2005 California Government Code Sections 53835-53839 Article 7.4. Securitized Limited Obligations Notes

53835.  As used in this article, "special district" means any agency
of the state for the local performance of governmental or
proprietary functions within limited boundaries.  "Special district"
does not include any agency subject to Section 18 of Article XVI of
the California Constitution, including any city, county, school
district, or community college district, or any community
redevelopment agency.
53836.  The powers conferred by this article are in addition to and
alternative to any powers conferred by any other law for borrowing by
a special district and any amount borrowed pursuant to this article
shall not be considered in any limitation on the amount that may be
borrowed by a special district under any other law.
53837.  (a) A special district may borrow money pursuant to this
article, the indebtedness to be represented by a securitized limited
obligation note or notes issued to the lender pursuant to this
article.
   (b) The money borrowed may be used and expended by the special
district solely for the acquisition or improvement of land,
facilities, or equipment.
   (c) Any note issued pursuant to this article shall be exempt from
all taxation within the state.
53838.  (a) A special district may issue securitized limited
obligation notes after the adoption, by a four-fifths vote of all the
members of the governing body, of a resolution reciting each of the
following:
   (1) That the resolution is being adopted pursuant to this
subdivision.
   (2) The purposes of incurring the indebtedness, and that the
indebtedness shall be used solely for those purposes.
   (3) The estimated amount of the indebtedness.
   (4) The maximum amount of notes to be issued, and the source of
revenue or revenues to be used to secure the limited obligation
notes.
   (5) The maturity date of the securitized limited obligation notes.
   (6) The form of the securitized limited obligation notes.
   (7) The manner of execution of the securitized limited obligation
notes.
   (b) The resolution may also provide for any of the following
matters:
   (1) Insurance for the securitized limited obligation notes.
   (2) A schedule for the completion of the purposes for which the
indebtedness was incurred.
   (3) Procedures in the event of default, terms upon which the
securitized limited obligation notes may be declared due before
maturity, and the terms upon which that declaration may be waived.
   (4) The rights, liabilities, powers, and duties arising upon the
special district's breach of any agreement with regard to the
securitized limited obligation notes.
   (5) The terms upon which the holders of the securitized limited
obligation notes may enforce agreements authorized by this section.
   (6) A procedure for amending or abrogating the terms of the
resolution with the consent of the holders of a specified percentage
of the securitized limited obligation notes.  If the resolution
contains this procedure, the resolution shall specifically state the
effect of amendment upon the rights of the holders of all of the
securitized limited obligation notes.
   (7) The manner in which the holders of the securitized limited
obligation notes may take action.
   (8) Other actions necessary or desirable to secure the securitized
limited obligation notes or tending to make the notes more
marketable.
   (c) The securitized limited obligation notes shall bear interest
at a rate not exceeding the rate permitted under Article 7
(commencing with Section 53530) of Chapter 3.
   (d) The securitized limited obligation notes may not mature later
than 10 years after the date of the issuance of the notes.
   (e) The total amount of the securitized limited obligation notes
outstanding at any one time within a special district may not exceed
the sum of two million dollars ($2,000,000).
   (f) The agreement between the special district and the purchasers
of the securitized limited obligation notes shall state that the
notes are securitized limited obligation notes payable solely from
specified revenue of the special district.  The pledged revenue shall
be sufficient to pay the following amounts annually, as they become
due and payable:
   (1) The interest and principal on the notes.
   (2) All payments required for compliance with the resolution
authorizing issuance of the notes or agreements with the purchasers
of the notes.
   (3) All payments to meet any other obligations of the special
district that are charges, liens, or encumbrances on the pledged
revenue.
   (g) The securitized limited obligation notes are special
obligations of the special district, and shall be a charge against,
and secured by a lien upon, and payable, as to the principal thereof
and interest thereon, from the pledged revenue.  If the revenue
described in the authorizing resolution is insufficient for the
payment of interest and principal on the notes, the special district
may make payments from any other funds or revenues that may be
applied to their payment.  The revenue and any interest earned on the
revenue constitute a trust fund for the security and payment of the
interest on and principal of the notes.
   (h) So long as any securitized limited obligation notes or
interest thereon are unpaid following their maturity, the pledged
revenue and interest thereon may not be used for any other purpose.
   (i) If the interest and principal on the securitized limited
obligation notes and all charges to protect them are paid when due,
the special district may expend the pledged revenue for other
purposes.
   (j) Securitized limited obligation notes of the same issue shall
be equally secured.
   (k) The general funds of the state and the special district are
not liable for the payment of the principal of, or the interest on,
the securitized limited obligation notes.
   (l) The holders of the securitized limited obligation notes may
not compel the exercise of the taxing power by the special district,
other than the revenue pledged, or the forfeiture of the special
district's property.
   (m) Every agreement shall recite in substance that the principal
of, and interest on, the securitized limited obligation notes are
payable solely from the revenue pledged to the payment of the
principal and interest and that the special district is not obligated
to pay the principal or interest except from the pledged revenue.
53839.  A special district shall not issue any securitized limited
obligation notes after December 31, 2009, unless a later enacted
statute that is enacted before December 31, 2009, deletes or extends
that date.