2009 California Government Code - Section 16752-16760 :: Article 4. Sale Of Bonds

16752.  The Treasurer may from time to time, by electronic means or
by public announcement at the place and at or before the time fixed
for a competitive sale of bonds, continue the sale to the time and
place the Treasurer may select.

16752.1.  The Treasurer may cancel or postpone a competitive sale of
bonds to an indefinite date by public announcement, including by
electronic means, made prior to or at the time and place fixed for
the sale of the bonds. The Treasurer may give notice of the new time
and place of the sale of the bonds that the Treasurer may deem
advisable.

16753.  (a) Each bid at a competitive sale shall be submitted to the
Treasurer in the form and by the means specified by the Treasurer by
public announcement.
   (b) Each proposal for purchase of bonds in a negotiated sale shall
be made in a bond purchase contract or similar agreement approved by
the Treasurer.
    (c) (1) The Treasurer shall require that each bidder in a
competitive sale or underwriter in a negotiated sale provide a good
faith deposit of at least one-half of 1 percent of the principal
amount of the bonds for which the bidder or underwriter submits a bid
or proposal. The good faith deposit shall be based upon the
principal amount of bonds offered for sale in the amount that has
been publicly announced at least one day prior to receipt of bids for
a competitive sale, or in the amount that is reasonably determined
by the Treasurer at least one day prior to a negotiated sale of
bonds. The Treasurer shall specify the form of the deposit, which may
be a cashier's check, a surety bond, a wire transfer of funds, or a
combination thereof. The deposit shall not bear interest.
   (2) This subdivision shall apply only to bonds sold with a fixed
interest rate.

16754.  (a) The bonds specified in the resolution shall be sold by
the Treasurer, at the time fixed by the Treasurer, and upon the
notice that the Treasurer may deem advisable, or at the time to which
the sale shall have been so continued, at a competitive sale to the
bidder whose bid will result in the lowest interest cost on account
of those bonds.
    (b) The Treasurer shall reject any and all bids for the bonds
that shall be below the par value thereof plus the interest that
shall have accrued thereon from the date thereof or, if any past due
coupon or coupons have been detached from the bonds prior to the
delivery thereof, then from the due date of the latest coupon so
detached, to the date of the purchaser's payment for the bond.
   (c) The method of determining the lowest interest cost bid shall
be prescribed in the bond resolution and shall be limited to either
the net interest cost method or the present worth basis method, also
referred to as the true interest cost, bond book basis, and Canadian
interest cost method.
    (1) The net interest cost of each bid shall be determined by
ascertaining the total amount of interest that the state would be
required to pay under that bid, from the date of the bonds to the
respective maturity dates of the bonds then offered for sale, at the
coupon rate or rates specified in the bid, less the total amount of
the premium, if any, offered by the bid. The bid under which the
amount so ascertained is the least shall be deemed to be the bid
resulting in the lowest net interest cost.
   (2) Under the present worth basis method, the bonds shall be
awarded to the bidder submitting the lowest interest rate bid, which
shall be determined by doubling the semiannual interest rate,
compounded semiannually, necessary to discount the debt service
payments to the specified interest computation date and to the price
bid.
   (d) Under either method specified in subdivision (c), the sale
shall be for cash, payable upon the delivery of the bonds in
definitive form, or if the right to deliver temporary securities has
been reserved, then upon the delivery of the temporary securities.

16754.3.  (a) The bonds specified in the resolution shall be sold by
the Treasurer, at the time fixed by the Treasurer, and upon the
notice that the Treasurer may deem advisable, or at the time to which
the sale shall have been so continued, either at a competitive sale
to the bidder whose bid will result in the lowest interest cost on
account of those bonds or by a negotiated sale if the Treasurer
determines it will result in a lower interest cost. With respect to
bonds sold by the Treasurer by negotiated sales, the Treasurer shall
make a finding on the public record as to why a competitive sale was
not used. The Treasurer may sell the bonds at a price below the par
value thereof, but the discount on bonds so sold shall not exceed 3
percent of the par value. The interest, if any, accrued to the date
of delivery of, and payment for, the bonds shall be added to the sale
price of the bonds in any case.
   (b) (1) The method of determining the lowest interest cost bid
shall be prescribed in the bond resolution and shall be limited to
either the net interest cost method or the true interest cost method.
   (A) The net interest cost of each bid shall be determined by
ascertaining the total amount of interest that the state would be
required to pay under that bid, from the date of the bonds to the
respective maturity dates of the bonds then offered for sale, at the
interest rate or rates specified in the bid, less the total amount of
the premium, if any, or plus the total amount of the discount, if
any, offered by the bid. The bid under which the amount so
ascertained is the least shall be deemed to be the bid resulting in
the lowest net interest cost.
   (B) Under the true interest cost method, the bonds shall be
awarded to the bidder submitting the lowest interest rate bid
determined by the nominal interest rate that, when compounded
semiannually and used to discount the debt service payments on the
bonds to the date of the bonds, results in an amount equal to the
price bid for the bonds, excluding interest accrued to the date of
delivery.
   (2) Under either method specified in this subdivision, the sale
shall be for cash, payable upon the delivery of the bonds in
definitive form, or if the right to deliver temporary securities has
been reserved, then upon the delivery of the temporary securities.
   (c) Notwithstanding subdivision (a) or (b), if the resolution
prescribes that the bonds may pay a variable interest rate, as
specified in subdivision (d) of Section 16731, the Treasurer may sell
the bonds by negotiated sales if the Treasurer determines that it is
in the best interest of the state to do so.
   (d) This section shall apply to any bonds authorized at any
statewide election held at any time after the effective date of this
section. Section 16754 shall apply only to bonds authorized at
elections held before the effective date of this section.

16754.5.  Notwithstanding any provision in this article to the
contrary, bonds to provide farm and home aid for veterans in
accordance with the Veterans' Farm and Home Purchase Act of 1974
(Article 3.1 (commencing with Section 987.50) of Chapter 6 of
Division 4 of the Military and Veterans Code), may be sold by
negotiated sale by the Treasurer with the approval of the Veterans'
Finance Committee of 1943.

16755.  (a) The deposit of each unsuccessful bidder shall be
returned to the bidder promptly upon the rejection of the bidder's
bid or the acceptance of another bid.
   (b) The deposit of the successful bidder or underwriter in a
negotiated sale shall, immediately upon the acceptance of the bid or
proposal, become and be the property of the state, be placed in the
State Treasury to the credit of the fund, and be credited to the
successful bidder or underwriter upon the purchase price of the bonds
when the purchase price is paid in full within the time mutually
agreed upon between the successful bidder or underwriter and the
Treasurer.
   (c) If the purchase price is not paid in accordance with
subdivision (b), the successful bidder or underwriter shall have no
right in and to the bonds by reason of the bid or purchase contract
and the successful bidder or underwriter shall not have any right to
the recovery of the deposit accompanying the bid or purchase contract
or to any allowance or credit by reason of that deposit unless it
shall appear that the bonds cannot be validly issued or delivered, or
unless the return of the good faith deposit to the underwriter is
provided for in the purchase contract.

16756.  Upon payment in full, the bonds shall be delivered to the
purchaser in definitive form, unless the right to deliver temporary
securities has been reserved or the purchaser has waived the right to
receive definitive bonds at the time of payment, in either of which
events such temporary securities, exchangeable for definitive bonds,
may be delivered upon such payment. In case the purchase price is not
so paid, the bonds so sold but not paid for shall be resold by the
State Treasurer, upon notice, as provided in case of original sale.

16757.  (a) The proceeds of each sale of bonds, and the amount that
may have been paid as accrued interest on the bonds, shall be
forthwith paid over by the Treasurer into the fund.
   (b) All money deposited in the fund pursuant to this section that
is derived from premium and accrued interest on bonds sold shall be
reserved in the fund and shall be available for transfer to the
General Fund as provided in the bond act, except that amounts derived
from premium on the bonds may be used to pay costs of issuance of
the bonds, as provided in Section 16724.5, and in subdivisions (d)
and (e) of Section 16727, prior to transfer to the General Fund.

16758.  All actual and necessary expenses of the committee and of
the members thereof incurred in the performance of their duties shall
be paid out of the fund. Such expenses incurred by members of the
committee shall be so paid upon claims filed with the State
Controller by the member or members who incurred such expenses.

16759.  The Treasurer shall submit to the Chairperson of the Joint
Legislative Budget Committee, after each sale of bonds authorized to
be sold under this chapter, an update as to the percentage of general
fund moneys that would be used to service the resulting general
obligation bond obligations.

16760.  Whenever the committee deems that it will increase the
salability or the price of the bonds to obtain, prior to or after
sale, a legal opinion, other than that of the Attorney General, as to
the validity of the bonds, the committee may authorize the State
Treasurer or the Department of Finance, or both, to obtain such a
legal opinion.