Chapter 5. Creation Of Reserve Fund Pursuant To Agreement With The United States of California Water Code >> Division 15. >> Part 8. >> Chapter 5.

When there is an agreement between a district and the United States of America, or any department or agency thereof, which provides for the issuance of refunding bonds of the district aggregating in principal amount a sum less than the principal amount of the bonds to be refunded and for the creation of a reserve fund to pay installments of principal or interest of the refunding bonds when the amount in the bond fund is insufficient to pay the installments, and when the unpaid principal amount of the assessment securing the bonds to be refunded is, or upon the carrying out of the plan for refunding provided in the agreement will be, in excess of the principal amount of bonds secured by the assessment, the board may declare by resolution that all or part of the excess of the assessment shall be called from time to time for the purpose of creating a reserve fund.

The money in the reserve fund shall be used to pay the installments of principal and interest of any outstanding bonds secured by the assessment when the amount in the bond fund is insufficient to meet such installments on any January 1st or July 1st, as the case may be.

If the bond fund contains a sum derived from an assessment securing the bonds to be refunded pursuant to the agreement which is in excess of the amount required to pay all installments of principal and interest due or to become due within six months upon all outstanding bonds secured by the assessment, the board may by resolution direct that the excess, or such part thereof as they deem advisable, be set apart for the purpose of creating a reserve fund.

The county treasurer shall call such part of the principal of the assessment securing the refunding bonds, not exceeding the amount by which the unpaid principal amount of the assessment exceeds the principal amount of bonds secured thereby, as is necessary to restore the amount of depletion of the reserve fund caused by authorized payments therefrom.

The call shall be made at the time prescribed by Section 51420 for making the next call for the payment of principal or interest of the bonds after the reserve fund has been depleted.

The board may direct that the restoration of the reserve fund be effected over a period not exceeding three years next after the reserve fund was depleted, in which case not less than one-third of the amount of the depletion shall be restored during each of the three years.

No call for the purpose of creating a reserve fund shall be made until the United States, or department or agency thereof, has accepted 50 percent or more of the refunding bonds proposed to be issued under the plan.

The county treasurer may invest any money in the reserve fund in bonds of the United States or of the State of California, and bonds so purchased and held in the reserve fund may be sold by the county treasurer and the proceeds temporarily reinvested in such bonds.

Sales of bonds of the United States or of the State of California purchased with reserve fund money shall be made by the county treasurer in sufficient time that the proceeds may be applied to the purposes for which the reserve fund was created.

The board of a district which has entered into an agreement pursuant to Section 52850, may, by resolution, direct that any money on deposit in the county treasury to the credit of any bond fund or bond reserve fund of the district, which was derived from an assessment against district lands securing said bonds and which is in excess of the amount required to pay principal and interest then due or to become due within six months thereafter upon bonds secured by the assessment, be applied to either or both of the following purposes:
  (a) The purchase of bonds secured by the assessment.
  (b) Deposit with the Federal Reserve Bank in San Francisco, California, subject to withdrawal therefrom only upon written orders of the district and the United States of America, or the department or agency thereof, including Reconstruction Finance Corporation, interested in the creation and maintenance of the fund, or by the district with the written consent of the United States of America, or the department or agency thereof, including Reconstruction Finance Corporation, interested in the creation and maintenance of the reserve fund.

The county treasurer shall forthwith cancel all bonds purchased pursuant to subsection (a) of Section 52859.

No purchase of bonds shall be made pursuant to subdivision (a) of Section 52859 unless the unpaid principal amount of the assessment securing such bonds is in excess of the principal amount of outstanding and authorized bonds secured by such assessment.

No funds deposited pursuant to subdivision (b) of Section 52859 may be withdrawn except to pay the principal or interests upon any bonds of the district held by Reconstruction Finance Corporation, or its successors in interest, or for repayment to the treasurer of the district for the purposes and uses of the district.