Article 1. Authorization And Issuance Of General Obligation Bonds of California Public Utilities Code >> Division 10. >> Part 16. >> Chapter 6. >> Article 1.

Whenever the board deems it necessary for the district to incur a bonded indebtedness for the acquisition or improvement of real property authorized by this part or necessary or convenient for the carrying out of the powers of the district, the board shall, by ordinance, adopted by a vote of two-thirds of all members of the board, so declare and call an election to be held in the district for the purpose of submitting to the qualified voters thereof the proposition of incurring indebtedness by the issuance of bonds of the district, provided the total amount of bonds issued and outstanding pursuant to this article shall not exceed 15 percent of the assessed value of the taxable property of the district as shown by the last equalized assessment roll of the counties within the district. The ordinance shall state:
  (a) The purposes for which the proposed debt is to be incurred, which may include all costs and estimated costs incidental to or connected with the accomplishment of those purposes, including, without limitation, engineering, inspection, legal, fiscal agents, financial consultant, and other fees; bond and other reserve funds; working capital; bond interest estimated to accrue during the construction period and for a period not to exceed three years thereafter; and expenses of all proceedings for the authorization, issuance, and sale of the bonds.
  (b) The estimated cost of accomplishing those purposes.
  (c) The amount of the principal of the indebtedness.
  (d) The maximum term the bonds proposed to be issued shall run before maturity, which shall not exceed 50 years from the date thereof or the date of each series thereof.
  (e) The maximum rate of interest to be paid, which shall not exceed 7 percent per annum.
  (f) The proposition to be submitted to the voters, which may include one or more purposes.
  (g) The date of the election.
  (h) The manner of holding the election and the procedure for voting for or against the measure.
  (i) The ordinance may also contain any other matters authorized by this part or any other law.

Notice of holding of the election shall be given by publishing, pursuant to Section 6066 of the Government Code, the ordinance calling the election in at least one newspaper published in the district. No other notice of the election need be given. Except as otherwise provided in the ordinance, the election shall be conducted as other district elections.

If any proposition is defeated by the electors, the board 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 this type of a proposition, signed by 15 percent of the district electors, as shown by the votes cast for all candidates for governor within the district at the last gubernatorial election, is filed with the board, the board may call an election before the expiration of six months.

If two-thirds of the electors voting on the proposition vote for it, then the board may, by resolution, at the time or times it deems proper, issue bonds of the district for the whole or any part of the amount of the indebtedness so authorized and may from time to time, by resolution, provide for the issuance of any necessary amounts, until the full amount of the bonds authorized shall have been issued. The full amount of bonds may be divided into two or more series and different dates and different dates of payment fixed for the bonds of each series. A bond need not mature on an anniversary of its date. The maximum term the bonds of any series shall run before maturity shall not exceed 50 years from the date of each series respectively. In the resolution or resolutions, the board shall prescribe the form of the bonds (including, without limitation, registered bonds and coupon bonds) and the form of any coupons to be attached thereto, the registration, conversion, and exchange privileges, if any, pertaining thereto, and fix the time when the whole or any part of the principal shall become due and payable.

The bonds shall bear interest at a rate or rates not exceeding 7 percent per annum, payable semiannually, except that the first interest payable on the bonds or any series thereof may be for any period not exceeding one year as determined by the board. In the resolution or resolutions providing for the issuance of the bonds, the board may also provide for call and redemption of the bonds prior to maturity at the times and prices and upon any other terms it may specify, but no bond shall be subject to call or redemption prior to maturity unless it contains a recital to that effect or unless a statement to that effect is printed thereon. The denomination or denominations of the bonds shall be stated in the resolution providing for their issuance, but shall not be less than one thousand dollars ($1,000). The principal of and interest on the bonds shall be payable in lawful money of the United States at the office of the treasurer of the district or at any other place or places that may be designated, or at either place or places at the option of the holders of the bonds. The bonds, or series thereof, shall be dated and numbered consecutively and shall be signed by the chairperson of the board and the treasurer, countersigned by the secretary and the official seal of the district attached. The interest coupons of the bonds shall be signed by the treasurer. All signatures, countersignatures, and seal may be printed, lithographed, or mechanically reproduced, except that one of the signatures or countersignatures on the bonds shall be manually affixed. If any officer whose signature or countersignature appears on bonds or coupons ceases to be an officer before the delivery of the bonds, his or her signature is as effective as if he or she had remained in office.

The bonds may be sold as the board determines by resolution but for not less than par. Before selling the bonds or any part thereof, the board shall give notice inviting sealed bids in a manner as it 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 board determines that the bids received are not satisfactory as to price or responsibility of the bidders, the board may reject all bids received, if any, and either readvertise or sell the bonds at private sale.

Delivery of any bonds may be made at any place either inside or outside the state, and the purchase price may be received in cash or bank credits.

All accrued interest and premiums received on the sale of bonds 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 purposes for which the debt was incurred; provided, however, that when those purposes have been accomplished any moneys remaining in the improvement fund (a) shall be transferred to the fund to be used for the payment of principal of and interest on the bonds, or (b) shall be placed in a fund to be used for the purchase of outstanding bonds of the district from time to time in the open market at the prices and in the manner, either at public or private sale or otherwise, as the board may determine. Bonds so purchased shall be canceled immediately.

After the expiration of three years after a bond election the board may determine, by ordinance adopted by a vote of two-thirds of all the members of the board, that any or all of the bonds authorized at the election remaining unsold shall not be issued or sold. When the ordinance takes effect, the authorization to issue these bonds shall become void.

Whenever the board deems that the expenditure of money for the purposes for which the bonds were authorized by the voters is impractical or unwise, it may, by ordinance adopted by a vote of two-thirds of all members of the board, so declare and call an election to be held in the district for the purpose of submitting to the qualified voters thereof the proposition of incurring indebtedness by the issuance of these bonds for some other purposes or, in the case where bonds have been sold, the proposition to use the proceeds for some other purposes. The procedure, so far as applicable, shall be the same as when a bond proposition is originally submitted.

The board may provide for the issuance, sale, or exchange of refunding bonds to redeem or retire any bonds issued by the district upon the terms, at the times, and in the manner which it determines. Refunding bonds may be issued in a principal amount sufficient to pay all or any part of the principal of the outstanding bonds, the interest thereon, and the premiums, if any, due upon call and redemption thereof prior to maturity and all expenses of the refunding. The provisions of this article for issuance and sale of bonds apply to the issuance and sale of the refunding bonds, except that (a) no election need be called or held for the purpose of authorizing the issuance of refunding bonds, and (b) when refunding bonds are to be exchanged for outstanding bonds, the method of exchange shall be determined by the board.

The provisions of Article 4 (commencing with Section 53500) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code are applicable to the district.

Any bonds that are issued under the provisions of this article shall be legal investment for all trust funds; for the funds of insurance companies, banks, both commercial and savings, and trust companies; and for state school funds. Whenever any money or funds may, by any law now or hereafter enacted, be invested in bonds of cities, cities and counties, counties, school districts, or other districts within the state, the money or funds may be invested in the bonds issued under this part. Whenever bonds of cities, cities and counties, counties, school districts, or other districts within this state may, by any law now or hereafter enacted, be used as security for the performance of any act or the deposit of any public moneys, the bonds issued under this part may be so used. The provisions of this article shall be in addition to all other laws relating to legal investments and shall be controlling as the latest expression of the Legislature with respect thereto.

The board may enter into any covenants deemed proper to provide for issuance of additional parity bonds and the priority and pledge of special taxes; and any other covenants that are customary or desirable in the issuance of any bonds payable out of special funds or that are necessary, convenient, or desirable to secure the bonds or tending to make them more marketable, subject to the provisions of the ordinance calling the bond election.