2005 California Government Code Sections 50665.1-50670.4 Article 4. Limited Obligation Bonds

50665.1.  As used in this article:
   (a) "Local agency" means any county, city, or city and county,
including a chartered city, or special district, including a school
district.
   (b) "Legislative body" means the city council in the case of a
city, and the board of supervisors in the case of a county.
   (c) "Revenues" means the funds received by a local agency from any
source or combination of sources, which a local agency is not
precluded by any other provision of law from using for the purposes
of this article.  "Revenues" include the proceeds of ad valorem taxes
on real property levied by, or allocated to, the local agency, and
the proceeds of sales and use taxes.
   (d) "Pledged revenue" means a specified annual dollar amount from
a specified source or combination of sources of revenue, which the
legislative body of a local agency, in a resolution providing for the
issuance of limited obligation bonds, has designated and pledged as
security for the bonds in accordance with Section 50665.7.
   (e) "Limited obligation bonds" are bonds issued by a local agency
which are to be paid solely from pledged revenue.
   (f) "Initiating resolution" means a resolution by which a
legislative body determines that public interest or necessity demands
the issuance of bonds.
   (g) "Resolution" means a resolution by which a legislative body
authorizes the issuance, sale, and delivery of bonds.
50665.2.  Limited obligation bonds may be issued for the
acquisition, installation, construction, or improving of any or all
public works or improvements which the local agency is otherwise
authorized to acquire, install, construct, or improve, and for the
acquisition of lands and easements therefor.
50665.3.  In determining the amount of bonds to be issued, the
legislative body may include:
   (a) All costs and estimated costs incidental to or connected with
the acquisition, construction, improving, or financing of the public
works or improvements.
   (b) All engineering, inspection, legal, and fiscal agent's fees,
all costs of the bond election and of the issuance of limited
obligation bonds, all bond reserve funds, and all bond interest
estimated to accrue during the construction period and for a period
determined by the legislative body after completion of construction.
50665.4.  Proceedings are initiated when the legislative body passes
an initiating resolution by a majority vote of all its members.
50665.5.  For all local agencies, the initiating resolution shall
recite each of the following:
   (a) That the initiating resolution is being adopted pursuant to
the powers granted by this article.
   (b) The object and purpose of incurring the indebtedness.
   (c) The estimated cost of the public improvements.
   (d) The maximum amount of the indebtedness.
   (e) A maximum rate of interest on the indebtedness.
   (f) A pledge by the local agency that any bonds issued pursuant to
the initiating resolution shall be secured by all or part of the
revenues received by the local agency.
   (g) The date of the election.
   (h) The manner of holding the election and the procedure for
voting for or against the proposition.
50665.6.  The initiating resolution shall be published once in a
newspaper of general circulation in the local agency.  If there is no
such newspaper, it shall be posted in a public place within the
jurisdiction of the local agency.
50665.7.  The bonds and the resolution providing for their issuance
shall state that the bonds are limited obligation bonds payable
solely from revenues of the local agency pledged for that purpose.
   In addition, the resolution of the legislative body providing for
the issuance of limited obligation bonds shall specify the amount and
source of revenue pledged therefor.  The pledged revenue shall be
sufficient to pay the following amounts annually, as they become due
and payable:
   (a) The interest on and the principal on the bonds.
   (b) All payments required for compliance with the resolution
authorizing issuance of the bonds or any other contract with the
bondholders, including the creation of a sinking fund and reserve
funds.
   (c) All payments to meet any other obligations of the local agency
which are charges, liens, or encumbrances on the pledged revenue.
50665.8.  The proposition for incurring a bonded debt shall be
submitted to the qualified voters of the local agency at an election
held for that purpose.  The election may be consolidated with any
other election of the local agency.
50665.9.  A proposition to be submitted to the voters of a local
agency for approval of the issuance of limited obligation bonds shall
state that the bonds are limited obligation bonds to be paid solely
from pledged revenue, and shall specify the source and amount of the
pledged revenue.
50665.10.  Except as otherwise provided in the initiating
resolution, any election required under this article shall be
conducted as other elections of the local agency.
50665.11.  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.
50665.12.  If two-thirds of the voters voting on a proposition
initiated pursuant to this article vote for it, the legislative body
may, by majority vote, adopt a resolution approving the issuance,
sale, and delivery of the bonds.
50665.13.  The bonds shall bear interest at a rate or rates not
exceeding the maximum rate authorized by Section 53531, may be
payable at the time or times, may be in one or more series, may bear
a date or dates, may mature at a time or times not exceeding 31 years
from their respective dates, may be payable in the medium of payment
at a place or places, may carry the registration privileges, may be
subject to the terms of redemption at the premiums, may be executed
in a manner, may contain those terms, covenants and conditions, and
may be in the form, either coupon or registered, as the resolution
authorizing the bonds may provide.  The bonds may be sold at public
or private sale in the manner and upon the terms as may be provided
in the resolution.  Pending the preparation of definitive bonds,
interim receipts or certificates, in the form and with those
provisions as may be provided in the resolution, may be issued to the
purchaser or purchasers of bonds sold pursuant to this article.  The
bonds and interim receipts or certificates shall be deemed to be
securities and negotiable instruments within the meaning and for all
purposes of the Uniform Commercial Code of this state, subject to the
provisions for registration thereof contained in the resolution.
   Prior to approving the sale of bonds at a private sale, the
legislative body of the issuing entity shall retain an investment
firm which has had no prior underwriting relationship with the
issuing entity on a similar bond issue within the previous three
years to analyze the terms and conditions of the proposed bond issue.
  The bonds shall be sold at private sale only if the investment firm
determines and reports to the legislative body that it has found the
following to be true:
   (a) The underwriter's price differential is reasonable.
   (b) The final negotiated offering is consistent with common
practices in the industry and is comparable to other bond offerings
of a comparable amount that have been offered within the previous six
months.
50665.14.  The bonds are special obligations of the local agency and
shall be a charge against and are secured by a lien upon and shall
be payable, as to the principal thereof and interest thereon, and any
premiums upon the redemption thereof, from the revenues and such
funds as are described in the resolution authorizing the issuance of
the bonds.  If funds and revenues described in the authorizing
resolution are insufficient for the payment of interest and principal
on the bonds, the local agency, at its discretion, may make such
payments from any other funds or revenues that may be legally applied
to their payment.
50666.  By resolution, the legislative body may pledge, place a
charge upon, and assign all or any part of the revenues for the
security of the bonds.
50666.1.  The payment of interest on and principal of the bonds and
any premiums upon the redemption of any thereof are secured by an
exclusive pledge, charge, and lien upon all of the revenues.
50666.2.  The revenues and any interest earned on the revenues
constitute a trust fund for the security and payment of the interest
on and principal of the bonds.
50666.3.  So long as any bonds or interest thereon are unpaid
following their maturity, the revenues and interest thereon shall not
be used for any other purpose.
50666.4.  If the interest and principal of the bonds and all charges
to protect or secure them are paid when due, an amount or amounts
for other purposes may be apportioned from the revenues.
50666.5.  Bonds of the same issue shall be equally secured by a
pledge, charge, and lien upon the revenues specified in the
resolution authorizing the issuance of the bonds, without priority
for number, date of bonds, of sale, of execution, or of delivery
pursuant to this article and the resolution authorizing the issuance
of the bonds; except that any local agency may authorize the issuance
of bonds of different series and may provide that the bonds in any
series shall, to the extent and in the manner prescribed in the
resolution, be subordinated and be junior in standing, with respect
to the payment of principal and interest and the security thereof, to
such other bonds as may be specified in the resolution.
50666.6.  The general fund of a local agency is not liable for the
payment of the bonds or their interest.
50666.7.  The general credit or taxing power of the local agency,
other than the revenues pledged, is not liable for the payment of the
bonds or their interest.
50666.8.  The holder of the bonds shall not compel the exercise of
the taxing power by the local agency, other than the revenues
pledged, or the forfeiture of its property.
50666.9.  The principal of, and interest on, the bonds and any
premiums upon the redemption of any thereof are not a debt of the
local agency, nor a legal or equitable pledge, charge, lien, or
encumbrance, upon any of its property, or upon any of its income,
receipts, or revenues except the revenues that have been pledged to
their payment.
50667.  Every bond shall recite in substance that the principal of,
and interest on, the bond are payable solely from the revenues
pledged to the payment of the principal and interest and that the
local agency is not obligated to pay the principal or interest except
from the pledged revenues.
50667.1.  The bonds and, any interest on, or income from, the bonds
are exempt from taxation in this state, except from bank and
corporation franchise, gift, inheritance, and estate taxes.
50667.2.  In the resolution authorizing the bonds, the legislative
body may insert any of the provisions authorized by this article,
which shall become a part of the contract with the bondholders.
50667.3.  The legislative body may provide limitations on:
   (a) The purpose to which the proceeds of sale of any issue of
bonds may be applied.
   (b) The issuance of additional bonds for the same purpose and on
the lien of additional bonds.
50667.4.  The legislative body may provide for events of default and
terms upon which the bonds may be declared due before maturity and
the terms upon which the declaration and its consequences may be
waived.
50667.5.  The legislative body may provide for the rights,
liabilities, powers, and duties arising upon the local agency's
breach of any covenants, conditions, or obligations.
50667.6.  The legislative body may provide for the vesting in a
trustee of the right to enforce covenants to secure payment of, or in
relation to, the bonds and the trustee's powers and duties, and the
limitation of his or her liabilities.
50667.7.  The legislative body may provide for the terms upon which
the bondholders or any percentage of the bondholders may enforce
covenants or duties imposed by this article.
50667.8.  The legislative body may provide in the resolution
authorizing issuance of the bonds for a procedure for amending or
abrogating the terms of the resolution with the consent of the
holders of a specified number of the bonds.
50667.9.  Any resolution containing a procedure specified in Section
50667.8 may also provide for meetings of bondholders or for their
written assent without a meeting and the manner of consenting, with
or without a meeting.
50668.  The resolution shall specifically state the effect of
amendment upon the rights of the holders of all of the bonds and
shall be binding upon the holders of all of the bonds issued pursuant
to the resolution.
50668.1.  The legislative body may provide for any other acts and
things necessary, convenient, or desirable to secure the bonds or
tending to make them more  marketable.
50668.2.  The local agency shall pay or cause to be paid the
principal and interest of the bonds on the date, at the place, and in
the manner mentioned in the bonds and in accordance with the
resolution authorizing their issuance.
50668.3.  A separate, distinct, and special fund shall be created at
or before the issuance of the bonds, which shall be maintained
continuously during the time that any of the bonds or the interest
thereon are outstanding and unpaid.
50668.4.  All pledged revenue shall be deposited in the special fund
and payments shall be made therefrom in the order specified in
subdivisions (a) to (c), inclusive, of Section 50665.7.
50668.5.  The local agency shall preserve and protect the security
of the bonds and the rights of the bondholders and shall warrant and
defend the rights of the bondholders against all claims and demands
of all persons.
50668.6.  In order to fully preserve and protect the priority and
security of the bonds the local agency shall pay and discharge all
lawful claims for labor, materials, and supplies, which if unpaid may
become a lien or charge upon the revenues prior or superior to the
lien of the bonds or impair the security of the bonds.
50668.7.  The local agency shall hold in trust the revenues pledged
to the payment of the principal of and interest on the bonds for the
benefit of the bondholders and shall apply the same pursuant to the
resolution authorizing the issuance of the bonds or to the resolution
as modified.
50668.8.  The local agency may invest funds held in reserve, or in
any sinking fund, or funds not required for immediate disbursement,
in property or securities in which the local agency may legally
invest funds subject to its control.  No such investment shall be
made in contravention of any covenant or agreement in any resolution
authorizing the issuance of any outstanding bonds.
50668.9.  The local agency shall keep proper books of record and
accounts of the revenues, separate from all other records and
accounts, in which complete and correct entries shall be made of all
transactions relating to the revenues.
50669.  At all times, the books shall be subject to the inspection
of the holders of not less than 10 percent of the outstanding bonds
or their representatives authorized in writing.
50669.1.  The local agency shall cause to be published a summary
statement showing the amount of revenues collected which are required
as security for payment of the principal of and interest on the
bonds, the disbursements from such revenues in reasonable detail, and
a general financial statement.
50669.2.  The statement shall be published annually, not more than
120 days after the close of each fiscal year.  The local agency shall
furnish a copy of the statement to any bondholder upon request.
50669.3.  In the resolution authorizing the bonds, the local agency
may agree that the statement shall be prepared or audited by an
independent certified public accountant and shall be in the form and
contain the detail specified in the resolution.
50669.4.  The duties set forth in this article do not require the
local agency to expend any funds other than revenues pledged to
secure payment of the principal of or interest on bonds as provided
in this article.
50669.5.  A fiscal or paying agent may be appointed as now, or
hereafter, provided in Article 7 (commencing with Section 54550) of
Chapter 6 of Division 2 of Title 5.
50669.6.  A validating proceeding may be conducted as now, or
hereafter, provided in Chapter 9 (commencing with Section 860) of
Title 10 of Part 2 of the Code of Civil Procedure.
50669.7.  Bondholders shall have the remedies as now, or hereafter,
provided in Article 10 (commencing with Section 54640) of Chapter 6
of Division 2 of Title 5.
50669.8.  The bonds may be refunded in the manner now, or hereafter,
provided in Article 11 (commencing with Section 54660) of Chapter 6
of Division 2 of Title 5.
50670.  All bonds issued in pursuance of the provisions of this
article shall by their issuance be conclusive evidence of the
regularity, validity, and legal sufficiency of all proceedings, acts,
and determinations in any wise pertaining thereto, had or made
hereunder.
50670.1.  Any action, suit, or proceeding of any kind or nature in
which the validity of any of the proceedings taken under the
provisions of this article is questioned or attacked, shall be filed
within 30 days after the day of the adoption of the resolution
providing for the issuance of the bonds and in case such action is
not brought raising such issue within that period, then thereafter
all persons whatsoever shall be barred in any action, suit, or
proceeding from pleading, asserting, or claiming that any of the
proceedings or other actions herein  specified, were defective,
faulty, or invalid in any respect.
50670.3.  This article provides an alternative authority and
procedure for the subject to which it relates but does not affect any
other law relating to the same or a similar subject.  When
proceeding under this article, its provisions only need be followed.
50670.4.  This article and all of its provisions shall be liberally
construed to the end that the purposes of this article may be
effective.  If any section, subdivision, sentence, clause, or phrase
of this article is for any reason held to be unconstitutional, that
decision shall not affect the validity of the remaining portion of
this article.  It is hereby declared that this article would have
been passed irrespective of the fact that any one or more sections,
subdivisions, sentences, clauses, or phrases be declared
unconstitutional.