Chapter 6. Bonds of California Water Code >> Division 17. >> Part 1. >> Chapter 6.

After the approval and adoption of an engineer's report and before ordering the engineer to prepare precise plans and specifications as provided in Chapter 5, the district board may submit to the voters of the district the proposition of incurring a bonded indebtedness to obtain funds with which to acquire the property and to do the work in whole or in part set forth in the report. For that purpose a special election shall be called by resolution.

The resolution shall state all of the following:
  (a) The general objects and purposes for which it is proposed to incur an indebtedness.
  (b) A reference to the report filed with the district board for particulars.
  (c) The amount of the bonds proposed to be issued; provided, that the district shall not incur any indebtedness which exceeds fifteen percent (15%) of the assessed value of all taxable real property in the district.
  (d) The number of years not to exceed which the whole of the bonds are to run.
  (e) The rate of interest or a maximum rate of interest to be paid, which rate shall not be more than the rate specified in this chapter, payable at the time specified in this chapter.
  (f) The date of the election.
  (g) The election precincts, polling places, and election officers.

For the purposes of the bond election the district board may consolidate into one precinct several precincts established for general election purposes and describe the precinct by reference to the general election precincts.

An election board consisting of one inspector, one judge, and one clerk shall be appointed by the district board for each precinct.

Only voters registered in the district are eligible to vote at the bond election.

The resolution calling the election shall be published pursuant to Section 6063 of the Government Code in a newspaper having a general circulation in the district and designated by the district board. No other notice of the election need be given.

If two-thirds of the votes cast are in favor of incurring the bonded indebtedness as proposed, bonds of the district for the amount stated in the resolution calling the election shall be issued and sold.

The validity of the bonds after their issuance shall not be questioned in any court except upon the ground that the provisions of this chapter authorizing their issuance are unconstitutional, or that the required hearing regarding the formation of the district was not legally held or proper notice of it was not given.

The district board shall prescribe by resolution the form of the bonds, and interest coupons. The bonds shall be payable at such times and at a place to be fixed by the board, and designated in the bonds, together with interest on all sums unpaid on that date until the whole of the indebtedness has been paid. The term of bonds issued shall not exceed 40 years. The district board 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 term of bonds of each issue or series shall not exceed 40 years from the date of the bonds.

The bonds shall be issued in such denominations as the district board determines, except that no bonds shall be of a denomination less than one hundred dollars ($100) or greater than one thousand dollars ($1,000). They shall be payable on the day and at the place fixed in the bonds, and with interest at the rate specified in the bonds, which rate shall not be in excess of 8 percent per annum, and shall, after the first year, be payable semiannually.

The bonds shall be signed by the chairman of the district board, and countersigned by the auditor of the district, and the seal of the district board shall be affixed. The interest coupons of the bonds shall be numbered consecutively and signed by the auditor of the district. All such signatures and countersignatures may be printed, lithographed, engraved, or otherwise mechanically reproduced, except that one of said signatures or countersignatures to said bonds shall be manually affixed. The auditor of the district under this section shall be the county auditor of the county in which the district is formed.

If any officer whose signature or countersignature appears on the bonds ceases to be an officer before the delivery of the bonds to the purchaser, his signature or countersignature shall be as valid as if he had remained in office until the delivery of the bonds.

The board may issue and sell the bonds of the district at not less than par value, and the proceeds shall be placed in the treasury of the county. Before selling the bonds, or any part thereof, the legislative body shall give notice not less than 10 days prior to the date of sale by publication pursuant to Section 6061 of the Government Code in a newspaper of general circulation circulating in the district inviting sealed bids in such manner as the legislative body shall 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 paid into the fund to be used for the payment of principal and interest on the bonds and the remainder of the proceeds of the sale shall be paid into the construction fund of the district, and proper records of the transactions shall be placed upon the books of the treasurer.

The construction fund shall be applied exclusively to the purposes and objects mentioned in the resolution calling the bond election. Payments from the construction fund shall be made upon the demands allowed by the district board, and prepared, presented and audited in the same manner as demands upon the funds of the county.

When the purposes and objects mentioned in the resolution calling the bond election have been accomplished, any moneys remaining in the construction fund shall be transferred to the fund to be used for the payment of principal and interest on the bonds.

If the proposition of issuing bonds submitted at a bond election fails to receive the requisite number of votes, the district board may, at the expiration of six months after that election, call or order another bond election, either for the same objects and purposes, or for any other object or purpose of the district.

If bonds have been issued by the district and the proceeds of the sale have been expended, and the district board by resolution passed by a vote of four-fifths of all its members determines that the public interest or necessity of the district demands the issuance of additional bonds for carrying out any of the objects of the district, the district board may again have a report made, and submit to the voters the question of issuing additional bonds in the same manner as for a first issue. All the provisions of this chapter for the issuance and sale of bonds, and for the expenditure of the proceeds, apply to the issuance of additional bonds.

Bonds and the interest thereon shall be paid by revenue derived from an annual tax upon the real property in the district, and all the real property in the district shall be and remain liable to be taxed for such payments. Said bonds and the interest thereon shall not be taxable in this State.

(1) An issue of bonds is hereby defined to be the aggregate principal amount of all of the bonds authorized to be issued in accordance with a proposal submitted to and approved by the electors of the district, but no indebtedness will be deemed to have been contracted until bonds shall have been sold and delivered and then only to the extent of the principal amount of bonds so sold and delivered.
  (2) The board of directors of any district issuing any bonds heretofore or hereafter authorized may, in its discretion, divide the aggregate principal amount of such issue into two or more divisions or series and fix different dates for the bonds of each separate division or series. In the event any authorized issue is divided into two or more divisions or series, the bonds of each division or series may be made payable at such time or times as may be fixed by the legislative body of the district separate and distinct from the time or times of payment of bonds of any other division or series of the same issue.

Bonds may be made payable on a date subsequent to the time fixed for the collection of the second installment of general district taxes with which the first levy of taxes for the payment of the principal and interest of said bonds is to be collected. In such event, the first interest coupons shall be for interest from the date of said bonds of such issue or series or division to the maturity date of said coupons.

If the result of any election upon the question of the issuance of bonds is in favor of issuance, the board may, in its discretion, commence in the superior court of the county, a special proceeding to determine its right to issue the bonds and their validity, similar to the proceeding in relation to irrigation bonds, provided for by the "Irrigation District Law," and all supplementary acts, and all their provisions apply to and govern the proceedings to be commenced by the board, so far as applicable. The judgment has the same effect as a judgment in relation to irrigation bonds under the provisions of that act.