Article 5. Agency Bonds of California Health And Safety Code >> Division 24. >> Part 1. >> Chapter 6. >> Article 5.
From time to time an agency may, subject to the approval of
the legislative body, issue bonds for any of its corporate purposes.
An agency may also, subject to the approval of the legislative body,
issue refunding bonds for the purpose of paying or retiring bonds
previously issued by it.
An agency may issue any types of bonds which it may
determine, including bonds on which the principal and interest are
(a) Exclusively from the income and revenues of the redevelopment
projects financed with the proceeds of the bonds, or with the
proceeds together with financial assistance from the state or federal
government in aid of the projects.
(b) Exclusively from the income and revenues of certain designated
redevelopment projects whether or not they were financed in whole or
in part with the proceeds of the bonds.
(c) In whole or in part from taxes allocated to, and paid into a
special fund of, the agency pursuant to the provisions of Article 6
(commencing with Section 33670).
(d) In whole or in part from taxes imposed pursuant to Section
7280.5 of the Revenue and Taxation Code which are pledged therefor.
(e) From its revenues generally.
(f) From any contributions or other financial assistance from the
state or federal government.
(g) By any combination of these methods.
(a) As used in this section:
(1) "Collateral" means any revenues, moneys, accounts receivable,
contracts rights, and other rights to payment of whatever kind or
other property subject to the pledge provided for or created in a
(2) "Pledge document" means the resolution, indenture, trust
agreement, loan agreement, lease, installment sale agreement,
reimbursement agreement, pledge agreement, or similar agreement in
which the pledge is provided for or created.
(3) "Pledge" means a committment of, by the grant of a lien on and
a security interest in, the collateral referred to in a pledge
(b) A pledge of collateral by a redevelopment agency to secure,
directly or indirectly, the payment of the principal or redemption
price of, or interest on, any bonds, or any reimbursement agreement
with any provider of credit to bonds, which is issued by or entered
into by an agency shall be valid and binding in accordance with the
terms of the pledge document from the time the pledge is made for the
benefit of pledgees and successors thereto.
The collateral shall immediately be subject to the pledge, and the
pledge shall constitute a lien and security interest which
immediately shall attach to the collateral and be effective, binding,
and enforceable against the pledgor, its successors, purchasers of
the collateral, creditors, and all others asserting the rights
therein, to the extent set forth, and in accordance with, the pledge
document irrespective of whether those parties have notice of the
pledge and without the need for any physical delivery, recordation,
filing, or further act.
Any of such bonds may be additionally secured by a pledge of
any revenues or by an encumbrance by mortgage, deed of trust, or
otherwise of any redevelopment project or other property of the
agency or by a pledge of the taxes referred to in subdivision (c) of
Section 33641, or by any combination thereof.
Neither the members of an agency nor any persons executing
the bonds are liable personally on the bonds by reason of their
The bonds and other obligations of any agency are not a debt
of the community, the State, or any of its political subdivisions
and neither the community, the State, nor any of its political
subdivisions is liable on them, nor in any event shall the bonds or
obligations be payable out of any funds or properties other than
those of the agency; and such bonds and other obligations shall so
state on their face. The bonds do not constitute an indebtedness
within the meaning of any constitutional or statutory debt limitation
The agency may authorize bonds by resolution. The
resolution, trust indenture, or mortgage may provide for:
(a) The issuance of the bonds in one or more series.
(b) The date the bonds shall bear.
(c) The maturity dates of the bonds.
(d) The rate or maximum rate of interest on the indebtedness,
which shall not exceed the maximum rate permitted by Section 53531 of
the Government Code, and need not be recited if the rate does not
exceed 4 1/2 percent. The interest may be fixed or variable and may
be simple or compound. The interest shall be payable at the time or
times determined by the agency.
(e) The denomination of the bonds.
(f) Their form, either coupon or registered.
(g) The conversion or registration privileges carried by the
(h) The rank or priority of the bonds.
(i) The manner of their execution.
(j) The medium of payment.
(k) The place of payment.
( l) The terms of redemption with or without premium to which the
bonds are subject.
(m) The maximum amount of bonded indebtedness in compliance with,
and not to exceed, the limit specified in the redevelopment plan as
required in Section 33334.1.
The resolution, trust indenture, or mortgage shall provide that
tax-increment funds allocated to an agency pursuant to Section 33670
shall not be payable to a trustee on account of any issued bonds when
sufficient funds have been placed with the trustee to redeem all
outstanding bonds of the issue.
Notwithstanding Section 33645 or any other provision of
law, the rate of interest on any indebtedness or obligation of an
agency which is payable to the federal government or any agency or
instrumentality thereof or on any such indebtedness or obligation
guaranteed by the federal government or any instrumentality thereof
may be at a rate higher than the limitation established in Section
33645, or any other law, if such rate is the rate established by the
federal government or any instrumentality thereof. Any such
indebtedness or obligation shall be in such form and denomination,
have such maturity, and be subject to such conditions as may be
prescribed by the federal government or agency or instrumentality
The bonds may be sold at no less than par less a discount of
not to exceed 5 percent, at public sale held after notice published
once at least five days prior to the sale in a newspaper of general
circulation published in the community, or, if there is none, in a
newspaper of general circulation published in the county. The bonds
may be sold at not less than par to the federal government at private
sale without any advertisement.
The amendment to this section made at the 1969 Regular Session of
the Legislature shall be applicable to bonds of a redevelopment
agency which have been authorized by the agency prior to the
effective date of the amendment but which have not been issued prior
to such date.
If any agency member or officer whose signature appears on
bonds or coupons ceases to be such member or officer before delivery
of the bonds, his signature is as effective as if he had remained in
Bonds issued pursuant to this part are fully negotiable.
In any action or proceedings involving the validity or
enforceability of any bonds or their security, any such bond reciting
in substance that it has been issued by the agency to aid in
financing a redevelopment project is conclusively deemed to have been
issued for a redevelopment project and the project is conclusively
deemed to have been planned, located, and constructed pursuant to
In connection with the issuance of bonds, and in addition to
its other powers, an agency has the powers prescribed in Sections
33651 to 33659, inclusive.
An agency may:
(a) Pledge all or any part of its gross or net rents, fees, or
revenues to which its right then exists or may thereafter come into
(b) Encumber by mortgage, deed of trust, or otherwise all or any
part of its real or personal property, then owned or thereafter
An agency may covenant:
(a) Against pledging all or any part of its rents, fees, and
(b) Against encumbering all or any part of its real or personal
property, to which its right or title then exists or may thereafter
come into existence.
(c) Against permitting any lien on such revenues or property.
(d) With respect to limitations on its right to sell, lease, or
otherwise dispose of all or part of any redevelopment project.
(e) As to what other, or additional debts or obligations it may
An agency may:
(a) Covenant as to the bonds to be issued, as to the issuance of
such bonds in escrow or otherwise, and as to the use and disposition
of the bond proceeds.
(b) Provide for the replacement of lost, destroyed, or mutilated
(c) Covenant against extending the time for the payment of its
bonds or interest.
(d) Redeem the bonds, covenant for their redemption, and provide
the redemption terms and conditions.
An agency may:
(a) Covenant as to the consideration or rents and fees to be
charged in the sale or lease of a redevelopment project, the amount
to be raised each year or other period of time by rents, fees, and
other revenues, and as to their use and disposition.
(b) Create or authorize the creation of special funds for money
held for redevelopment or other costs, debt service, reserves, or
other purposes, and covenant as to the use and disposition of such
An agency may prescribe the procedure, if any, by which the
terms of any contract with bondholders may be amended or abrogated,
the amount of bonds whose holders are required to consent thereto,
and the manner in which such consent may be given.
An agency may covenant:
(a) As to the use of any or all of its real or personal property.
(b) As to the maintenance of its real and personal property, its
replacement, the insurance to be carried on it, and the use and
disposition of insurance money.
An agency may:
(a) Covenant as to the rights, liabilities, powers, and duties
arising upon the breach by it of any covenant, condition, or
(b) Covenant and prescribe as to events of default and terms and
conditions upon which any or all of its bonds or obligations become
or may be declared due before maturity, and as to the terms and
conditions upon which such declaration and its consequences may be
An agency may:
(a) Vest in a trustee or the holders of bonds or any proportion of
them the right to enforce the payment of the bonds or any covenants
securing or relating to the bonds.
(b) Vest in a trustee the right, in the event of a default by the
agency, to take possession of all or part of any redevelopment
project, to collect the rents and revenues arising from it and to
dispose of such money pursuant to the agreement of the agency with
(c) Provide for the powers and duties of a trustee and limit his
(d) Provide the terms and conditions upon which the trustee or the
holders of bonds or any proportion of them may enforce any covenant
or rights securing or relating to the bonds.
An agency may:
(a) Exercise all or any part or combination of the powers granted
in Sections 33651 to 33658 inclusive.
(b) Make covenants other than and in addition to the covenants
expressly authorized in such sections of like or different character.
(c) Make such covenants and to do any and all such acts and things
as may be necessary, convenient, or desirable to secure its bonds,
or, except as otherwise provided in this part, as will tend to make
the bonds more marketable notwithstanding that such covenants, acts,
or things may not be enumerated in this part.
In addition to all other rights which may be conferred on
him, and subject only to any contractual restrictions binding upon
him, an obligee may:
(a) By mandamus, suit, action, or proceeding, compel the agency
and its members, officers, agents, or employees to perform each and
every term, provision, and covenant contained in any contract of the
agency with or for the benefit of the obligee, and require the
carrying out of any or all such covenants and agreements of the
agency and the fulfillment of all duties imposed upon it by this
(b) By suit, action, or proceeding in equity, enjoin any acts or
things which may be unlawful, or the violation of any of the rights
of the obligee.
By its resolution, trust indenture, mortgage, lease, or
other contract, an agency may confer upon any obligee holding or
representing a specified amount in bonds, the following rights upon
the happening of an event or default prescribed in such resolution or
instrument, to be exercised by suit, action, or proceeding in any
court of competent jurisdiction:
(a) To cause possession of all or part of any redevelopment
project to be surrendered to any such obligee.
(b) To obtain the appointment of a receiver of all or part of any
redevelopment project of the agency and of the rents and profits from
it. If a receiver is appointed, he may enter and take possession of
the redevelopment project or any part of it, operate and maintain it,
collect and receive all fees, rents, revenues, or other charges
thereafter arising from it, and shall keep such money in separate
accounts and apply it pursuant to the obligations of the agency as
the court shall direct.
(c) To require the agency and its members and employees to account
as if it and they were the trustees of an express trust.
The bonds are issued for an essential public and
governmental purpose, and together with interest on them and income
from them are exempt from all taxes.
Notwithstanding any restrictions on investments contained in
any laws, the state and all public officers, municipal corporations,
political subdivisions, and public bodies, all banks, bankers, trust
companies, savings banks and institutions, building and loan
associations, savings and loan associations, investment companies,
and other persons carrying on a banking business, all insurance
companies, insurance associations, and other persons carrying on an
insurance business, and all executors, administrators, guardians,
conservators, trustees, and other fiduciaries may legally invest any
sinking funds, money, or other funds belonging to them or within
their control in any bonds or other obligations issued by an agency.
Such bonds and other obligations are authorized security for all
public deposits. It is one of the purposes of this part to authorize
any persons, firms, corporations, associations, political
subdivisions, bodies and officers, public and private, to use any
funds owned or controlled by them, including, but not limited to,
sinking, insurance, investment, retirement, compensation, pension,
and trust funds, and funds held on deposit, for the purchase of any
such bonds or other obligations. This part does not relieve any
person, firm, or corporation from any duty of exercising reasonable
care in selecting securities.
(a) An agency may purchase its bonds as follows:
(1) At a price not more than the sum of their principal amount and
accrued interest plus (if the bonds purchased are callable at a
premium) an amount not to exceed the premium that would be applicable
if the bonds were purchased on the next following call date.
(2) At a higher price if a majority of the members of the agency
determine, based upon substantial evidence, that under then
prevailing conditions the purchase would be of financial advantage to
the agency. Prior to purchasing bonds pursuant to this paragraph,
the agency shall adopt a resolution designating paragraph (1), (2),
or (3) of subdivision (b) as the financial advantage accruing to the
agency from the bond purchase or specifying in detail any alternative
basis for the agency's finding of financial advantage. Unless the
legislative body has designated itself as the redevelopment agency,
the agency shall additionally obtain the approval of the legislative
body for repurchase of agency bonds under this subdivision and, if
applicable, under Section 33640.
A resolution of the legislative body approving repurchase of
agency bonds under this subdivision shall be operative only for the
period specified in the resolution of the legislative body, not to
exceed five years. However, the authorization may be renewed by an
appropriate resolution of the legislative body and the expiration of
the legislative body's resolution shall in no way impair the
obligation of bonds previously issued by the agency to refund bonds
purchased under this subdivision.
(b) "Financial advantage," as used in subdivision (a), includes,
but is not limited to, each of the following:
(1) A reduction in the aggregate debt service on the agency's
(2) The creation of opportunities to more efficiently leverage
revenues of the agency.
(3) Cancellation of agency bonds subject to adverse provisions of,
or tax consequences under, the laws of the United States.
(c) Any bond purchases made pursuant to this section shall be (1)
identified in the agency's annual fiscal year report required by
Section 33080.1 for the fiscal year in which the purchase was made
and (2) reflected in the agency's statement of indebtedness filed
pursuant to Section 33675.
(d) Within two weeks following a purchase of bonds pursuant to
paragraph (2) of subdivision (a), the redevelopment agency shall
transmit to the California Debt Advisory Commission a copy of the
agency's resolution specifying the financial advantage to the agency
in making the purchase, together with a covering letter that includes
all of the following information respecting the bonds purchased:
(1) The date of the agency's resolution authorizing the bonds, the
date of issuance of the bonds, and any other information necessary
to identify the particular issuance or series of bonds.
(2) The terms of redemption to which the bonds were originally
(3) The denominations and interest rates of the bonds purchased.
(4) The purchase price.
(e) All bonds purchased pursuant to this section shall be
All of the provisions of this article are subject to the
limitations of Article 3 (commencing with Section 33620) of this