Chapter 5. Revenue Bonds of California Streets And Highways Code >> Division 18. >> Part 2. >> Chapter 5.

As used in this chapter, "bonds" means revenue bonds issued pursuant to this part.

Bonds shall not be issued in any city until the legislative body, either at a general or a special election, submits to the electors of the city the question whether the city or the authority, or both, shall be authorized to adopt the revenue bond method of financing projects provided for in this part. If a majority of the voters voting upon the proposition favor the proposition, the authority, or the city, or both, as specified in the proposition, may from time to time issue bonds in accordance with this part. In any city in which the voters have previously authorized the issuance of general obligation bonds or revenue bonds for parking facilities an authority or the city, pursuant to Section 33552, may issue bonds without submitting such proposition to the voters.

In lieu of the submission of such question the legislative body may from time to time so submit to such electors the proposition of the issuance, by the authority or the city, pursuant to this part, of revenue bonds in a specific amount, to finance a specific project or specific projects. If at any such election a majority of the voters voting upon the proposition vote in favor thereof, the power to issue revenue bonds as provided in this part shall be operative as to the bonds so specified, and the authority, or the city, as may have been so specified, may from time to time issue revenue bonds in accordance with the provisions of this part in an amount or amounts not exceeding the amount so specified for the project or projects so specified.

Sections 33101 and 33101.5 shall not apply where the bonds are issued to finance a project which is to be leased to the city and where the principal of and interest on the bonds are to be payable from rentals paid by the city under such lease.

The authority shall have power to borrow money to provide funds for any project and to issue in its name revenue bonds to evidence the indebtedness created by such borrowing. The bonds of each issue shall constitute special obligations, and evidence a special indebtedness, of the authority, which shall be a charge upon, and payable, both as principal and interest, and as to any premiums upon the redemption of any thereof, solely from, such revenues and funds as are specified therein and in the proceedings for their issuance, and shall not constitute obligations, nor evidence any indebtedness, of the city, or of the State.

All such bonds shall recite upon their face, in substance, that the bonds of each issue shall constitute special obligations, and evidence a special indebtedness, of the authority, which shall be a charge upon, and payable, both as principal and interest, and as to any premiums upon the redemption of any thereof, solely from, such revenues and funds as are specified therein and in the proceedings for their issuance, and shall not constitute obligations, nor evidence any indebtedness, of the city, or of the State, and shall also recite upon their face that they are issued under this part, which for that purpose may be designated by the short title provided for in Section 32500.

An authority may issue such types of bonds as it determines, including bonds on which the principal and interest are payable:
  (a) Exclusively from the income and revenue of the parking facilities financed with the proceeds of the bonds, or with such proceeds and financial assistance from the State or Federal Governments or from any other source in aid of such projects.
  (b) Exclusively from the income and revenue of certain designated parking facilities, whether or not such facilities were financed in whole or in part with the proceeds of the bonds, and including income or revenue from any future extension, betterment, or addition to any such parking facilities thereafter to be established.
  (c) From its revenues generally.
  (d) From any contributions or other financial assistance from the city, the State or Federal Governments, or from any other source.
  (e) From parking meter revenue of the city which may be appropriated by the governing body of the city.
  (f) From any combination of these sources.

Bonds may be additionally secured by the pledging of, placing a charge upon, or otherwise making available any parking meter revenue. Until all bonds so secured have been paid, the legislative body of a city may allocate, pledge, place a charge upon, or otherwise make available its parking meter revenue or special taxes for periods of years for the financing or operation of any project authorized by this part and the payment of principal and interest on all or any type of bond issued and outstanding pursuant to this part.

Nothing in this part nor in the specification, in the proceedings for the issuance of any bonds, of the sources of payment thereof, shall preclude any of the following:
  (a) The payment of interest on or principal of any such bonds out of sums received as premiums or accrued interest on the sale thereof.
  (b) The payment of principal of or interest on, or premiums on the redemption of, any such bonds out of the proceeds of the sale of refunding bonds issued for that purpose.
  (c) The payment of any interest on any such bonds accruing during, and for not to exceed two years after, the period of the construction of a project on account of which they were issued, or for any other reasonably limited period, out of the proceeds of the sale of such bonds.
  (d) The payment of any principal of, interest on, or premiums on the redemption of, any such bonds by the purchasers thereof, or by any entity other than the authority issuing the same in any case where such purchasers or entity may have guaranteed such payment.
  (e) The application to the payment of any principal of, interest on, or premiums on the redemption of, any such bonds of any funds which the authority may lawfully so apply.

Except as limited by express provision of this part, each authority, by resolution, or by contract, or other agreement with, or for the benefit of, the bondholders, may determine all the terms and conditions of each issue, series, or division of bonds and of their sale and issuance, and all matters necessary or appropriate in connection with the bonds.

An authority may provide for the aggregate principal amount, date or dates, maturities, interest rate or rates, interest payment dates, denominations and form of such bonds, and may provide for the issuance thereof as serial bonds or sinking fund bonds, as payable to bearer or to named payees, or as registered bonds, and for the issuance thereof with or without coupons, and for the subsequent registration of bonds, and for all other terms and conditions upon which they shall be executed, issued, secured, sold, paid, redeemed, funded, and refunded.

The authority may provide that any resolution or resolutions adopted in connection with the authorization of any bonds shall constitute a contract with the holders of such bonds, not subject to repeal, and not subject to any modification other than to the extent and in a manner provided in any such resolution.

Reference on the face of the bonds to any such resolution by the date of its adoption, or to any such contract or other agreement by the date of its execution, or the apparent date on the face thereof, is sufficient to incorporate all of the provisions of the contract or agreement into the body of the bonds and their appurtenant coupons. Each taker and subsequent holder of the bonds or coupons, whether the coupons are attached to or detached from the bonds, has recourse to all of the provisions of the indenture and is bound thereby.

The authority may provide for such covenants and agreements on the part of the authority as it deems necessary or advisable for the better security of any bonds.

The authority may provide for the making of a covenant requiring the authority to pay punctually the principal and interest on any bonds on the date or dates, at the place or places, and in the manner mentioned in the bonds and coupons in accordance with their terms.

The authority may provide for the making of a covenant requiring the authority to continuously operate in an efficient and economical manner any or all facilities and properties any revenues of which are charged with the payment of any bonds in connection with which such covenant is made.

The authority may provide for the making of a covenant requiring the authority to make all repairs, renewals and replacements necessary to the operation of any or all facilities and properties any revenues of which are charged with the payment of any bonds in connection with which such covenant is made, and to keep any and all such facilities and property at all times in good repair.

The authority may provide for the making of a covenant requiring the authority to pay and discharge from the funds available for that purpose all lawful claims for labor, materials and supplies, or other charges which if unpaid may become a lien or charge upon all or any part of the revenue, any facilities or properties, revenues charged with the payment of any bonds in connection with which the covenant is made, or physical properties of the project which may impair the security of the bonds.

The authority may provide for the making of a covenant which limits, restricts, or prohibits the power of the authority to mortgage or otherwise encumber, sell, lease, or dispose of any or all facilities and properties, any revenues of which are charged with the payment of any bonds in connection with which the covenant is made, or to enter into any lease or agreement which might impair or impede the operation of such facilities or properties, or any part thereof, or might otherwise impair or impede the rights of bondholders with respect to such revenues.

The authority may provide for the making of a covenant requiring the authority to fix, prescribe and collect, with respect to any or all properties, any revenues of which are charged with the payment of any bonds in connection with which such covenant is made, fees, tolls, rentals or other charges in connection with the services and facilities furnished from any such properties operated by it, and to fix and collect rentals or other charges for any such properties leased by it to others for operation, sufficient, with such parking meter revenues or other funds as may have been made available for and charged with such payment, to pay the principal of and interest on such bonds as they become due and payable, together with all expenses of operation, maintenance and repair of such facilities and properties, and with such additional sums as may be required for any sinking fund, reserve fund or other special fund provided for the further security of such bonds or as a depreciation charge or other charge in connection with such facilities and properties, and all other charges payable out of any revenues charged with the payment of the bonds. The authority may also provide for the making of a covenant requiring the fixing and prescribing by it and the collection by any lessee or operator of any or all facilities and properties, any revenues of which are charged with the payment of any bonds in connection with which such covenant is made, of all fees, tolls, rentals, or other charges in connection with the services and facilities furnished by such lessee or operator, sufficient to assure the payment by such lessee or operator to such authority of the rentals or other charges payable by such lessee or operator to such authority.

The authority may provide for the making of a covenant requiring the authority to provide for the establishment and maintenance of reserve funds, sinking funds, or other special funds in the city treasury or special trust accounts in a bank or trust company to insure payment, when due or payable, whether at maturity or upon redemption, of the principal of and interest on any bonds, including premiums, if any due, upon the redemption of any thereof, or to insure the application of the proceeds of such bonds to the purposes for which the same were issued, or for any other appropriate purpose. Any money placed in any such reserve, sinking, or other special fund or trust account shall constitute a trust fund and shall be applied only to the purposes for which it was created.

The authority may provide for the making of a covenant requiring it to apply the proceeds of the bonds in connection with which such covenant is made, or any part thereof, to the acquisition or construction of a specified facility, or other specified purpose.

The authority may provide for the making of a covenant restricting the incurring of additional indebtedness payable in whole or in part out of revenues or funds which are charged with the payment of any bonds in connection with which such covenant is made.

The authority may provide for the making of a covenant requiring it to carry insurance on any facilities or properties any revenues of which are charged with the payment of any bonds in connection with which such covenant is made, or any operations incident thereto, specifying or limiting the kind, amount and character of such insurance, and providing for the use and disposition of the proceeds of any such insurance thereafter collected.

The authority may provide for the terms and conditions upon which any bonds may become or be declared due and payable prior to maturity, upon the happening of any specified event of default, and the terms and conditions upon which such declaration and its consequences may be waived.

The authority may provide for the rights, limitations, powers, and duties arising upon breach by the authority of any of the covenants, conditions, or obligations contained in any resolution, contract, or agreement.

The authority may provide for a procedure by which certain specified terms and conditions of any resolution, contract, or agreement may be subsequently amended or modified, or any provision thereof waived, with the consent of the authority and the vote or written assent of the holders of a specified principal amount of the bonds issued and outstanding. Such provision may authorize meetings of bondholders and specify the manner in which the consent of the bondholders may be given. Such provision shall specifically state the effect of such amendment, modification, or waiver upon the rights of the holders of all of the bonds and interest coupons appertaining to the bonds, whether attached to or detached from the bonds.

The provisions for such procedure may include an agreement that bonds held by the authority, the city, or by any other person or entity who or which the authority may determine to be so interested in the matter as to make it proper, shall not be counted as outstanding bonds, and that the holders thereof shall not be entitled to vote or assent with respect to such amendment, modification or waiver, but shall nevertheless be subject thereto.

The authority may provide for such other acts and matters as it may deem to be necessary, convenient, or desirable to secure the bonds or to make them more marketable.

The authority may designate a bank or trust company as a trustee for the holders of bonds issued pursuant to this part, and may authorize the trustee to act on behalf of the bondholders, and to exercise and prosecute on their behalf the rights and remedies available to them.

The authority may fix and determine the conditions upon which any trustee shall receive, hold, or disburse any or all funds coming into its hands pursuant to any resolution, contract, or agreement.

The authority may prescribe the duties and powers of any trustee respecting the payment of principal and interest on bonds, the redemption of bonds, the registration and discharge from registration of bonds, and the management of any sinking or other fund provided as security for bonds, and with respect to any other appropriate matter.

The authority may provide for the issuance of bonds in series, and for the division of any issue into two or more divisions, and may fix different maturities or dates of such bonds, different rates of interest, or prescribe different terms and conditions for the bonds of the several series or divisions. After having authorized or issued bonds the authority may from time to time thereafter authorize and issue other bonds, subject to any covenants it may have made restricting the future issuance of bonds.

All bonds of the same authorized issue need not be of the same kind or character, have the same security, or bear the same interest rate, but the terms of the bonds shall in each case be prescribed by the authority.

Bonds may be callable upon such terms, conditions, and notice as the authority determines, and upon the payment of the premium, if any, fixed by the authority in the proceedings for their issuance. No bond shall be subject to call or redemption prior to its fixed maturity date unless the right to exercise such call is expressly stated on its face.

The authority may provide for the payment of the principal and interest of bonds at any place within the State, or for the payment or collection of such principal without the State, and in any specified coin or currency of the United States.

Signatures on the bonds and interest coupons may be printed, lithographed, or engraved facsimile, except that on the bonds, but not on the interest coupons, the countersignature of the clerk or other officer of the authority designated by it which shall be manually affixed.

If any officer or representative whose signature or countersignature appears upon the bonds or coupons ceases to be an officer or representative before the delivery of the bonds or coupons, his signature or countersignature is nevertheless valid and of the same force and effect as if he had continued to hold his office or position until the delivery of the bonds and coupons.

Bonds issued under this part may be serial or sinking fund bonds. A bond by its terms shall not mature more than forty (40) years from its own date. If any authorized issue is divided into two or more series or divisions, the maximum maturity date shall be calculated from the date on the face of each bond separately, irrespective of the fact that different dates may be prescribed for the bonds of each separate series or division of any authorized issue.

The authority may sell bonds at a price below the par or face value, provided that the discount on any bonds so sold shall not exceed 8 percent of the par value thereof. The interest rate on the bonds shall not exceed 8 percent, payable semiannually. The sale shall be conducted in compliance with Chapter 10 (commencing with Section 5800) of Division 6 of Title 1 of the Government Code.

In determining the amount of bonds to be issued, the authority may include an amount for the purpose of establishing a reserve fund or funds for the security of the bonds.

The authority may provide that interest on bonds issued for the acquisition, construction, or completion of any project may be paid out of the proceeds of the sale of the bonds during the actual construction of the project and for a period of not to exceed two years after completion of actual construction, or for any other reasonably limited period.

In the proceedings for the issuance of bonds, the authority may provide that the principal of and interest on the bonds constitute such charge upon the revenues of any project acquired, constructed or completed from the proceeds of the bonds, or upon other available and specified revenues or funds as may be provided for in such proceedings.

Pending the actual issuance or delivery of bonds, the authority may issue temporary or interim bonds, certificates, or receipts of any denominations, with or without coupons, to be exchanged for definitive bonds when ready for delivery.

The principal, interest, and income of all bonds issued under this part are exempt from all taxation in this State, other than gift, inheritance, and estate taxes.

The authority may provide for the issuance, sale, or exchange of refunding bonds to redeem or retire any revenue bonds issued by it. All provisions of this part applicable to the issuance of bonds are applicable to refunding bonds and to their issuance, sale or exchange. However, even if the alternative method provided for in Section 32655 of submitting to the electors the question of issuing bonds in a specific amount has been followed, without the submission of the question of adopting the revenue bond method of financing, no submission to the electors of the proposition of issuing refunding bonds shall be required as a prerequisite to the issuance of such refunding bonds; and if the proposition of adopting the revenue bond method of financing has been submitted and carried, it shall be full authority for the issuance of refunding bonds.

Refunding bonds may be issued in a principal amount sufficient to provide funds for the payment of the bonds to be refunded and all expenses incident to the calling, retiring, or paying of the outstanding bonds and the issuance of the refunding bonds. These expenses include:
  (a) The difference in amount between the par value of the refunding bonds and any amount less than par for which the refunding bonds are sold.
  (b) The amount of interest upon the refunding bonds from the date of their sale to the date of payment of the bonds to be refunded or to the date upon which the bonds to be refunded will be paid pursuant to their call or pursuant to any agreement with the holders of such bonds.
  (c) Any premium required to be paid to call or retire the outstanding bonds.
  (d) The interest accruing on the outstanding bonds to the date of their call or retirement.

Bonds issued pursuant to this part are negotiable instruments.

An action to determine the validity of bonds may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure.