Article 7. Miscellaneous of California Military And Veterans Code >> Division 4. >> Chapter 7. >> Article 7.
All debentures and the income therefrom are at all times
exempt from taxation in the State of California, except for transfer,
inheritance, and gift taxes.
All debentures shall be legal investments for all trust
funds, for the funds of all insurance companies, banks (both
commercial and savings), trust companies, state school funds and any
pension funds, public or private.
Any money or funds which may by law be invested in bonds of
the State of California may be invested in debentures.
Whenever any bonds of the State of California may by law be
used as security for the performance of any act or the deposit of
any public money, debentures may be so used.
All debentures, subject to the provisions for registration
contained therein, are negotiable instruments under the law merchant.
The department may include in the proceedings authorizing
the issuance of debentures any provisions not inconsistent with this
chapter which limit, restrict or regulate the holding, deposit,
investment, and application of money consisting of the proceeds from
the sale of the debentures or the revenues or other income received
from the pledged contracts entered into by the department with
veterans, and such provisions shall constitute a contract with the
holders of the debentures and shall be binding upon the department
and all other officers, officials and agencies of the State of
California and upon the state so long as any of the debentures are
The department may provide in the proceedings authorizing
issuance of debentures for the establishment of one or more reserve
funds out of the proceeds of the sale of the debentures or out of
revenues or out of any moneys or securities available to the
department under this act, and may provide for the use and
application of any surplus moneys in any such reserve fund.
The State Treasurer may sell any of the debentures
authorized under this chapter to the United States of America or to
any of its departments, agencies or instrumentalities upon such terms
and conditions as may be mutually agreed upon, and the department is
specifically authorized to enter into any such agreements, terms and
conditions required by the United States of America or any of its
departments, agencies or instrumentalities as a condition to the
purchase of such debentures.
Warrants for the payments to be made on account of the
debentures either as to principal, interest, premium, or otherwise,
shall be duly drawn by the State Controller, upon the request of the
State Treasurer, whenever the drawing of such warrants is required in
order to make such payments.
Notwithstanding anything contained in this chapter, the
proceeds received from the sale of debentures and any revenues
received by the department from pledged contracts entered into by the
department may be used to defray any expenses incurred by the
department or the State Treasurer in connection with and incidental
to the issuance and sale of debentures including expenses for
preparation, inspections and examinations, surveys and reports, which
may be required by the purchasers of debentures, and any legal
opinions deemed necessary or advisable by the department in
connection with the issuance of debentures except that the
proceedings authorizing the issuance of such debentures may contain
appropriate provisions governing the use and application of the
proceeds from the sale of the debentures or other revenues received
by the department for the purposes above specified.
This chapter shall be liberally construed to carry out the
objects and purposes and the declared public policy of the State of
California as in this chapter set forth. The facts with which the
Legislature is fully cognizant are:
The State of California is committed to aid and assist veterans
under the Veterans' Farm and Home Purchase Act of 1974. Increasing
numbers of servicemen who served in Vietnam are being discharged and
need home loans. The Cal-Vet loan program must be updated to provide
comparable benefits to those provided veterans of World War II and
the Korean Conflict. Conditions in the money market render it
impracticable for the State of California in conformity with its
other commitments to continue to raise funds for veterans' aid
through the issuance and sale of general obligation bonds of the
state. There is now in the Department of Veterans Affairs a backlog
of applications which cannot be processed because funds are
inadequate to meet the demand for loans. This act provides another
method whereby the State of California will be able to raise the
necessary funds for the aid and assistance of veterans through the
issuance of revenue debentures payable exclusively from the proceeds
of contracts of sale of properties acquired by the department from
veterans' revenue debenture proceeds and resold to veterans without
imposing any liability upon the State of California and without
creating any debt or liability of the State of California. The urgent
requirements of veterans and the necessity of raising funds
immediately for their aid and assistance render it essential that
this law be adopted.
If any section, subdivision, sentence, clause or phrase of
this chapter is for any reason held to be unconstitutional or
invalid or unenforceable, such decision shall not affect the validity
or enforceability of the remaining portions of the chapter. The
Legislature hereby declares that it would have passed this chapter
and each section, subdivision, sentence, clause and phrase hereof
irrespective of the fact that any one or more sections, subdivisions,
sentences, clauses and phrases may be declared unconstitutional,
invalid or unenforceable.
This chapter shall not operate to rescind or repeal any
act of the State of California now or hereafter enacted providing for
the issuance of general obligation bonds of the State of California
for the purpose of financing the Veterans' Farm and Home Purchase Act
of 1974 or for purposes similar to those set forth in the Veterans'
Farm and Home Purchase Act of 1974 provided such bonds are either
payable out of the General Fund of the State of California or the
full faith and credit of said state is pledged for the payment of
both the principal of and interest thereon.
All money in any of the funds created or authorized to be
created in any resolution of issuance under the provisions of this
chapter is hereby appropriated for expenditure in carrying out the
purposes herein and therein provided.
The purchaser shall make an initial payment of at least 10
percent of the selling price of the property, in case of a farm, and
5 percent in the case of a home. The department may waive the
initial payment in any case where the value of the property as
determined by the department appraisal shall be equal to the amount
to be paid by the department plus at least 10 percent in the case of
a farm, and 5 percent in the case of a home. The balance of the
purchase price may be amortized over a period fixed by the
department, not exceeding 40 years, together with interest thereon at
the rate as determined by the department for such amortization
purposes. The department shall establish the actual interest rate to
be paid. To this end the department, by two-thirds vote of the
California Veterans Board, with the approval of the Veterans'
Debenture Finance Committee established by Section 1000.3 of this
code, is empowered to establish a uniform rate of interest payable
upon the amount remaining unpaid under all pledged veterans' purchase
contracts then or thereafter executed. The California Veterans Board
and the Veterans' Debenture Finance Committee shall periodically at
least once each year make a finding as to the rate of interest to be
charged, taking into consideration the requirements of the Veterans'
Debenture Revenue Fund created by this chapter, but subject to any
covenant contained in any resolution of issuance adopted in
accordance with this chapter pursuant to which debentures are at the
time outstanding. Subject to any such covenant, the department may
raise or lower the rate of interest payable under such contracts for
any given period as many times and as frequently as it deems to be
for the best interests of the department, if in so doing its action
is made applicable alike to any and all pledged contract holders and
30 days' advance notice is given of the time when the new rate of
interest is to become effective. Upon demand of the Veterans'
Debenture Finance Committee, given as provided in any resolution of
issuance adopted pursuant to this chapter, the department shall
increase the rate of interest to be charged upon the amount remaining
unpaid upon all pledged veterans' purchase contracts then in
existence. A change in the interest rate may affect the total amount
of any installment payment. The purchaser on any installment date may
pay any or all installments still remaining unpaid. Subject to any
covenant contained in any resolution of issuance adopted in
accordance with this chapter, and pursuant to which debentures are at
the time outstanding, the department may, in any individual case,
for good cause postpone from time to time, upon such terms as the
department deems proper, the payment of the whole or any part of any
installment of the purchase price or interest thereon.
This section is intended to be applicable to all lands acquired
from the proceeds of the sale of debentures issued hereunder and to
the resale and disposition of such lands to the purchasers thereof
and no other provision of law shall be applicable to the purchase or
resale of such lands except only as in this act provided.
The department shall require that all applicants under
this article qualify under the applicable federal laws and
regulations governing the permitted uses of tax-exempt bond funds,
and file within the time limits required under applicable federal
laws and regulations.