference to bonds secured by special
taxes.
Existing law authorizes the legislative body of a public agency,
as defined, to determine that it would be convenient, advantageous,
and in the public interest to designate an area within which
authorized public agency officials and property owners may enter into
voluntary contractual assessments to finance certain improvements,
including the installation of distributed generation renewable energy
sources or energy or water efficiency improvements that are
permanently fixed to real property, as specified. Existing law
authorizes the public agency to issue bonds to be repaid by voluntary
contractual assessments, and to enter into a relationship with an
underwriter or financial institution that allows the sequential
issuance of a series of bonds as the need arises. Existing law
requires the interest rate on bonds to be fixed at the time each bond
is issued, unless the bond is issued to finance improvements to
nonresidential private property or residential private property with
4 or more units. Existing law also provides that certain provisions
relating to redemption of bonds prior to their scheduled maturity
date or refinance of outstanding bonds only apply to nonresidential
private property or residential private property with 4 or more
units.
This bill, with respect to residential private property, would
instead require the interest rate on the bonds, when issued, to be
fixed unless the property consists of 5 or more units. The bill would
provide that the provisions relating to redemption of bonds prior to
their scheduled maturity date, or refinance of outstanding bonds,
with respect to residential private property, would apply to property
that consists of 5 or more units.
Existing law provides that an assessment under these provisions,
and any interest and penalties, until paid, constitute a lien against
the property on which the assessment was made. Existing law provides
that certain other provisions, including provisions relating to lien
priority, apply to liens imposed relative to these assessments.
This bill would, except for nonresidential private property or
residential private property with 5 or more units, delete the
reference to the other provisions relating to lien priority, and
instead provide that an assessment under these provisions shall have
the force, effect, and priority of a judgment lien as established by
its date of recordation.
Existing law, if bonds have not been issued by a public agency,
authorizes the public agency to transfer its right, title, and
interest to voluntary contractual assessments to another party, as
specified. Existing law, however, provides that initiation and
prosecution of a foreclosure action from a delinquency in the payment
of voluntary contractual assessments remains the responsibility of
the public agency, which shall retain the sole right to enforce its
senior lien status.
This bill would provide that if the holder of a note secured by a
deed of trust for purchase money or a refinanced purchase money
obligation institutes a foreclosure, or if a public agency institutes
a foreclosure, the interest of the purchase money noteholder is
treated as an encumbrance that is senior to any delinquency of
specified voluntary assessments.
Existing law prohibits a public agency from permitting a property
owner to participate in any program established pursuant to these
provisions if the owner's participation would result in the total
amount of any annual property taxes and assessments exceeding 5% of
the property's market value, as determined at the time of approval of
the owner's contractual assessment.
This bill would also, except for situations involving
bonds issued to improve nonresidential private property or
residential private property with 5 or more units,
also prohibit a public agency from permitting a property owner
who is a homeowner applicant to participate in a program
pursuant to these provisions unless the property owner has been
provided with a Truth in Lending Act-Real Estate Settlement
Procedures Act Integrated Mortgage Disclosure for the obligation
being incurred or completed financing estimate
document or a substantially equivalent document. The bill would also
prohibit a public agency from permitting a property owner to
participate in a program pursuant to these provisions if the
total mortgage-related debt and contractual assessment-related debt
on the underlying property exceeds would
exceed the fair market value of the property at the time of the
agreement. owner's contractual assessment,
if the mortgage-related debt on the property alone is equal to 90% or
greater of the property's fair market value at the time of the
approval of the owner's contractual assessment, or if the owner
is unable to meet specified requirements.
This bill would provide that the failure of a public agency to
comply with either of these 2
prohibitions voids renders the
contractual obligations of the property owner for the contractual
assessment. assessment void.
The Mello-Roos Community Facilities Act of 1982 specifies the
requirements for the establishment of a community facilities
district, including, among other things, a petition, a hearing, the
establishment of the boundaries of the community facilities district,
and an election on the question. A community facilities district
formed pursuant to that law is authorized to, among other things,
finance and refinance the acquisition, installation, and improvement
of energy efficiency, water conservation, and renewable energy
improvements to or on real property and in buildings, as specified.
This bill would require that an assessment levied or a delinquency
collected in connection with those improvements be collected using
the procedures described above.
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 53313.5 of the Government Code is amended to
read:
53313.5. A community facilities district may also finance the
purchase, construction, expansion, improvement, or rehabilitation of
any real or other tangible property with an estimated useful life of
five years or longer or may finance planning and design work that is
directly related to the purchase, construction, expansion, or
rehabilitation of any real or tangible property. The facilities need
not be physically located within the district. A district may not
lease out facilities that it has financed except pursuant to a lease
agreement or annexation agreement entered into prior to January 1,
1988. A district may only finance the purchase of facilities whose
construction has been completed, as determined by the legislative
body, before the resolution of formation to establish the district is
adopted pursuant to Section 53325.1, except that a district may
finance the purchase of facilities completed after the adoption of
the resolution of formation if the facility was constructed as if it
had been constructed under the direction and supervision, or under
the authority of, the local agency that will own or operate the
facility. For example, a community facilities district may finance
facilities, including, but not limited to, the following:
(a) Local park, recreation, parkway, and open-space facilities.
(b) Elementary and secondary schoolsites and structures provided
that the facilities meet the building area and cost standards
established by the State Allocation Board.
(c) Libraries.
(d) Child care facilities, including costs of insuring the
facilities against loss, liability insurance in connection with the
operation of the facility, and other insurance costs relating to the
operation of the facilities, but excluding all other operational
costs. However, the proceeds of bonds issued pursuant to this chapter
shall not be used to pay these insurance costs.
(e) The district may also finance the construction or
undergrounding of water transmission and distribution facilities,
natural gas pipeline facilities, telephone lines, facilities for the
transmission or distribution of electrical energy, and cable
television lines to provide access to those services to customers who
do not have access to those services or to mitigate existing visual
blight. The district may enter into an agreement with a public
utility to utilize those facilities to provide a particular service
and for the conveyance of those facilities to the public utility.
"Public utility" shall include all utilities, whether public and
regulated by the Public Utilities Commission, or municipal. If the
facilities are conveyed to the public utility, the agreement shall
provide that the cost or a portion of the cost of the facilities that
are the responsibility of the utility shall be refunded by the
public utility to the district or improvement area thereof, to the
extent that refunds are applicable pursuant to (1) the Public
Utilities Code or rules of the Public Utilities Commission, as to
utilities regulated by the commission, or (2) other laws regulating
public utilities. Any reimbursement made to the district shall be
utilized to reduce or minimize the special tax levied within the
district or improvement area, or to construct or acquire additional
facilities within the district or improvement area, as specified in
the resolution of formation.
(f) The district may also finance the acquisition, improvement,
rehabilitation, or maintenance of any real or other tangible
property, whether privately or publicly owned, for flood and storm
protection services, including, but not limited to, storm drainage
and treatment systems and sandstorm protection systems.
(g) The district may also pay in full all amounts necessary to
eliminate any fixed special assessment liens or to pay, repay, or
defease any obligation to pay or any indebtedness secured by any tax,
fee, charge, or assessment levied within the area of a community
facilities district or may pay debt service on that indebtedness.
When the amount financed by the district is to pay a tax, fee,
charge, or assessment imposed by a public agency other than the one
conducting the proceedings, and if the amount provided to the other
public agency will not be entirely used to pay off or prepay an
assessment lien or special tax obligation pursuant to the property
owner's legal right to do so, the written consent of the other public
agency is required. In addition, tax revenues of a district may be
used to make lease or debt service payments on any lease,
lease-purchase contract, or certificate of participation used to
finance facilities authorized to be financed by the district.
(h) Any other governmental facilities that the legislative body
creating the community facilities district is authorized by law to
contribute revenue to, or construct, own, or operate. However, the
district shall not operate or maintain
operate, maintain, or, except as otherwise provided in
subdivisions (e) and (k), have any ownership interest in any
facilities for the transmission or distribution of natural gas,
telephone service, or electrical energy.
electricity.
(i) (1) A district may also pay for the following:
(A) Work deemed necessary to bring buildings or real property,
including privately owned buildings or real property, into compliance
with seismic safety standards or regulations. Only work certified as
necessary to comply with seismic safety standards or regulations by
local building officials may be financed. No project involving the
dismantling of an existing building and its replacement by a new
building, nor the construction of a new or substantially new building
may be financed pursuant to this subparagraph. Work on qualified
historical buildings or structures shall be done in accordance with
the State Historical Building Code (Part 2.7 (commencing with Section
18950) of Division 13 of the Health and Safety Code).
(B) In addition, within any county or area designated by the
President of the United States or by the Governor as a disaster area
or for which the Governor has proclaimed the existence of a state of
emergency because of earthquake damage, a district may also pay for
any work deemed necessary to repair any damage to real property
directly or indirectly caused by the occurrence of an earthquake
cited in the President's or the Governor's designation or
proclamation, or by aftershocks associated with that earthquake,
including work to reconstruct, repair, shore up, or replace any
building damaged or destroyed by the earthquake, and specifically
including, but not limited to, work on any building damaged or
destroyed in the Loma Prieta earthquake that occurred on October 17,
1989, or by its aftershocks. Work may be financed pursuant to this
subparagraph only on property or buildings identified in a resolution
of intention to establish a community facilities district adopted
within seven years of the date on which the county or area is
designated as a disaster area by the President or by the Governor or
on which the Governor proclaims for the area the existence of a state
of emergency.
(2) Work on privately owned property, including reconstruction or
replacement of privately owned buildings pursuant to subparagraph (B)
of paragraph (1), may only be financed by a tax levy if all of the
votes cast on the question of levying the tax, vote in favor of
levying the tax, or with the prior written consent to the tax of the
owners of all property that may be subject to the tax, in that case
the prior written consent shall be deemed to constitute a vote in
favor of the tax and any associated bond issue. Any district created
to finance seismic safety work on privately owned buildings,
including repair, reconstruction, or replacement of privately owned
buildings pursuant to this subdivision, shall consist only of lots or
parcels that the legislative body finds have buildings that were
damaged or destroyed by the earthquake cited pursuant to subparagraph
(B) of paragraph (1) or by the aftershocks of that earthquake.
(j) A district may also pay for the following:
(1) Work deemed necessary to repair and abate damage caused to
privately owned buildings and structures by soil deterioration. "Soil
deterioration" means a chemical reaction by soils that causes
structural damage or defects in construction materials including
concrete, steel, and ductile or cast iron. Only work certified as
necessary by local building officials may be financed. No project
involving the dismantling of an existing building or structure and
its replacement by a new building or structure, nor the construction
of a new or substantially new building or structure may be financed
pursuant to this paragraph.
(2) Work on privately owned buildings and structures pursuant to
this subdivision, including reconstruction, repair, and abatement of
damage caused by soil deterioration, may only be financed by a tax
levy if all of the votes cast on the question of levying the tax vote
in favor of levying the tax. Any district created to finance the
work on privately owned buildings or structures, including
reconstruction, repair, and abatement of damage caused by soil
deterioration, shall consist only of lots or parcels on which the
legislative body finds that the buildings or structures to be worked
on pursuant to this subdivision suffer from soil deterioration.
(k) A district may also finance the acquisition, improvement,
rehabilitation, or maintenance of any real or other tangible
property, whether privately or publicly owned, for the purposes of
removal or remedial action for the cleanup of any hazardous substance
released or threatened to be released into the environment. As used
in this subdivision, "remedial action" and "removal" shall have the
meaning set forth in Sections 25322 and 25323, respectively, of the
Health and Safety Code, and "hazardous substance" shall have the
meaning set forth in Section 25281 of the Health and Safety Code.
(l) A district may also finance and refinance the acquisition,
installation, and improvement of energy efficiency, water
conservation, and renewable energy improvements that are affixed, as
specified in Section 660 of the Civil Code, to or on real property
and in buildings, whether the real property or buildings are
privately or publicly owned. Energy efficiency, water conservation,
and renewable energy improvements financed by a district may only be
installed on a privately owned building and on privately owned real
property with the prior written consent of the owner or owners of the
building or real property. This chapter shall not be used to finance
installation of energy efficiency, water conservation, and renewable
energy improvements on a privately owned building or on privately
owned real property in connection with the initial construction of a
residential building unless the initial construction is undertaken by
the intended owner or occupant. An assessment levied or a
delinquency collected pursuant to this subdivision shall be collected
using the procedures set out in Section 26054 of the Public Resource
Code and in Sections 5898.15 and 5898.30 of the Streets and Highways
Code.
(m) Any improvement on private property authorized to be financed
by this section shall constitute a "public facility" for purposes of
this chapter and a "public improvement" for purposes of Part 1
(commencing with Section 3100) and Part 2 (commencing with Section
3110) of Division 4.5 of the Streets and Highways Code, whether the
improvement is owned by a private entity, if the legislative body has
determined that the improvement provides a public benefit, or the
improvement is owned by a public agency.
SEC. 2. Section 26054 of the Public Resources Code is amended to
read:
26054. "Property Assessed Clean Energy bond" or "PACE bond" means
a bond that is secured by either of the following:
(a) A voluntary contractual assessment on property authorized
pursuant to paragraph (2) of subdivision (a) of Section 5898.20 of
the Streets and Highways Code.
(b) A voluntary contractual assessment on property to finance the
installation of distributed generation renewable energy sources,
electric vehicle charging infrastructure, or energy or water
efficiency improvements.
SEC. 3. Section 5898.15 of the Streets and Highways Code is
amended to read:
5898.15. (a) A public agency shall not permit a property owner to
participate in any program established pursuant to this chapter if
the any of the following apply:
(1) The owner's participation
would result in the total amount of any the
annual property taxes and assessments exceeding 5 percent of
the property's fair market value, as determined at the
time of approval of the owner's contractual assessment.
(b) (1) Except as otherwise provided in subdivision (c), a public
agency shall not permit a property owner to participate in a program
pursuant to this chapter unless the property owner has been provided
with a federal Truth in Lending Act-Real Estate Settlement Procedures
Act Integrated Mortgage Disclosure for the obligation being incurred
that is required for mortgages by the federal Consumer Financial
Protection Bureau.
(2) Except as otherwise provided in subdivision (c), a
public agency shall not permit the The total
mortgage-related debt and contractual assessment-related debt on the
underlying property to would exceed the
fair market value of the property at the time of the
agreement. property, as determined at the time of the
owner's contractual assessment.
(3) The total mortgage-related debt on the property alone is equal
to 90 percent or greater of the property's fair market value, as
determined at the time of approval of the owner's contractual
assessment.
(4) The property owner is unable to meet all of the following
criteria:
(A) The property owner shall certify that the property taxes for
the property are current and that there is no more than one late
payment during the previous three years or the period of time during
which the owner has owned the property, whichever is less.
(B) The property owner shall certify that he or she is not
currently in default on any debt secured by the property and that
there is no more than one late payment during the 12-month period
preceding the time of the owner's contractual assessment and that
late payment, if any, was submitted no later than 30 days after the
due date.
(C) If the property owner is a homeowner applicant, the property
owner has not had any active bankruptcies within the last seven
years. This criterion can be met if a property owner's bankruptcy was
discharged between two and seven years before the application date
and the property owner has not had any mortgage or nonmortgage
payments past due for more than 60 days in the most recent 24 months.
(D) The property owner does not have an involuntary lien recorded
against the property in excess of one thousand dollars ($1,000).
(b) If a property owner is a homeowner applicant, a public agency
shall not permit the property owner to participate in any program
established pursuant to this chapter unless the property owner has
been provided with a completed financing estimate document set forth
in Section 5898.16, or a substantially equivalent document that
displays the same information in a substantially similar format.
(3)
( c) Failure to comply with the requirements
of either paragraph (1) or (2) voids
subdivision (a) or (b) renders the contractual obligations of a
property owner for a contractual assessment entered into pursuant to
this chapter. chapter void.
(c) Subdivision (b) does not apply to bonds issued to improve
nonresidential private property or residential private property with
five or more units pursuant to Section 5898.28.
(d) Except as provided in subdivision (b),
subdivisions ( a) and ( b), nothing in
this chapter shall be construed to void or otherwise release a
property owner from the contractual obligations incurred by a
contractual assessment on a property.
SEC. 4. Section 5898.16 of the Streets
and Highways Code is amended and renumbered to read:
5898.16. 5898.17. All references to
financing in this chapter shall be deemed to also refer to
refinancing, except that with respect to refinancing, the legislative
body shall conclude that providing the refinancing will result in an
increased adoption of the improvements authorized to be financed by
this chapter. This section does not constitute a change in, but is
declaratory and a clarification of existing law.
SEC. 5. Section 5898.16 is added to the
Streets and Highways Code , to read:
5898.16. The disclosure set forth below shall be completed and
delivered to a homeowner as soon as practicable before, and in no
event later than when, a homeowner becomes obligated on an agreement
to a voluntary assessment described in this chapter, Section 26054 of
the Public Resources Code, or Section 53328.1 of the Government
Code.
Financing Estimate and Disclosure
Notice to Homeowners: The financing arrangement
described below will result in an assessment
against you property which will be collected along
with your property taxes. The assessment may
jeopardize your ability to sell or refinance your
property unless you repay the underlying debt.
There may be cheaper alternative financing
arrangements available from conventional lenders.
You should read and review the terms carefully,
and if necessary, consult with a tax professional
or attorney.
Products and Costs
Product costs
(including
labor/installation
) $________
Description
1.
2.
3.
Financing Costs
Application fees $________
and costs $________
Prepaid Interest $________
Other Costs $________
Total Amount
Financed
Annual Percentage Rate (APR) ______%
Simple Interest Rate ______%
Total Annual Principal, $______
Interest, and
Administrative Fees
Note: If your property taxes are paid through an
impound account, your lender may apportion the
amount and add it to your monthly payment.
See ""Other important considerations,'' below
Total Amount you
will have paid
over the life of
the loan $________
Other Costs
Appraisal Fees
Bond related costs
Annual Administrat
ive fees $________
Estimated closing $________
costs $________
Credit Reporting $________
Fees $________
Recording Fees
Total Financing
Costs and Closing
Costs $________
Estimated Cash
(out of pocket)
to close $________
Other Terms
Prepayment fee
Assumable by new ( ) No ( ) Yes ______
owner ( ) No ( ) Yes ______
Additional Information About This Financing
Comparisons (Use this information to compare to
other financing options)
------------------
$________ Principal you will
have paid off.
$________ Amount of interest
you have paid.
In 10 years $________ Amount of financing
and other costs
you will have paid.
$________ Total you will have
paid.
------------------
Annual Percentage ______%
Rate
+
--------------------------------
+
Total Interest Paid (as a
percentage of all the payments ______%
you have made)
Other Important Considerations
Assumption by New ( ) Yes - Allowed
Buyer on original terms
( ) No - Not
Allowed on
original terms
I understand that if I refinance my home, my
mortgage company may require me to pay off the
full remaining balance of this obligation. If I
sell my home, the buyer or their mortgage company
may require me to pay off the full remaining
balance of this obligation.
_______________
(Borrower
initials)
Monthly Mortgage Payments
Your payments will be added to your property tax
bill. Whether you pay your property taxes through
your mortgage payment, using an impound account,
or if you pay them directly to the tax collector,
you will need to save an estimated $_______ for
your first tax installment. After your first
payment, if you pay your taxes through an impound
account, your monthly mortgage payment should be
adjusted by your lender to cover your increased
property tax bill.
_______________
(Borrower
initials)
Tax Benefits: Consult your tax advisor regarding
tax credits, credits and deductions, tax
deductibility, and other tax benefits available.
Making an appropriate application for the benefit
is your responsibility.
_______________
(Borrower
initials)
Confirmation of Receipt
This confirms the receipt of the information in
this form. You do not have to accept this
financing just because you acknowledge that you
have received or signed this form, and it is NOT a
contract.
__________________________ __________________
(Property Owner Signature - ________
Date) (Property Owner
Signature - Date)
SEC. 4. SEC. 6. Section 5898.28 of
the Streets and Highways Code is amended to read:
5898.28. (a) A public agency may issue bonds pursuant to this
chapter, the principal and interest for which would be repaid by
voluntary contractual assessments. A public agency may advance its
own funds to finance work to be repaid through voluntary contractual
assessments, and may from time to time sell bonds to reimburse itself
for those advances. A public agency may enter into a relationship
with an underwriter or financial institution that would allow the
sequential issuance of a series of bonds, each bond being issued as
the need arose to finance work to be repaid through voluntary
contractual assessments. The interest rate of each bond may be
determined by an appropriate index, but shall be fixed at the time
each bond is issued unless the bond is issued to finance improvements
to nonresidential private property or residential private property
with five or more units. Bond proceeds may be used to establish a
reserve fund for debt service or paying the costs of foreclosure on
properties participating in the program, to fund capitalized interest
for a period up to two years from the date of issuance of the bonds,
to fund the administrative fee required for participation in the
PACE Reserve Program established pursuant to Chapter 4 (commencing
with Section 26050) of Division 16 of the Public Resources Code, and
to pay for expenses incidental to the issuance and sale of the bonds.
Division 10 (commencing with Section 8500) shall apply to any bonds
issued pursuant to this section, insofar as that division is not in
conflict with this chapter.
(b) (1) Notwithstanding any provision of this division or the
Improvement Act of 1915 (Division 10 (commencing with Section 8500)),
a public agency may transfer its right, title, and interest in and
to any voluntary contractual assessments, if bonds have not been
issued pursuant to subdivision (a). The public agency and the
transferee shall 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, not to exceed
three years. Except as provided in paragraph (2), a transfer of any
voluntary contractual assessments under this subdivision shall be
treated as a true and absolute transfer of the asset so transferred
for the period of the transfer and not as a pledge or grant of a
security interest by the public agency for any borrowing. The
characterization of the transfer of any of those assets as an
absolute transfer by the public agency shall not be negated or
adversely affected by the fact that only a portion of any voluntary
contractual assessment is transferred, nor by any characterization of
the transferee for purposes of accounting, taxation, or securities
regulation, nor by any other factor whatsoever. As used in this
section, "transfer" means sale, assignment, or other transfer.
(2) Nothing in this subdivision shall be construed to authorize
the transferee to initiate and prosecute a foreclosure action
resulting from a delinquency in the payment of the voluntary
contractual assessment. Initiation and prosecution of a foreclosure
action shall remain the responsibility of the public agency, which
shall shall, subject to paragraph (3),
retain the sole right to enforce its senior lien status.
(3) When a holder of a note secured by a deed of trust for
purchase money or a refinanced purchase money obligation institutes a
foreclosure, or when the public agency institutes a foreclosure, the
interest of the purchase money noteholder shall be treated as an
encumbrance that is senior to any delinquency of a voluntary
assessment described in
this chapter, Section 26054 of the Public Resources Code, or Section
53328.1 of the Government Code. The seniority of the purchase money
obligation shall be retained regardless of whether the delinquency
occurred before or after the purchase money obligation was recorded
against the property. In enacting this paragraph, the Legislature
recognizes that the voluntary special assessments authorized by this
chapter are unique, and require unique treatment of their secured
priority. This paragraph shall not be interpreted or applied to
affect the status or priority of any municipal or county lien other
than a lien addressed in this section, nor shall it create any
implied precedent for the interpretation of any other remedy or
collection mechanism available to a governmental entity. The change
in priority effected by this paragraph applies to assessments agreed
to on or after January 1, 2017.
(c) Division 10 (commencing with Section 8500) shall apply to any
bonds issued pursuant to this section, insofar as that division is
not in conflict with this chapter. Notwithstanding Part 16
(commencing with Section 8880) of Division 10, if any reserve fund is
established in whole or in part with legally available moneys of one
or more public agencies other than bond proceeds, the public agency
or agencies may provide that a property owner who prepays all or a
portion of the assessment shall not be credited with the public
agency moneys in the reserve fund and there shall be no reduction in
the assessment pursuant to Sections 8881 or 8884, and the public
agency moneys in the reserve account shall not be used to redeem
bonds pursuant to Section 8885 and any public agency moneys remaining
in the reserve fund at the maturity of the bonds shall be disbursed
to the public agency free and clear of the lien of the issuing
instrument. Any excess bond proceeds may be used to pay principal of
and interest on the bonds in addition to any other use permitted by
Division 10 (commencing with Section 8500).
(d) Notwithstanding any other law, the public agency may conclude
that it is in the public interest for bonds issued by the public
agency pursuant to this chapter to not be subject to redemption prior
to their scheduled maturity date except as a result of the
prepayment in whole or in part of contractual assessments.
Notwithstanding any other limitations set forth in law, and with
respect to bonds issued to finance improvements to nonresidential
property or residential property with five or more units, the
redemption premium associated with a redemption of bonds as a result
of a contractual assessment prepayment shall be determined by
agreement of the public agency issuing the bonds, the property owner,
and the initial purchaser of the bonds.
(e) (1) Without the prior written approval of the property owner,
and notwithstanding any other law, a public agency may issue bonds
pursuant to this chapter to refinance outstanding bonds payable from
contractual assessments levied pursuant to this chapter if all of the
following are true:
(A) The total interest cost to maturity on the refunding bonds is
less than the total interest cost to maturity on the bonds to be
refunded.
(B) The final maturity date of the refunding bonds is not later
than the final maturity date of the refunded bonds, except that if
the bonds to be refunded are variable rate bonds, the final maturity
date of the refunding bonds may extend to, but not beyond, the useful
life of the financed improvements.
(C) The total interest component of the scheduled contractual
assessment installments to maturity, after issuance of the refunding
bonds, is less than the total interest component of the scheduled
contractual assessment installments to maturity prior to issuance of
the refunding bonds.
(2) For purposes of this section, in connection with the issuance
of fixed rate bonds to refinance variable rate bonds, the interest
rate on the refunded bonds for purpose of demonstrating compliance
with this section may be assumed to be the maximum possible interest
rate on the bonds to be refunded as long as the legislative body
concludes that the public interest will be served by issuing fixed
rate bonds to refinance the outstanding variable rate bonds. In
connection with an issuance of refunding bonds under this chapter,
the legislative body may direct that an amendment to the document
required by subdivision (d) of Section 5898.24 be recorded to reflect
the revised contractual assessment installment schedule.
(f) With the prior written approval of the owner of nonresidential
property or residential property with five or more units, and
notwithstanding any other law, a public agency may issue bonds
pursuant to this chapter to refinance outstanding bonds payable from
contractual assessments levied pursuant to this chapter without
complying with subdivision (e). The final maturity date of the
refunding bonds issued pursuant to this subdivision may be later than
the final maturity date of the bonds being refunded as long as the
final maturity date of the refunding bonds does not extend beyond the
useful life of the financed improvements.
SEC. 5. SEC. 7. Section 5898.30 of
the Streets and Highways Code is amended to read:
5898.30. (a) Notwithstanding Section 5898.28 and except as
otherwise provided in subdivision (b), assessments levied pursuant to
this chapter, and the interest and any penalties thereon shall
constitute a lien against the lots and parcels of land on which they
are made, until they are paid. Division 10 (commencing with Section
8500), insofar as those provisions are not in conflict with this
chapter, Article 13 (commencing with Section 53930) of, and Article
13.5 (commencing with Section 53938) of, Chapter 4 of Part 1 of
Division 2 of Title 5 of the Government Code shall only apply to the
collection of assessments contracted for pursuant to this chapter,
which may be collected in the same manner and at the same time as the
general taxes of the city or county on real property. Any assessment
levied pursuant to this chapter shall have the force, effect, and
priority of a judgment lien as established by the date of its
recordation.
(b) Assessments levied pursuant to Section 5898.28 against
nonresidential private property or residential private property with
five or more units and the interest and any penalties thereon shall
constitute a lien against the lots and parcels of land on which they
are made, until they are paid. Division 10 (commencing with Section
8500), insofar as those provisions are not in conflict with this
chapter, Article 13 (commencing with Section 53930) of, and Article
13.5 (commencing with Section 53938) of, Chapter 4 of Part 1 of
Division 2 of Title 5 of the Government Code apply to the imposition
and collection of assessments contracted for pursuant to this
chapter, including, but not limited to, provisions related to lien
priority, the collection of assessments in the same manner and at the
same time as the general taxes of the city or county on real
property, unless another procedure has been authorized by the
legislative body or by statute, and any penalties and remedies in the
event of delinquency and default.
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