BILL NUMBER: SB 872 CHAPTERED 10/06/93 BILL TEXT CHAPTER 841 FILED WITH SECRETARY OF STATE OCTOBER 6, 1993 APPROVED BY GOVERNOR OCTOBER 5, 1993 PASSED THE SENATE AUGUST 27, 1993 PASSED THE ASSEMBLY AUGUST 19, 1993 AMENDED IN ASSEMBLY JULY 16, 1993 AMENDED IN SENATE JUNE 7, 1993 AMENDED IN SENATE MAY 5, 1993 AMENDED IN SENATE APRIL 12, 1993 INTRODUCED BY Senator Kopp MARCH 4, 1993 An act to add Article 4.5 (commencing with Section 53506) to Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code, relating to bonds. LEGISLATIVE COUNSEL'S DIGEST SB 872, Kopp. Local agencies: general obligation bonds. Existing law authorizes and prescribes procedures for cities and counties to issue limited obligation bonds. This bill would authorize cities, counties, school districts, community college districts, and special districts to issue and refund general obligation bonds secured by a general tax levy and prescribe the procedures therefor. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Article 4.5 (commencing with Section 53506) is added to Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code, to read: Article 4.5. General Obligation Bonds 53506. (a) This article is full authority for the issuance of bonds or refunding bonds by any city, county, city and county, school district, community college district, or special district, secured by the levy of ad valorem taxes, authorized in accordance with the Constitution and, in the case of a chartered city, county, or city and county, with the charter thereof, or in the case of a special district, with the district' s principal act. (b) This article is intended to provide a complete additional and alternative method for doing the things authorized by this article. The powers conferred by this article are supplemental and additional to the powers conferred by any other laws, and the limitations imposed by this article do not affect the powers conferred by any other law. 53506.5. This article shall be liberally construed to promote its objectives. If inconsistent with any other law, this article shall be controlling. 53507. As used in this article, the following terms shall have the meanings assigned to them in this section. (a) "Bonds" means bonds, notes, warrants, or other evidence of indebtedness payable, both principal and interest, from the proceeds of ad valorem taxes that may be levied without limitation as to rate or amount upon property subject to taxation by the legislative body. (b) "Issuer" means a city, county, city and county, school district, community college district, or special district, secured by the levy of ad valorem taxes, authorized to issue bonds pursuant to this article. (c) "Legislative body" means the governing body of the issuer. 53507.5. (a) The legislative body may, by resolution, provide for the issuance of bonds pursuant to this article. (b) The resolution shall state that the bonds are being issued pursuant to this article. 53508. The resolution authorizing any bonds or any issue of bonds may provide for any of the following: (a) The form of the bonds to be issued as serial bonds, or sinking fund bonds, with serial or term maturities, or any combination thereof. (b) The number of series in which the bonds are to be issued. (c) The form of the bonds as coupon, registered, or book entry. (d) The interest on the bonds, either fixed or variable, and the interest rate or rates, payable at the times and in the manner specified therein, and whether all or part of any series of the bonds shall be issued as zero coupon or capital appreciation bonds; provided, however, that under no conditions may the annual interest rate, whether fixed or variable, exceed the maximum rate permitted by Section 53531 or 53532. (e) The time, medium, and place or places of payment. (f) The time or times of maturity of the bonds, not exceeding 40 years from their respective dates. (g) The date or dates to be borne by the bonds of each series. (h) The denomination of the bonds. (i) The registration and conversion privileges of the bonds. (j) The manner in which the bonds are to be executed. (k) The terms of redemption, with or without premium. (l) Other terms and conditions of the bonds and of their execution, issuance, and sale deemed necessary and appropriate by the legislative body. 53508.3. (a) No bond shall be subject to mandatory tender for purchase or redemption prior to its fixed maturity date unless it contains a recital to that effect. (b) Any bond protected by its terms or by the terms of this section from mandatory tender for purchase or redemption prior to its fixed maturity date or for a specified period of time after issuance, may specify terms upon which the issuer may sell or transfer its right to require the bond to be tendered for purchase or redemption prior to its fixed maturity date. 53508.5. (a) Annual payments of the principal and interest on an issue of bonds shall be structured to amortize the bonds in a manner whereby the maximum annual debt service payment on the bonds does not exceed the minimum annual debt service payment on the bonds by more than 10 percent. Notwithstanding the provisions of this subdivision, a deviation in annual debt service in excess of 10 percent is allowable if the excess deviation is the result of an accelerated repayment of principal on the bonds. (b) The restrictions set forth in subdivision (a) shall not apply if, as a result of the issuance of the particular bond issue, the overall outstanding general obligation bond debt of the issuer will be amortized in a more level manner. 53508.7. (a) The bonds shall be sold at a public sale and at a price at, above, or below par, as the legislative body determines. (b) Any bonds sold at a discount below the par value of the bonds shall be sold in compliance with the provisions of Section 53532. 53509. (a) Any bond issued under the authority of this article may be refunded pursuant to this or any other applicable law. Any bond may be refunded pursuant to this article regardless of whether the bond or the legislation under which its issuance was authorized explicitly provides that the bond may be refunded. (b) Refunding bonds shall not be issued if the total net interest cost to maturity on the refunding bonds plus the principal amount of the refunding bonds exceeds the total net interest cost to maturity on the bonds to be refunded plus the principal amount of the bonds to be refunded. Subject to that limitation, the principal amount of the refunding bonds may be more than, less than, or the same as the principal amount of the bonds to be refunded. 53509.3. Nothing in this article shall limit the authority of the legislative body to enter into any contract in connection with the issuance of the bonds which it is permitted by Section 5922 to enter into.