Article 4. Sale Of Bonds of California Government Code >> Division 4. >> Title 2. >> Part 3. >> Chapter 4. >> Article 4.

The Treasurer may from time to time, by electronic means or by public announcement at the place and at or before the time fixed for a competitive sale of bonds, continue the sale to the time and place the Treasurer may select.

The Treasurer may cancel or postpone a competitive sale of bonds to an indefinite date by public announcement, including by electronic means, made prior to or at the time and place fixed for the sale of the bonds. The Treasurer may give notice of the new time and place of the sale of the bonds that the Treasurer may deem advisable.

(a) Each bid at a competitive sale shall be submitted to the Treasurer in the form and by the means specified by the Treasurer by public announcement.
  (b) Each proposal for purchase of bonds in a negotiated sale shall be made in a bond purchase contract or similar agreement approved by the Treasurer.
  (c) (1) The Treasurer shall require that each bidder in a competitive sale or underwriter in a negotiated sale provide a good faith deposit of at least one-half of 1 percent of the principal amount of the bonds for which the bidder or underwriter submits a bid or proposal. The good faith deposit shall be based upon the principal amount of bonds offered for sale in the amount that has been publicly announced at least one day prior to receipt of bids for a competitive sale, or in the amount that is reasonably determined by the Treasurer at least one day prior to a negotiated sale of bonds. The Treasurer shall specify the form of the deposit, which may be a cashier's check, a surety bond, a wire transfer of funds, or a combination thereof. The deposit shall not bear interest.
  (2) This subdivision shall apply only to bonds sold with a fixed interest rate.

(a) The bonds specified in the resolution shall be sold by the Treasurer, at the time fixed by the Treasurer, and upon the notice that the Treasurer may deem advisable, or at the time to which the sale shall have been so continued, at a competitive sale to the bidder whose bid will result in the lowest interest cost on account of those bonds.
  (b) The Treasurer shall reject any and all bids for the bonds that shall be below the par value thereof plus the interest that shall have accrued thereon from the date thereof or, if any past due coupon or coupons have been detached from the bonds prior to the delivery thereof, then from the due date of the latest coupon so detached, to the date of the purchaser's payment for the bond.
  (c) The method of determining the lowest interest cost bid shall be prescribed in the bond resolution and shall be limited to either the net interest cost method or the present worth basis method, also referred to as the true interest cost, bond book basis, and Canadian interest cost method.
  (1) The net interest cost of each bid shall be determined by ascertaining the total amount of interest that the state would be required to pay under that bid, from the date of the bonds to the respective maturity dates of the bonds then offered for sale, at the coupon rate or rates specified in the bid, less the total amount of the premium, if any, offered by the bid. The bid under which the amount so ascertained is the least shall be deemed to be the bid resulting in the lowest net interest cost.
  (2) Under the present worth basis method, the bonds shall be awarded to the bidder submitting the lowest interest rate bid, which shall be determined by doubling the semiannual interest rate, compounded semiannually, necessary to discount the debt service payments to the specified interest computation date and to the price bid.
  (d) Under either method specified in subdivision (c), the sale shall be for cash, payable upon the delivery of the bonds in definitive form, or if the right to deliver temporary securities has been reserved, then upon the delivery of the temporary securities.

(a) The bonds specified in the resolution shall be sold by the Treasurer, at the time fixed by the Treasurer, and upon the notice that the Treasurer may deem advisable, or at the time to which the sale shall have been so continued, either at a competitive sale to the bidder whose bid will result in the lowest interest cost on account of those bonds or by a negotiated sale if the Treasurer determines it will result in a lower interest cost. With respect to bonds sold by the Treasurer by negotiated sales, the Treasurer shall make a finding on the public record as to why a competitive sale was not used. The Treasurer may sell the bonds at a price below the par value thereof, but the discount on bonds so sold shall not exceed 3 percent of the par value. The interest, if any, accrued to the date of delivery of, and payment for, the bonds shall be added to the sale price of the bonds in any case.
  (b) (1) The method of determining the lowest interest cost bid shall be prescribed in the bond resolution and shall be limited to either the net interest cost method or the true interest cost method.
  (A) The net interest cost of each bid shall be determined by ascertaining the total amount of interest that the state would be required to pay under that bid, from the date of the bonds to the respective maturity dates of the bonds then offered for sale, at the interest rate or rates specified in the bid, less the total amount of the premium, if any, or plus the total amount of the discount, if any, offered by the bid. The bid under which the amount so ascertained is the least shall be deemed to be the bid resulting in the lowest net interest cost.
  (B) Under the true interest cost method, the bonds shall be awarded to the bidder submitting the lowest interest rate bid determined by the nominal interest rate that, when compounded semiannually and used to discount the debt service payments on the bonds to the date of the bonds, results in an amount equal to the price bid for the bonds, excluding interest accrued to the date of delivery.
  (2) Under either method specified in this subdivision, the sale shall be for cash, payable upon the delivery of the bonds in definitive form, or if the right to deliver temporary securities has been reserved, then upon the delivery of the temporary securities.
  (c) Notwithstanding subdivision (a) or (b), if the resolution prescribes that the bonds may pay a variable interest rate, as specified in subdivision (d) of Section 16731, the Treasurer may sell the bonds by negotiated sales if the Treasurer determines that it is in the best interest of the state to do so.
  (d) This section shall apply to any bonds authorized at any statewide election held at any time after the effective date of this section. Section 16754 shall apply only to bonds authorized at elections held before the effective date of this section.

Notwithstanding any provision in this article to the contrary, bonds to provide farm and home aid for veterans in accordance with the Veterans' Farm and Home Purchase Act of 1974 (Article 3.1 (commencing with Section 987.50) of Chapter 6 of Division 4 of the Military and Veterans Code), may be sold by negotiated sale by the Treasurer with the approval of the Veterans' Finance Committee of 1943.

(a) The deposit of each unsuccessful bidder shall be returned to the bidder promptly upon the rejection of the bidder's bid or the acceptance of another bid.
  (b) The deposit of the successful bidder or underwriter in a negotiated sale shall, immediately upon the acceptance of the bid or proposal, become and be the property of the state, be placed in the State Treasury to the credit of the fund, and be credited to the successful bidder or underwriter upon the purchase price of the bonds when the purchase price is paid in full within the time mutually agreed upon between the successful bidder or underwriter and the Treasurer.
  (c) If the purchase price is not paid in accordance with subdivision (b), the successful bidder or underwriter shall have no right in and to the bonds by reason of the bid or purchase contract and the successful bidder or underwriter shall not have any right to the recovery of the deposit accompanying the bid or purchase contract or to any allowance or credit by reason of that deposit unless it shall appear that the bonds cannot be validly issued or delivered, or unless the return of the good faith deposit to the underwriter is provided for in the purchase contract.

Upon payment in full, the bonds shall be delivered to the purchaser in definitive form, unless the right to deliver temporary securities has been reserved or the purchaser has waived the right to receive definitive bonds at the time of payment, in either of which events such temporary securities, exchangeable for definitive bonds, may be delivered upon such payment. In case the purchase price is not so paid, the bonds so sold but not paid for shall be resold by the State Treasurer, upon notice, as provided in case of original sale.

(a) The proceeds of each sale of bonds, and the amount that may have been paid as accrued interest on the bonds, shall be forthwith paid over by the Treasurer into the fund.
  (b) All money deposited in the fund pursuant to this section that is derived from premium and accrued interest on bonds sold shall be reserved in the fund and shall be available for transfer to the General Fund as provided in the bond act, except that amounts derived from premium on the bonds may be used to pay costs of issuance of the bonds, as provided in Section 16724.5, and in subdivisions (d) and (e) of Section 16727, prior to transfer to the General Fund.

All actual and necessary expenses of the committee and of the members thereof incurred in the performance of their duties shall be paid out of the fund. Such expenses incurred by members of the committee shall be so paid upon claims filed with the State Controller by the member or members who incurred such expenses.

The Treasurer shall submit to the Chairperson of the Joint Legislative Budget Committee, after each sale of bonds authorized to be sold under this chapter, an update as to the percentage of general fund moneys that would be used to service the resulting general obligation bond obligations.

Whenever the committee deems that it will increase the salability or the price of the bonds to obtain, prior to or after sale, a legal opinion, other than that of the Attorney General, as to the validity of the bonds, the committee may authorize the State Treasurer or the Department of Finance, or both, to obtain such a legal opinion.