Article 1. General of California Government Code >> Division 4. >> Title 4. >> Chapter 4. >> Article 1.

As used in this article, "an issue of bonds" means the aggregate principal amount of all bonds authorized by a proposal approved by the city electors pursuant to this article.

As used in this article, "municipal improvement" includes bridges, waterworks, water rights, sewers, light and power works or plants, buildings for municipal uses, wharves, breakwaters, jetties, seawalls, schoolhouses, fire apparatus, street work, and other works, property, or structures necessary or convenient to carry out the objects, purposes, and powers of the city. "Municipal improvement" also includes the acquisition of real property for a civic center site or for any public use or uses, whether or not the improvement of said real property is part of the purposes for which the bonds are to be issued and whether or not funds for the improvement of said real property are presently available from other sources.

Pursuant to this article, a city may incur indebtedness for any municipal improvement requiring an expenditure greater than the amount allowed for it by the annual tax levy.

(a) A city or a city and county may also incur indebtedness pursuant to this chapter for seismic strengthening of unreinforced buildings and other buildings. Proceeds of bonds authorized pursuant to this section may be used to make loans to public entities or owners of private buildings. Loans shall satisfy all of the following:
  (1) Any loan used to finance seismic strengthening of a residential structure containing units rented by households specified in Section 50079.5 of the Health and Safety Code before strengthening shall be subject to a regulatory agreement which will ensure that the number of those units in the structure will not be reduced and will remain available at affordable rents pursuant to Section 50053 of the Health and Safety Code as long as any portion of the loan is unpaid.
  (2) All seismic strengthening financed with any loan funded pursuant to this section shall be in accordance with a plan developed for the structure by a registered civil engineer or a licensed architect, or approved by a city or city and county building official, one of whom shall certify that the work funded is necessary for seismic safety reasons, or is otherwise legally required for completion of the work or occupancy of the building. In no event shall any loan funded pursuant to this section finance the destruction of any existing building or the construction of any new building.
  (3) Any amount received in payment of interest on or to repay principal on any loan made pursuant to this section shall be used to pay debt service on bonds authorized pursuant to this section, or shall be used to fund additional loans for seismic strengthening, except that the provisions of this paragraph shall not apply after the bonds, including any bonds issued to refund the bonds, are fully repaid.
  (4) Loans made pursuant to this section shall constitute liens in favor of the city or city and county when recorded by the county recorder of the county in which the real property is located. The lien shall contain the legal description of the real property, the assessor's parcel number, and the name of the owner of record as shown on the latest equalized assessment roll.
  (5) The legislative body of the city or city and county may specify the interest rate, term, and other provisions of any loan made pursuant to this section.
  (6) A city or city and county may issue bonds and make loans pursuant to this section only if the city or city and county has completed an inventory of unreinforced masonry structures within its jurisdiction and has adopted a mitigation ordinance pursuant to Section 8875.2 or Section 19163 of the Health and Safety Code. The city or city and county shall establish criteria, terms, and conditions to identify eligible buildings.
  (b) The legislative body of the city or city and county is authorized to expend the proceeds of bonds authorized by this section to make loans pursuant to this section. The legislative body of a city or city and county shall declare in the bond proposition that loans made from bond proceeds pursuant to this section to owners of private buildings for seismic strengthening of unreinforced buildings or other buildings constitute a public purpose resulting in a public benefit. Loans made pursuant to this section shall not be construed to be gifts of public funds in violation of Section 6 of Article XVI of the California Constitution.
  (c) Work on qualified historical buildings or structures shall be done in accordance with the State Historical Building Code (Part 2.7 (commencing with Section 18950) of Division 13 of the Health and Safety Code).
  (d) The Legislature hereby declares that loans made from bond proceeds pursuant to this section to owners of private buildings for seismic strengthening of unreinforced buildings or other buildings constitute a public purpose resulting in a public benefit.

When a city planning commission and the legislative body approve a group of municipal improvements as constituting a city plan, the legislative body may submit a single bond proposition covering the entire group of improvements. The provisions of Title 7 of this code shall not apply to the formulation and approval of a city plan under this section.

Such a city plan may include land for public use, public buildings including auditoriums and stadiums, parks, streets, transportation facilities and other municipal improvements.

A city shall not incur an indebtedness for public improvements which exceeds in the aggregate 15 percent of the assessed value of all real and personal property of the city. Within the meaning of this section "indebtedness" means bonded indebtedness of the city payable from the proceeds of taxes levied upon taxable property in the city.

An indebtedness is incurred within the meaning of this article to the extent of the principal amount of bonds sold and delivered.

Proceedings are initiated when the city legislative body passes a resolution by a two-thirds vote of all its members determining that the public interest or necessity demands the acquisition, construction, or completion of any municipal improvement.

At any subsequent meeting, by a two-thirds vote of all its members, the legislative body may pass an ordinance ordering the submission of the proposition of incurring a bonded debt for the purpose set forth in said resolution to the qualified voters of the city at an election held for that purpose.

Propositions for more than one object or purpose may be submitted at the same election.

The ordinance shall recite:
  (a) The object and purpose of incurring the indebtedness.
  (b) The estimated cost of the public improvements.
  (c) The amount of the principal of the indebtedness.
  (d) The rate or maximum rate of interest on the indebtedness, which shall not exceed 8 percent, and need not be recited if it does not exceed 4 1/2 percent. Said interest shall be payable semiannually except that interest for the first year after the date of the bonds may be made payable at the end of said year.
  (e) The date of the election.
  (f) The manner of holding the election and the procedure for voting for or against the proposition.

The ordinance may provide that the estimated cost stated therein of the public improvements includes any or all of the following:
  (a) Legal or other fees incidental to or connected with the authorization, issuance and sale of the bonds.
  (b) The costs of printing the bonds and other costs and expenses incidental to or connected with the authorization, issuance and sale of the bonds.
  (c) If the public improvements are revenue-producing public works, bond interest estimated to accrue during the construction period and for a period of not to exceed 12 months after completion of construction. If such statement is made, the proceeds of the sale of the bonds may be used to pay such of the foregoing as are stated in the ordinance. This section shall not be construed to authorize a city to use the proceeds of the sale of bonds for a purpose for which it could not use its general fund.

The ordinance shall be published once a day for at least seven days in a newspaper published at least six days a week in the city, or once a week for two weeks in a newspaper published less than six days a week in the city. If there are no such newspapers, it shall be posted in three public places in the city for two succeeding weeks. No other notice need be given.

If an election called pursuant to this article is consolidated with any other election, the ordinance calling the bond election need not set forth the election precincts, polling places and officers of election but may provide that the precincts, polling places and officers of election shall be the same as those set forth in the ordinance, order, resolution or notice calling or providing for or listing or designating the precincts, polling places and election officers for the election with which the election called pursuant to this article is consolidated, and shall refer to such ordinance, order, resolution or notice by number and title or date of adoption, or by date or proposed date of publication and the name of the newspaper in which publication has been or will be made, or by any other definite description.

Except as otherwise provided in the ordinance, the election shall be conducted as other city elections.

If two-thirds of the electors voting on the proposition vote for it, the bonds may be issued.

When two or more propositions for incurring indebtedness are submitted at the same election, the votes cast for and against each proposition shall be counted separately.

If any proposition is defeated by the electors, the legislative body shall not call another election on a substantially similar proposition to be held within six months after the prior election. If a petition requesting submission of such a proposition, signed by 15 percent of the city electors as shown by the votes cast for all candidates for Governor at the last election, is filed with the legislative body, it may hold an election before the expiration of six months.

The legislative body shall prescribe the form of the bonds and interest coupons, and fix the date of the bonds.

The legislative body may divide the principal amount of any issue into two or more series and fix different dates for the bonds of each series. The bonds of one series may be made payable at different times from those of any other series. The maturity of each series shall comply with this article.

The legislative body shall fix, and designate in the bonds, a time and place for payment of the bonds. Except as provided in Section 43620 of the code, not less than one-fortieth of the principal amount of each issue or series of bonds with interest on all sums unpaid shall be paid every year.

The legislative body may fix a date, not more than two years from the date of issuance, for the earliest maturity of each issue or series of bonds and in the case of bonds issued for the acquisition, construction, or completion of revenue-producing public works may fix a date not more than 10 years from the date of issuance for the earliest maturity of each issue or series of bonds. Beginning with the date of the earliest maturity of each issue or series, not less than one-fortieth of the indebtedness of such issue or series shall be paid every year; provided, however, the bonds of any issue or series irrespective of the purpose for which the same are to be issued may be made to mature and become payable in approximately equal total annual installments of interest and principal, during the term of the bonds computed from the first year in which any part of the principal shall mature to the date of final maturity which annual installments may vary one from the other in amounts not exceeding in any year more than 5 percent of the total principal amount of the bonds of such issue or of the series thereof then proposed to be issued. The final maturity date shall not exceed 40 years from the time of incurring the indebtedness evidenced by each issue or series.

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.

The legislative body may provide for redemption of bonds before maturity at prices determined by it. A bond shall not be subject to call or redemption prior to maturity unless it contains a recital to that effect.

The bonds shall be issued in such denomination or denominations as the legislative body may prescribe.

The bonds shall be signed by the mayor, or such other officer as the legislative body authorizes by resolution adopted by a two-thirds vote of all its members, and the city treasurer. They shall be countersigned by the clerk or a deputy clerk.

The bond coupons shall be numbered consecutively and signed by the treasurer.

All signatures and countersignatures except that of the clerk or his deputy may be printed, lithographed, or engraved.

If any officer whose signature or countersignature appears on bonds or coupons ceases to be such officer before delivery of the bonds, his signature is as effective as if he had remained in office.

The bonds may be issued and sold as the legislative body determines, but for not less than par. Before selling the bonds, or any part thereof, the legislative body shall give notice inviting sealed bids in such manner as the legislative body may prescribe. If satisfactory bids are received, the bonds offered for sale shall be awarded to the highest responsible bidder. If no bids are received, or if the legislative body determines that the bids received are not satisfactory as to price or responsibility of the bidders, the legislative body may reject all bids received, if any, and either readvertise or sell the bonds at private sale.

All premiums and accrued interest received shall be placed in the fund to be used for the payment of principal of and interest on the bonds, and the remainder of the proceeds of the bonds shall be placed in the treasury to the credit of the proper improvement fund and applied exclusively to the purpose and object recited in the ordinance; provided, however, that when said purpose and object has been accomplished any moneys remaining in such improvement fund shall be transferred to the fund to be used for the payment of principal of and interest on the bonds. Further, when such purpose and object have been accomplished and all principal and interest on the bonds have been paid, any balance of money then remaining shall be transferred to the general fund.

The legislative body may provide for delivery of any bonds at places outside the city or State, and for receipt and transmittal of the purchase price in cash or bank credits in the form of certified Federal Reserve bank funds.

After three years after a bond election the legislative body may determine, by ordinance adopted by a two-thirds vote of all of its members, that no part of the bond issue remaining unsold shall be issued or sold. When the ordinance takes effect, the bonds remaining unsold and described in the ordinance become void.

When the legislative body determines by resolution that the expenditure of money raised by the sale of bonds for the purpose for which the bonds were voted is impracticable or unwise, it may call a special election to obtain the consent of the electors to use the money for some other specified municipal purpose. The procedure shall be the same as when the bond proposition was originally submitted.

At the time of making the general tax levy after incurring the bonded indebtedness, and annually thereafter until the bonds are paid or until there is a sum in the treasury set apart for that purpose sufficient to meet all payments of principal and interest on the bonds as they become due, the legislative body shall levy and collect a tax sufficient to pay the interest on the bonds and such part of the principal as will become due before the proceeds of a tax levied at the next general tax levy will be available.

If the earliest maturity of the bonds is more than one year after the date of issuance, the legislative body shall levy and collect annually a tax sufficient to pay the interest as it falls due and to constitute a sinking fund for payment of the principal on or before maturity.

These taxes shall be levied and collected as other city taxes, and in addition to all other taxes. They shall be used only for payment of the bonds and interest.

A city may undertake to perform the work directly on any municipal improvement for which bonds are issued pursuant to this article, purchasing the materials and hiring the labor without following the ordinary procedure in awarding contracts.

When the city and the United States jointly perform work on such municipal improvements, the city may turn over its portion of the cost to the United States for expenditure by it.

By resolution, the legislative body may require the treasurer to give additional bonds for the safe custody and care of the public funds.

When municipal improvements are being made pursuant to this article, the legislative body shall make all necessary regulations for carrying out and maintaining the improvements and appoint all necessary agents to look after the construction and operation of improvements. The board of public works shall perform these duties in cities having freeholders' charters providing for such a board. The legislative body may contract with a specially qualified person, firm or corporation to act as fiscal agent. Such contracts may authorize the fiscal agent to act as agent for any city officer or employee in the performance of any duty required to be performed, or in taking any action authorized to be taken in connection with bonds issued pursuant to this chapter.