2005 California Government Code Sections 6584-6599.3 Article 4. Local Bond Pooling

6584.  This article shall be known and may be cited as the
Marks-Roos Local Bond Pooling Act of 1985.
6584.5.  The Legislature finds and declares all of the following:
   (a) That there is a critical need within the state to expand,
upgrade, and otherwise improve the public capital facilities of local
government necessary to support the rehabilitation and construction
of residential and economic development.  The needs of local
government for financing these facilities greatly exceed the amount
of funds available from existing state, local, and federal sources.
   (b) That it is the intent of the Legislature to assist in the
reduction of local borrowing costs, help accelerate the construction,
repair, and maintenance of public capital improvements, and promote
greater use of existing and new financial instruments and mechanisms,
such as bond pooling by local agencies.
   (c) That it is not lawful under this article for an authority or
any of its member agencies to charge fees to local agencies or
receive payments from the proceeds of the sale of bonds issued or
acquired by the authority, except for fees charged pursuant to
subdivision (o) of Section 6588 to recover the authority's costs of
issuance and administration.
6585.  The definitions in this section shall govern the construction
and interpretation of this article.
   (a) "Authority" means an entity created pursuant to Article 1
(commencing with Section 6500).  In the case of an authority issuing
bonds pursuant to this chapter in which VLF receivables, as defined
in subdivision (i), are pledged to the payment of the bonds, other
than VLF receivables so pledged for a county of the first class, an
authority shall consist of not less than 100 local agencies.
   (b) "Bond purchase agreement" means a contractual agreement
executed between the authority and the local agency whereby the
authority agrees to purchase bonds of the local agency.
   (c) "Bonds" means bonds (including, but not limited to, assessment
bonds, redevelopment agency bonds, government issued mortgage bonds,
and industrial development bonds), notes (including bond, revenue,
tax, or grant anticipation notes), commercial paper, floating rate,
and variable maturity securities, and any other evidences of
indebtedness and also includes certificates of participation or
lease-purchase agreements.
   (d) "Cost," as applied to a public capital improvement or portion
thereof financed under this part, means all or any part of the cost
of construction, renovation, and acquisition of all lands,
structures, real or personal property, rights, rights-of-way,
franchises, easements, and interests acquired or used for a public
capital improvement; the cost of demolishing or removing any
buildings or structures on land so acquired, including the cost of
acquiring any lands to which the buildings or structures may be
moved; the cost of all machinery and equipment; finance charges;
interest prior to, during, and for a period after, completion of that
construction, as determined by the authority; provisions for working
capital, reserves for principal and interest and for extensions,
enlargements, additions, replacements, renovations, and improvements;
the cost of architectural, engineering, financial and legal
services, plans, specifications, estimates, administrative expenses,
and other expenses necessary or incident to determining the
feasibility of constructing any project or incident to the
construction or acquisition or financing of any public capital
improvement.
   (e) "Legislative body" means the governing body of a local agency.
   (f) "Local agency" means a party to the agreement creating the
authority, or an agency or subdivision of that party, sponsoring a
project of public capital improvements, or any city, county, city and
county, authority, district, or public corporation of this state.
   (g) "Public capital improvements" means one or more projects
specified in Section 6546.
   (h) "Revenue" means all income and receipts of the authority from
a bond purchase agreement, bonds acquired by the authority, loans,
installment sale agreements, and other revenue-producing agreements
entered into by the authority, projects financed by the authority,
grants and other sources of income, VLF receivables purchased
pursuant to Section 6588.5, and all interest or other income from any
investment of any money in any fund or account established for the
payment of principal or interest or premiums on bonds.
   (i) "VLF receivable" means the right to payment of moneys due or
to become due to a local agency out of funds payable in connection
with vehicle license fees to a local agency pursuant to Section
10754.11 of the Revenue and Taxation Code.
   (j) "Working capital" means money to be used by, or on behalf of,
a local agency for any purpose for which a local agency may borrow
money pursuant to Section 53852, or for any purpose for which a VLF
receivable sold to an authority could have been used by the local
agency.
6586.  It is the Legislature's intent that this article be used to
assist local agencies in financing public capital improvements,
working capital, liability and other insurance needs, or projects
whenever there are significant public benefits for taking that
action.  For the purposes of this article, "significant public
benefits" means any of the following benefits to the citizens of the
local agency:
   (a) Demonstrable savings in effective interest rate, bond
preparation, bond underwriting, or bond issuance costs.
   (b) Significant reductions in effective user charges levied by a
local agency.
   (c) Employment benefits from undertaking the project in a timely
fashion.
   (d) More efficient delivery of local agency services to
residential and commercial development.
6586.5.  (a) Notwithstanding Section 6587, an authority, or any
entity acting on behalf of or for the benefit of an authority, may
not authorize bonds to construct, acquire, or finance a public
capital improvement except pursuant to Article 1 (commencing with
Section 6500), unless all of the following conditions are satisfied
with respect to each capital improvement to be constructed, acquired,
or financed:
   (1) The authority reasonably expects that the public capital
improvement is to be located within the geographic boundaries of one
or more local agencies of the authority that is not itself an
authority.
   (2) A local agency that is not itself an authority, within whose
boundaries the public capital improvement is to be located, has
approved the financing of the public capital improvement and made a
finding of significant public benefit in accordance with the criteria
specified in Section 6586 after a public hearing held by that local
agency within each county or city and county where the public capital
improvement is to be located after notice of the hearing is
published once at least five days prior to the hearing in a newspaper
of general circulation in each affected county or city and county.
If the public capital improvement to be financed will provide
infrastructure, services, or a golf course to support, or in
conjunction with, any development project, the local agency for
purposes of this subdivision shall be the city, county, or city and
county with land use jurisdiction over the development project.
   (3) A notice is sent by certified mail at least five business days
prior to the hearing held pursuant to paragraph (2) to the Attorney
General and to the California Debt and Investment Advisory
Commission.  This notice shall contain all of the following
information:
   (A) The date, time, and exact location of the hearing.
   (B) The name and telephone number of the contact person.
   (C) The name of the joint powers authority.
   (D) The names of all members of the joint powers authority.
   (E) The name, address, and telephone number of the bond counsel.
   (F) The name, address, and telephone number of the underwriter.
   (G) The name, address, and telephone number of the financial
adviser, if any.
   (H) The name, address, and telephone number of the legal counsel
of the authority.
   (I) The prospective location of the public capital improvement
described by its street address, including city, county, and ZIP
Code, or, if none, by a general description designed to inform
readers of its specific location, including both the county and the
ZIP Code that covers the specific location.
   (J) A general functional description of the type and use of the
public capital improvement to be financed.
   (K) The maximum aggregate face amount of obligations to be issued
with respect to the public capital improvement.
   (b) Paragraph (3) of subdivision (a) does not apply to bonds:
   (1) Issued pursuant to the Community Redevelopment Law, Part 1
(commencing with Section 33000) of Division 24 of the Health and
Safety Code.
   (2) To finance transportation facilities and vehicles.
   (3) To finance a facility that is located within the boundaries of
an authority, provided that the authority that issues those bonds
consists of any of the following:
   (A) Local agencies with overlapping boundaries.
   (B) A county and a local agency or local agencies located entirely
within that county.
   (C) A city and a local agency or local agencies located entirely
within that city.
   (4) To finance a facility for which an authority has received an
allocation from the California Debt Limit Allocation Committee.
   (5) Of an authority that consists of no less than 100 local
agencies and the agreement that established that authority requires
the governing body of the local agency that is a member of the
authority in whose jurisdiction the facility will be located to
approve the facility and the issuance of the bonds.
   (c) This section and Section 6586.7 do not apply to bonds issued
for any of the following purposes:
   (1) To finance the undergrounding of utility and communication
lines.
   (2) To finance, consistent with the provisions of this chapter,
facilities for the generation or transmission of electrical energy
for public or private uses and all rights, properties, and
improvements necessary therefor, including fuel and water facilities
and resources.
   (3) To finance facilities for the production, storage,
transmission, or treatment of water, recycled water, or wastewater.
   (4) To finance public school facilities.
   (5) To finance public highways located within the jurisdiction of
an authority that is authorized to exercise the powers specified in
Chapter 5 (commencing with Section 31100) of Division 17 of the
Streets and Highways Code, provided that the authority conducts the
noticed public hearing and makes the finding of significant public
benefit in accordance with this section.
   (d) For purposes of this section, a local agency does not include
a private entity.
6586.7.  (a) A copy of the resolution adopted by an authority
authorizing bonds or any issuance of bonds, or accepting the benefit
of any bonds or proceeds of bonds, except bonds issued or authorized
pursuant to Article 1 (commencing with Section 6500), or bonds issued
for the purposes specified in subdivision (c) of Section 6586.5,
shall be sent by certified mail to the Attorney General and the
California Debt and Investment Advisory Commission not later than
five days after adoption by the authority.
   (b) This section does not apply to bonds:
   (1) Specified in subdivision (c) of Section 6586.5.
   (2) Issued pursuant to the Community Redevelopment Law, Part 1
(commencing with Section 33000) of Division 24 of the Health and
Safety Code.
   (3) To finance transportation facilities and vehicles.
   (4) To finance a facility that is located within the boundaries of
an authority, provided that the authority that issues those bonds
consists of any of the following:
   (A) Local agencies with overlapping boundaries.
   (B) A county and a local agency or local agencies located entirely
within that county.
   (C) A city and a local agency or local agencies located entirely
within that city.
   (5) To finance a facility for which an authority has received an
allocation from the California Debt Limit Allocation Committee.
   (6) Of an authority that consists of no less than 250 local
agencies and the agreement that established that authority requires
the governing body of the local agency that is a member of the
authority in whose jurisdiction the facility will be located to
approve the facility and the issuance of the bonds.
6586.7.  (a) A copy of the resolution adopted by an authority
authorizing bonds or any issuance of bonds, or accepting the benefit
of any bonds or proceeds of bonds, except bonds issued or authorized
pursuant to Article 1 (commencing with Section 6500), or bonds issued
for the purposes specified in subdivision (c) of Section 6586.5,
shall be sent by certified mail to the Attorney General and the
California Debt and Investment Advisory Commission not later than
five days after adoption by the authority.
   (b) This section does not apply to bonds:
   (1) Specified in subdivision (c) of Section 6586.5.
   (2) Issued pursuant to the Community Redevelopment Law, Part 1
(commencing with Section 33000) of Division 24 of the Health and
Safety Code.
   (3) To finance transportation facilities and vehicles.
   (4) To finance a facility that is located within the boundaries of
an authority, provided that the authority that issues those bonds
consists of any of the following:
   (A) Local agencies with overlapping boundaries.
   (B) A county and a local agency or local agencies located entirely
within that county.
   (C) A city and a local agency or local agencies located entirely
within that city.
   (5) To finance a facility for which an authority has received an
allocation from the California Debt Limit Allocation Committee.
   (6) Of an authority that consists of no less than 100 local
agencies and the agreement that established that authority requires
the governing body of the local agency that is a member of the
authority in whose jurisdiction the facility will be located to
approve the facility and the issuance of the bonds.
6587.  This article does not limit any other law authorizing, or
providing for, the financing of public capital improvements.
Likewise, this  article does not limit any other law regarding local
indebtedness, or limit the exercise of any other power of an
authority created pursuant to this chapter. This article shall be
deemed to provide a complete and supplemental method for exercising
the powers authorized by this article, and shall be deemed as being
supplemental to the powers conferred by other applicable laws.  The
issuance of bonds, financing, or refinancing under this article need
not comply with the requirements of any other state laws applicable
to the issuance of bonds, including, but not limited to, other
articles of this chapter.
6588.  In addition to other powers specified in an agreement
pursuant to Article 1 (commencing with Section 6500) and Article 2
(commencing with Section 6540), the authority may do any or all of
the following:
   (a) Adopt bylaws for the regulation of its affairs and the conduct
of its business.
   (b) Sue and be sued in its own name.
   (c) Issue bonds, including, at the option of the authority, bonds
bearing interest, to pay the cost of any public capital improvement,
working capital, or liability or other insurance program.  In
addition, for any purpose for which an authority may execute and
deliver or cause to be executed and delivered certificates of
participation in a lease or installment sale agreement with any
public or private entity, the authority, at its option, may issue or
cause to be issued bonds, rather than certificates of participation,
and enter into a loan agreement with the public or private entity.
   (d) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this article.
   (e) As provided by applicable law, employ and compensate bond
counsel, financial consultants, and other advisers determined
necessary by the authority in connection with the issuance and sale
of any bonds.
   (f) Contract for engineering, architectural, accounting, or other
services determined necessary by the authority for the successful
development of a public capital improvement.
   (g) Pay the reasonable costs of consulting engineers, architects,
accountants, and construction, land-use, recreation, and
environmental experts employed by any sponsor or participant if the
authority determines those services are necessary for the successful
development of public capital improvements.
   (h) Take title to, and sell by installment sale or otherwise,
lands, structures, real or personal property, rights, rights-of-way,
franchises, easements, and other interests in lands that are located
within the state that the authority determines are necessary or
convenient for the financing of public capital improvements, or any
portion thereof.
   (i) Receive and accept from any source, loans, contributions, or
grants, in either money, property, labor, or other things of value,
for, or in aid of, the construction financing, or refinancing of
public capital improvement, or any portion thereof or for the
financing of working capital or insurance programs, or for the
payment of the principal of and interest on bonds if the proceeds of
those bonds are used for one or more of the purposes specified in
this section.
   (j) Make secured or unsecured loans to any local agency in
connection with the financing of capital improvement projects,
working capital or insurance programs in accordance with an agreement
between the authority and the local agency.  However, no loan shall
exceed the total cost of the public capital improvements, working
capital or insurance needs of the local agency as determined by the
local agency and by the authority.
   (k) Make secured or unsecured loans to any local agency in
accordance with an agreement between the authority and the local
agency to refinance indebtedness incurred by the local agency in
connection with public capital improvements undertaken and completed.
   (l) Mortgage all or any portion of its interest in public capital
improvements and the property on which any project is located,
whether owned or thereafter acquired, including the granting of a
security interest in any property, tangible or intangible.
   (m) Assign or pledge all or any portion of its interests in
mortgages, deeds of trust, indentures of mortgage or trust, or
similar instruments, notes, and security interests in property,
tangible or intangible, of a local agency to which the authority has
made loans, and the revenues therefrom, including payment or income
from any interest owned or held by the authority, for the benefit of
the holders of bonds issued to finance public capital improvements.
The pledge of moneys, revenues, accounts, contract rights, or rights
to payment of any kind made by or to the authority pursuant to the
authority granted in this part shall be valid and binding from the
time the pledge is made for the benefit of the pledgees and
successors thereto, against all parties irrespective of whether the
parties have notice of the claim.
   (n) Lease the public capital improvements being financed to a
local agency, upon terms and conditions that the authority deems
proper; charge and collect rents therefor; terminate any lease upon
the failure of the lessee to comply with any of the obligations of
the lease; include in any lease provisions that the lessee shall have
options to renew the lease for a period or periods, and at rents as
determined by the authority; purchase or sell by an installment
agreement or otherwise any or all of the public capital improvements;
or, upon payment of all the indebtedness incurred by the authority
for the financing or refinancing of the public capital improvements,
the authority may convey any or all of the project to the lessee or
lessees.
   (o) Charge and apportion to local agencies that benefit from its
services the administrative costs and expenses incurred in the
exercise of the powers authorized by this article.  These fees shall
be set at a rate sufficient to recover, but not exceed, the authority'
s costs of issuance and administration.  The fee charged to each
local obligation acquired by the pool shall not exceed that
obligation's proportionate share of those costs.  The level of these
fees shall be disclosed to the California Debt and Investment
Advisory Commission pursuant to Section 6599.1.
   (p) Issue, obtain, or aid in obtaining, from any department or
agency of the United States or of the state, or any private company,
any insurance or guarantee to, or for, the payment or repayment of
interest or principal, or both, or any part thereof, on any loan,
lease, or obligation or any instrument evidencing or securing the
same, made or entered into pursuant to this article.
   (q) Notwithstanding any other provision of this article, enter
into any agreement, contract, or any other instrument with respect to
any insurance or guarantee; accept payment in the manner and form as
provided therein in the event of default by a local agency; and
assign any insurance or guarantee that acts as security for the
authority's bonds.
   (r) Enter into any agreement or contract, execute any instrument,
and perform any act or thing necessary, convenient, or desirable to
carry out any power authorized by this article.
   (s) Invest any moneys held in reserve or sinking funds, or any
moneys not required for immediate use or disbursement, in obligations
that are authorized by law for the investment of trust funds.
   (t) At the request of affected local agencies, combine and pledge
revenues to public capital improvements for repayment of one or more
series of bonds issued pursuant to this article.
   (u) Delegate to any of its individual parties or other responsible
individuals the power to act on its behalf subject to its general
direction, guidelines, and oversight.
   (v) Purchase, with the proceeds of its bonds or its revenue, bonds
issued by any local agency at public or negotiated sale.  Bonds
purchased pursuant to this subdivision may be held by the authority
or sold to public or private purchasers at public or negotiated sale,
in whole or in part, separately or together with other bonds issued
by the authority.
   (w) Purchase, with the proceeds of its bonds or its revenue, VLF
receivables sold to the authority pursuant to Section 6588.5.  VLF
receivables so purchased may be pledged to the payment of bonds
issued by the authority or may be resold to public or private
purchasers at public or negotiated sale, in whole or in part,
separately or together with other VLF receivables purchased by the
authority.
   (x) Set any other terms and conditions on any purchase or sale
pursuant to this section as it deems by resolution to be necessary,
appropriate, and in the public interest, in furtherance of the
purposes of this article.
6588.5.  (a) An authority that was in existence at the time of the
enactment of this section may purchase, with the proceeds of its
bonds or its revenue, VLF receivables from one or more local
agencies.  The authority may pledge, assign, resell or otherwise
transfer or hypothecate any VLF receivables for the purpose of
securing bonds issued to finance the purchase price of the VLF
receivables.
   (b) Notwithstanding any other provision of law, local agencies may
sell VLF receivables to the authority, at one time or from time to
time, and to enter into one or more sales agreements with an
authority as and on the terms the local agency deems appropriate.
The sales agreement may include covenants of, and binding on, the
local agency necessary to establish and maintain the security of
bonds issued by the authority for the purpose of purchasing the VLF
receivables and, if applicable, the exclusion from gross income of
interest on the bonds for federal income tax purposes.  Any transfer
of some or all of a VLF receivable by a local agency to the authority
under this article that the governing documents state is a sale
shall be treated as an absolute sale and transfer of the property so
transferred to the authority and not as a pledge or grant of a
security interest by the local agency to secure a borrowing.  The
characterization of the transfer of any VLF receivable as an absolute
sale by the local agency shall not be negated or adversely affected
by any of the following:
   (1) The fact that only a portion of the VLF receivable is
transferred.
   (2) By the local agency's acquisition of an ownership interest in
any residual interest or a subordinate interest in the VLF
receivable.
   (3) By any characterization of the authority or its bonds for
purposes of accounting, taxation, or securities regulation.
   (4) By any other factor.
   (c) On and after the effective date of each transfer of a VLF
receivable under this article that the governing documents state is a
sale, the local agency shall have no right, title, or interest in or
to the VLF receivable transferred, and the VLF receivable so
transferred shall be the property of the authority and not of the
local agency, and shall be owned, received, held, and disbursed only
by the authority or any trustee or agent of the authority appointed
by the authority.  Any sale of some or all of any VLF receivable
shall automatically be perfected without the need for physical
delivery, recordation, filing, or further act, and the provisions of
Division 9 (commencing with Section 9101) of the Commercial Code and
Sections 954.5 to 955.1, inclusive, of the Civil Code shall not apply
to the sale.  None of the VLF receivables sold by the local agency
pursuant to this article shall be subject to garnishment, levy,
execution, attachment, or other process, writ, including, but not
limited to, a writ of mandate, or remedy in connection with the
assertion or enforcement of any debt, claim, settlement, or judgment
against the local agency.  On or before the effective date of any
sale of a VLF receivable, the local agency shall notify the
Controller that the VLF receivable has been sold to the authority and
irrevocably instruct the payor that, as of the effective date,
payments on the VLF receivable so sold are to be made directly to the
authority or any trustee or agent appointed by the authority.
   (d) The state hereby covenants, for the benefit of the holders of
any bonds issued by the authority pursuant to this article payable
from VLF receivables purchased by the authority, that it will not
take any action that would materially adversely affect the interest
of the holders of these bonds or otherwise impair the security of
these bonds, so long as any of these bonds remain outstanding.
6589.  An authority may enter into a bond purchase agreement with a
local agency or agencies.  The bond purchase agreement shall specify
the maximum rate of interest, the cost of issuance, the amount of
required reserve, and the procedure to be used in case of default.
Notwithstanding any other provision of law, local agencies may sell
their bonds to the authority on a negotiated basis without compliance
with any public sale requirement included in the statutes under
which the bonds are issued.
6590.  The authority may, from time to time, issue its bonds in the
principal amount as the authority determines necessary to provide
sufficient funds for its purposes, which may include, but shall not
be limited to, providing funds for bond purchase agreements, payment
of the purchase price of VLF receivables, payment of interest on
bonds of the authority, establishment of reserves to secure the
bonds, and other expenditures of the authority incident to issuance
of the bonds.  The authority may also issue bonds for the purpose of
making loans to local agencies, to the extent those local agencies
are authorized by law to borrow moneys, or to purchase VLF
receivables from local agencies as provided in Section 6588.5, and
the loan or sale proceeds shall be used by the local agencies to pay
for public capital improvements, working capital, or insurance
programs.
   In the case of any authority in existence on January 1, 1988, no
loans shall be made to local agencies for working capital or
insurance, unless that purpose is first approved by resolution of the
governing body of the authority by unanimous vote of all members of
the governing body.
6590.1.  (a) In the case of bonds issued by an authority to acquire
local obligations, the offering documents for the bonds shall clearly
delineate investment criteria for the local obligations to be
acquired.  The investment criteria shall specify the types of local
obligations eligible for acquisition by the authority, as well as
minimum standards of creditworthiness for these obligations.
   (b) No financial advisor, investment advisor, underwriter, broker,
dealer, or municipal securities dealer shall recommend the purchase,
sale, or exchange of a municipal security to an authority unless
that financial advisor, investment advisor, underwriter, broker,
dealer, or municipal securities dealer has reasonable grounds to
believe and does believe that the recommendation is suitable for the
authority in light of the authority's investment criteria and
responsibility to safeguard public funds.
   (c) In the case of bonds issued by an authority to acquire local
obligations, the underwriter of the bonds, and the financial advisor
and investment advisor to the authority, shall not sell to the
authority any security or obligation issued by a state or local
government from its dealer inventory or that it underwrote or
otherwise placed on behalf of another client.
6590.2.  (a) An authority shall solicit at least three bids, and
select the highest bid, for any guaranteed investment contract
purchased with the proceeds of bonds issued by the authority.
   (b) (1) Any government securities broker or dealer that sells
government securities to an authority shall certify that the purchase
price of those securities is equal to the fair market value of those
securities.
   (2) For purposes of this subdivision, "fair market value" means
the price a willing buyer would pay to a willing seller in an arms'
length transaction.
6591.  (a) The authority is authorized from time to time to issue
bonds to provide funds to achieve its purposes.
   (b) Bonds may be authorized to finance a single public capital
improvement, working capital, purchase of VLF receivables, or
insurance program for a single local agency; a series of public
capital improvements, working capital, purchases of VLF receivables,
or insurance program for a single local agency; a single public
capital improvement, working capital, or purchases of VLF
receivables, insurance program for two or more local agencies; or a
series of public capital improvements, working capital, purchases of
VLF receivables, insurance programs for two or more local agencies.
   (c) Bonds issued for the purpose of financing working capital
shall be used to make loans to local agencies for any of the purposes
for which a local agency may borrow money pursuant to Section 53852.
  The loans shall be repaid in accordance with the terms of Section
53854.
   (d) Except as otherwise expressly provided by the authority, every
issue of its bonds shall be general obligations of the authority
payable from any revenues or moneys of the authority available
therefor and not otherwise pledged.  These revenues or moneys may
include the proceeds of additional bonds, subject only to any
agreements with the holders of particular bonds pledging any
particular revenues or moneys.  Notwithstanding that the bonds may be
payable from a special fund, these bonds shall be deemed to be
negotiable instruments for all purposes, subject only to the bond
registration provisions.
   (e) The bonds may be issued as serial bonds or as term bonds, or
the authority may issue bonds of both types.  The bonds shall be
authorized by resolution of the authority and shall, as provided by
the resolution or indenture pursuant to which the bonds are issued,
bear the date of issuance; the time of maturity, not exceeding 50
years from their date of issuance; bear the rate of interest, either
fixed or variable, and, if variable, not in excess of the maximum
rate of interest specified therein; be payable as to principal and
interest at the time or times provided; be in the denominations
provided; be in the form provided; carry the registration privileges
provided; be executed in the manner provided; be payable in lawful
money of the United States at the place or places provided within or
without the state; and be subject to the terms of redemption
provided.
   (f) The bonds shall be sold by the authority at the time and in
the manner set out in the authority's resolution.  The sale may be a
public or private sale, and for price or prices, and on terms and
conditions as the authority determines proper, after giving due
consideration to the recommendations of any local agency to be
assisted from the proceeds of the bonds.  Pending preparation of the
definitive bonds, the authority may issue interim receipts,
certificates, or temporary bonds which shall be exchanged for
definitive bonds.
   (g) In the case of bonds issued by an authority, on or after
January 1, 1995, for the purpose of purchasing bonds of a local
agency, all of the bonds of the local agency shall be purchased by
the authority from the proceeds of the authority bonds within 90 days
of the date of issuance of the authority bonds.  Nothing in this
subdivision shall be construed to preclude an authority from issuing
parity bonds at any time.
6591.1.  (a) No broker, dealer, municipal securities dealer, or
other firm that underwrites a bond issue of an authority shall serve
as financial advisor or investment advisor to the authority on
decisions relating to the investment of the proceeds of that bond
issue.
   (b) An authority and its financial advisor shall enter into a
written contract prior to the delivery of financial advisory
services.  The contract shall specify the range of services that will
be delivered and the entire compensation to be paid to the financial
advisor.
6592.  Any resolution authorizing any bonds or any issue of bonds
may contain the following provisions, which shall be a part of the
contract with the holders of the bonds to be authorized:
   (a) Provisions pledging the full faith and credit of the
authority, or pledging all or any part of the revenues of any public
capital improvements, or any revenue-producing contract or contracts
made by the authority with any local agency, any VLF receivables
purchased pursuant to Section 6588.5, or any other moneys of the
authority, to secure the payment of the bonds, and of any special
account, subject to those agreements with bondholders as may then
exist.
   (b) Provisions setting out the rentals, fees, purchase payments,
loan repayments, and other charges, and the amounts to be raised in
each year thereby, and the use and disposition of the revenues.
   (c) Provisions setting aside reserves or sinking funds, and the
regulation and disposition thereof.
   (d) Limitations on the right of the authority or its agent to
restrict and regulate the use of the public capital improvements to
be financed out of the proceeds of the bonds or any particular issue
of bonds.
   (e) Limitations on the purpose to which the proceeds of sale of
any issue of bonds may be applied, and pledging the proceeds to
secure the payment of the bonds or any issue of the bonds.
   (f) Limitations on the issuance of additional bonds, the terms
upon which additional bonds may be issued and secured, and the
refunding of outstanding bonds.
   (g) The procedure, if any, by which the terms of any contract with
bondholders may be amended or abrogated, the amount of bonds and the
holders thereof that are required to give consent thereto, and the
manner in which the consent may be given.
   (h) Limitations on expenditures for operating, administrative, or
other expenses of the authority.
   (i) Definitions of acts or omissions to act which constitute a
default in the duties of the authority to holders of its obligations,
and providing the rights and remedies of the holders in the event of
a default.
   (j) The mortgaging of any public capital improvements and the site
thereof for the purpose of securing the bondholders.
   (k) The mortgaging of land, improvements, or other assets owned by
a local agency for the purpose of securing the bondholders.
   (l) Procedures for the selection of public capital improvements to
be financed with the proceeds of the bonds authorized by the
resolution, if the bonds are to be sold in advance of designating the
public capital improvements and the local agency to receive the
financing.
6592.5.  (a) No bonds issued by any local agency shall be purchased
pursuant to this article by an authority at a price to yield in
excess of 1 percent of the yield of the issue of bonds issued by the
authority to purchase the bonds of the local agency.  For the
purposes of this subdivision, yield is determined on the issue date
of the bonds.
   (b) At least 95 percent of the receipts by an authority from bonds
of a local agency purchased by the authority after January 1, 1995,
shall be used for any of the following:
   (1) To pay principal, interest, redemption prices or fees for
credit enhancement on the issue of bonds of the authority used to
acquire those bonds of the local agency.
   (2) To pay or reimburse administrative costs of the bonds of the
authority used to acquire those bonds of the local agency.
   (3) To pay or reimburse a local agency for principal, interest, or
redemption price on bonds of that local agency.
   (4) To establish reasonable reserves for the payment of debt
service on authority bonds.
   (5) To purchase other bonds of a local agency.
   (6) To pay or reimburse fees and expenses charged to the authority
by third parties, excluding any member of the authority, for
services relating to administration of the authority's bonds or of
the program established by the authority for purchase of local agency
bonds.
   (c) For the purposes of this section, the following definitions
shall apply:
   (1) "Administrative costs" means, and is limited to, costs of
issuing, carrying, or repaying the authority bonds.
   (2) "Credit enhancement" means any municipal bond insurance,
surety bond, letter of credit, or other guaranty arrangement entered
into between an independent party and the authority or the local
agency that unconditionally shifts substantially all of the credit
risk for all or part of the payments on the issue of bonds guaranteed
by the credit enhancement and, in the case of bonds bearing a
variable rate of interest and containing a provision permitting or
requiring tender of the bonds by the bondholder, includes payments
against failure to remarket bonds.
   (3) "Issue" means bonds that are issued by the same issuer on the
same issue date pursuant to the same plan of financing that are
reasonably expected to be paid from substantially the same source of
funds, without regard to credit enhancement or priority of lien.
   (4) "Issue date" means the first date on which the authority, in
the case of an issue of bonds issued by the authority, or the local
agency, in the case of an issue of bonds issued by the local agency
for purchase by the authority, receives the purchase price of the
issue of bonds in exchange or the delivery of the evidence of
indebtedness representing the bonds of the issue.
   (5) "Issue price" means, in the case of an issue of bonds issued
by the authority, the initial offering price to the public, excluding
bondhouses, underwriters, brokers, and other intermediaries, and
assuming that the issue price for each maturity of bonds of the issue
is equal to the price at which at least 10 percent of that maturity
was sold to the public, and if an issue is privately placed, means
the purchase of each maturity of bonds of the issue paid by the first
buyer of the obligation, excluding bondhouses, underwriters,
brokers, and other intermediaries.  "Issue price" means, in the case
of an issue of bonds issued by the local agency, the purchase price
of each maturity of bonds of the issue paid by the authority to the
local agency.
   (6) "Yield" means that discount rate that, when used in computing
the present value as of the issue date of all unconditionally payable
payments of principal, interest, and fees for credit enhancement on
the issue of bonds produces an amount equal to the present value,
using the same discount rate, of the aggregate issue price of bonds
of the issue as of the issue date.  In the case of an issue of bonds
issued by a local agency for purchase by the authority, payments for
administrative costs shall not be taken into account in determining
the yield of those local agency bonds.
6593.  No member of the governing body of the authority shall be
personally liable on the bonds or be subject to any personal
liability or accountability by reason of the issuance of bonds.
6594.  The authority may, out of any funds available therefor,
purchase its bonds.  The authority may hold, pledge, cancel, or
resell the bonds, subject to, and in accordance with, agreements with
bondholders.
6595.  Any bonds issued under this article may be secured by a trust
agreement between the authority and a corporate  trustee or
trustees, which may include any trust company or bank having the
powers of a trust company within or without the state.
   (a) The trust agreement or the resolution providing for the
issuance of the bonds may pledge or assign the revenues to be
received or the proceeds of any contract or contracts and may convey
or mortgage the project or projects, or any portion thereof, to be
financed out of the proceeds of the bonds.  The trust agreement or
resolution providing for the issuance of the bonds may contain
provisions for protecting and enforcing the rights and remedies of
the bondholders as may be reasonable and proper and not in violation
of law, including provisions specifically authorized to be included
in any resolution or resolutions of the authority authorizing bonds.
   (b) Any bank or trust company doing business under the laws of the
state which may act as a depository of the proceeds of bonds or of
revenues or other moneys shall furnish indemnifying bonds or pledge
securities when required by the authority.
   (c) The trust agreement may set forth the rights and remedies of
the bondholders and of the trustee or trustees, and may restrict the
individual right of action by bondholders.  In addition, any trust
agreement or resolution may contain other provisions the authority
determines to be reasonable and proper for the security of the
bondholders.
6595.3.  (a) The authority may issue bonds for the purpose of
refunding any bonds, notes, or other securities of the authority then
outstanding, including the payment of any redemption premium thereon
and any interest accrued, or to accrue, on their earliest or any
subsequent date of redemption, purchase, or maturity of these bonds.
The authority may issue bonds for the additional purpose of paying
all, or any part of, the costs of constructing and acquiring
additions, improvements, extensions, or enlargements of any public
capital improvement or any portion thereof.
   (b) The proceeds of any bonds issued for the purpose of refunding
outstanding bonds may be applied to the purchase or retirement at
maturity or redemption of those outstanding bonds either on their
earliest or any subsequent redemption date or upon the purchase or
retirement at the maturity thereof and may, pending this application,
be placed in escrow to be applied to the purchase or retirement at
maturity or redemption of those outstanding bonds on the date as may
be determined by the authority.
   (c) Pending this use, the escrowed proceeds may be invested and
reinvested in obligations of, or guaranteed by, the United States, or
in certificates of deposit or time deposits secured by obligations
of, or guaranteed by, the United States, maturing at the time or
times appropriate to assure prompt payment, of the principal,
interest, and redemption premium, if any, of the outstanding bonds to
be refunded.  The interest, income, and profits, if any, earned or
realized on the investment may also be applied to the payment of the
outstanding bonds to be refunded.  After the terms of the escrow have
been fully satisfied and carried out, any balance of the proceeds
and interest, income, and profits, if any, earned or realized on the
investments thereof, shall be returned to the authority for use in
carrying out the purposes of this article.
   (d) The portion of the proceeds of the bonds issued for the
additional purpose of paying all, or any part of, the costs of
construction and acquiring additions, improvements, extensions, or
enlargements of any project may be invested and reinvested in
obligations of, or guaranteed by, the United States, or in
certificates of deposit or time deposits secured by obligations of,
or guaranteed by, the United States, maturing not later than the time
or times when these proceeds will be needed for the purpose of
paying all or any part of the costs.  The interest, income, and
profits, if any, earned or realized on this investment may be applied
to the payment of all, or any part of, the costs or  may be used by
the authority in carrying out the purposes of this article.
6595.5.  Bonds issued by the authority are legal investments for all
trust funds, the funds of all insurance companies, banks, both
commercial and savings, trust companies, executors, administrators,
trustees, and other fiduciaries, for  state school funds, and for any
funds which may be invested in county, municipal, or school district
bonds.  These bonds are securities which may legally be deposited
with, and received by, any state or municipal officer or agency or
political subdivision of the state for any purpose for which the
deposit of bonds or obligations of the state is now, or may hereafter
be, authorized by law,  including deposits to secure public funds.
This authorization applies only to the extent that there exists
evidence of indebtedness or debt securities of the participating
party receiving financing through the issuance of these bonds which
qualify for, or are eligible for, these purposes and uses.
6595.7.  (a) The authority is not required to pay any property taxes
or assessments upon, or with respect to, any public capital
improvement or any property acquired by, or for, the authority under
this article, or upon the income therefrom, so long as the authority
holds title to the public capital improvement or to the property
contained in the public capital improvement.
   (b) The exemption of the authority from taxation of any public
capital improvement ceases when title to the property is transferred
from the authority to any local agency whose property is otherwise
taxable.  This section does not exempt any local agency whose
property is otherwise taxable from taxation, including, but not
limited to, taxation upon a possessory interest, with respect to any
public capital improvement, or the property or facilities contained
in any public capital improvement which may otherwise be applicable
to the participant.
6596.  The State of California does hereby pledge to, and agrees
with, the holders of any bonds issued under this article, and with
those parties who may enter into contracts with the authority
pursuant to this article, that the state will not limit or alter the
rights hereby vested in the authority to finance any public capital
improvement and to fulfill the terms of any loan agreement, lease, or
other contract with the authority pursuant to this part, or in any
way impair the rights or remedies of the bonds or of the parties
until those bonds, together with the interest thereon, are fully met
and discharged and those contracts are fully performed on the part of
the authority.  However, nothing in this section precludes this
limitation or alteration if and when adequate provision has been made
by law for the protection of the holders of those bonds of the
authority or those entering into those contracts with the authority.
6597.  All public capital improvements financed by the authority
shall pay interest within a reasonable time after the authority
receives revenues or proceeds from bonds as provided under this
article.
6597.5.  All public capital improvements financed by the authority
shall be   constructed or completed subject to the rules and
regulations of the authority.  When the principal of, and interest
on, bonds of the authority issued to finance the cost of a particular
public capital improvement, including any refunding bonds issued to
refund and refinance all, or any part, of these bonds, have been
fully paid and retired, or when adequate provisions have been made
for their payment and retirement and all other conditions of any
resolution, lease, indenture, mortgage or deed of trust, security
interest, or any other instrument authorizing and securing the bonds
have been satisfied, and any lien created has been released in
accordance with the provisions thereof, the authority is authorized,
upon the terms and conditions it prescribes, to execute releases,
release deeds, reassignments, deeds, and conveyances and to do all
things necessary or required to convey or release its rights, title,
and interest in the public capital improvement financed and in any
other instruments pledged or transferred to secure bonds to local
agencies, as their respective interests may appear.
6598.  Interest earned on any bonds issued by the authority shall at
all times be free from state personal income tax and corporate
income tax.
6598.5.  Local agencies may request advice from the California Debt
and Investment Advisory Commission pursuant to Section 8859 regarding
the formation of local bond pooling authorities and the planning,
preparing, insuring, marketing, and selling of bonds as authorized
pursuant to this article.
6599.  (a) In an action filed pursuant to Chapter 9 (commencing with
Section 860) of Title 10 of Part 2 of the Code of Civil Procedure to
determine the validity of any matter of an authority governed by
this article, the authority and any interested person shall serve the
Attorney General and the Treasurer with a copy of the complaint
filed by the respective party by the first day of the publication of
summons as required by Section 861 of the Code of Civil Procedure.  A
court may render no judgment in the matter or grant other permanent
relief to any party except on proof of service of the Attorney
General and the Treasurer as required by this section.
   (b) The Attorney General and the Treasurer are each interested
persons pursuant to an action filed pursuant to Chapter 9 (commencing
with Section 860) of Title 10 of Part 2 of the Code of Civil
Procedure to determine the validity of any authorizing bonds or the
issuance of bonds.
   (c) Any authority that dismisses a validation action by formal act
and withdraws the resolution may not issue bonds to construct,
acquire, or finance a public capital improvement, except pursuant to
Article 1 (commencing with Section 6500), unless the authority
thereafter reauthorizes the issuance of the bonds and thereafter, if
applicable, complies with Sections 6586.5 and 6586.7.
6599.1.  (a) The legislative body shall, no later than 30 days prior
to the sale of any bonds pursuant to this article, give written
notice of the proposed sale to the California Debt and Investment
Advisory Commission by mail, postage prepaid, as required by Chapter
11.5 (commencing with Section 8855) of Division 1 of Title 2.
   (b) Beginning January 1, 1996, each year after the sale of any
bonds by the authority for the purpose of acquiring local
obligations, the legislative body shall, not later than October 30 of
each year until the final maturity of the bonds, supply the
following information to the California Debt and Investment Advisory
Commission by mail, postage prepaid:
   (1) The principal amount of bonds outstanding, both authority
bonds and local obligations acquired with the proceeds of authority
bonds.
   (2) The balance in the reserve fund.
   (3) The costs of issuance, including any ongoing fees.
   (4) The total amount of administrative fees collected.
   (5) The amount of administrative fees charged to each local
obligation.
   (6) The interest earnings and terms of all guaranteed investment
contracts.
   (7) Commissions and fees paid on guaranteed investment contracts.
   (8) The delinquency rates on all local obligations.
   (9) The balance in capitalized interest accounts.
   (c) In addition, with respect to any bonds sold pursuant to this
article, regardless of when sold, and until the final maturity of the
bonds, the legislative body shall notify the California Debt and
Investment Advisory Commission by mail, postage prepaid, within 10
days if any of the following events occur:
   (1) The local agency or its trustee fails to pay principal and
interest due on any scheduled payment date.
   (2) Funds are withdrawn from a reserve fund to pay principal and
interest on the bonds issued by the authority or any bonds acquired
by the authority.
   (d) Neither the legislative body nor the California Debt and
Investment Advisory Commission shall be liable for any inadvertent
error in reporting the information required by this section.
6599.2.  Notwithstanding Sections 863 and 869 of the Code of Civil
Procedure, the Attorney General or the Treasurer may jointly or
separately file an action pursuant to Chapter 9 (commencing with
Section 860) of Title 10 of Part 2 of the Code of Civil Procedure at
any time up to 55 days after notice required by Section 6586.7 is
mailed by certified mail to the Sacramento offices of both the
Attorney General and the Treasurer.
6599.3.  Notwithstanding any other provision of law, an action may
be brought under Chapter 9 (commencing with Section 860) of Title 10
of Part 2 of the Code of Civil Procedure, to determine the validity
of any bonds issued under this article to finance the purchase of
bonds for local agencies, the financing of public capital
improvements, or the purchase of VLF receivables pursuant to Section
6588.5 and any contracts of sale of VLF receivables entered into by
any local agency, and any related documents.  If an action is
commenced, the action shall be brought in the jurisdiction in which
the authority maintains its principal office and is not required to
be brought in the jurisdiction or jurisdictions of any of the local
agencies.  However, publication of summons, as provided in Section
861 of the Code of Civil Procedure, shall be made in the county in
which the authority maintains its principal office and in each county
in which any local agency that has sold bonds to the authority, for
which a public capital improvement is being financed or that has
entered into a sales agreement for a VLF receivable where the
authority is located.