2010 California Code
Government Code
Article 6. Refunding Bonds

16780.  (a) The committee may provide for the issuance and sale or
exchange of refunding bonds for the purpose of redeeming, retiring,
or purchasing for retirement, outstanding bonds at or before their
maturity, if the committee determines that refunding is necessary or
advisable in order to do either of the following:
   (1) To effect a favorable reorganization of the debt structure of
the state.
   (2) To effect a saving in debt service cost to the state, as
measured by the present value of that saving.
   (b) When determining debt service savings for purposes of
paragraph (2) of subdivision (a), the committee shall include, as
interest on a refunded bond, the interest, if any, that will result
from a related hedging contract, as described in subparagraph (A) of
paragraph (2) of subdivision (d) of Section 16731. The committee may,
when determining debt service savings, for purposes of paragraph (2)
of subdivision (a), base the interest of a refunding bond upon the
effective fixed interest rate under a hedging contract described in
clause (ii) of subparagraph (B) of paragraph (1) of subdivision (d)
of Section 16731.



16781.  (a) Except as otherwise provided in this article or in
subdivision (b), all of the provisions of this chapter are applicable
to the issuance and sale of refunding bonds.
   (b) (1) Sections 16730 and 16757 are not applicable to the
issuance and sale of refunding bonds.
   (2) Notwithstanding Section 16754.3, refunding bonds may be sold
by negotiated sale if the Treasurer determines that it is in the best
interest of the state to do so.



16781.5.  Notwithstanding any other provision of this article, the
renewal and reissuance from time to time of commercial paper notes
within the amount and time of a program authorized by the committee
pursuant to Section 16731.6 shall be considered a refunding of the
amount of the commercial paper notes maturing from time to time that
complies with this article.



16782.  (a) Refunding bonds may be issued in a principal amount
sufficient to provide funds, either directly or by the purchase of
nonredeemable securities, the principal and interest on which shall
provide funds for the payment of any or all of the following:
   (1) The principal of or purchase price of the bonds to be refunded
by the refunding bonds.
   (2) All expenses incident to the calling, retiring, purchasing, or
paying of the outstanding bonds and the issuance of the refunding
bonds, including any excess of the par value of the refunding bonds
over the selling price thereof.
   (3) Interest upon the refunding bonds from the date of sale to the
date of payment of the bonds to be refunded, whether at maturity,
pursuant to the call thereof or pursuant to any agreement with the
holders thereof.
   (4) Any premium necessary in the calling, retiring, or purchase of
the outstanding bonds.
   (5) The interest accruing on the outstanding bonds to the date of
their call, retirement, or purchase.
   (6) Subject to the limitation on those payments contained in
subparagraph (A) of paragraph (2) of subdivision (d) of Section
16731, any termination payment owed by the state after offset for any
payments made to the state pursuant to any hedging contract that was
entered into in connection with the bonds to be refunded.
   Refunding bonds may be exchanged at not less than their par value
and accrued interest for outstanding bonds to be refunded thereby,
and this chapter with respect to the sale of bonds does not apply to
that exchange.
   (b) Notwithstanding subdivision (a), the principal amount of any
issue of refunding bonds shall not exceed the original aggregate
principal amount of the series of bonds to be refunded. If there
remains authorized but unissued bonds under the original bond act for
the program which was funded by the series of bonds to be refunded,
the principal amount of refunding bonds above the original aggregate
principal amount of bonds to be refunded shall be charged against
such unused authorization.



16783.  Refunding bonds may be issued before the first date upon
which the bonds being refunded are subject to call or redemption. The
final maturity date of any refunding bonds shall not be later than
the final maturity date of the series of bonds being refunded.



16784.  The Refunding Escrow Fund is hereby created as a special
fund in the State Treasury and is continuously appropriated for the
purposes of this section. The proceeds of each sale of refunding
bonds and any other available moneys shall be (1) set aside in a
separate account within the Refunding Escrow Fund, (2) held in trust
for the benefit of the holders of either or both of the bonds which
are to be refunded or of the refunding bonds as provided in the
resolution of the committee authorizing the issuance of the refunding
bonds, (3) used only for the payment of the principal of, and
interest and any redemption premium on, or the purchase price of the
refunded bonds for the payment of interest on the refunding bonds up
to the date of the redemption or payment of the bonds to be refunded,
and (4) for the other purposes set forth in Section 16782. Moneys in
each separate account shall be invested by the Treasurer in
accordance with the resolution of the committee providing for the
issuance of the refunding bonds, and any income from that investment
shall be credited to the account from which the investment was made.




16785.  Refunding bonds shall be valid and binding obligations of
the State of California, and the full faith and credit of the State
of California shall be pledged for the punctual payment of the
principal of and interest on the bonds as the principal and interest
become due and payable.



16786.  This article applies only to the refunding of bonds
authorized at a statewide election held after the effective date of
this article pursuant to a bond act expressly mentioning the right of
the state to refund the bonds so authorized. In any such bond act,
the provisions included therein pursuant to subdivisions (c), (d),
(e), and (f) of Section 16724 apply to refunding bonds to the same
extent and in the same manner as those provisions applied to the
bonds being refunded.



16787.  In any report of outstanding general obligation bonds or
bonded debt of the state, the Controller shall include both refunding
bonds and bonds which have been refunded but not yet retired, but
shall in the same report deduct either the refunded bonds, for the
retirement of which sufficient moneys or securities have been
deposited in the Refunding Escrow Fund, or the refunding bonds, if
interest thereon is pledged to be paid from moneys or securities
deposited in the Refunding Escrow Fund until the redemption or
payment of the bonds to be refunded, so as to show the net total of
bonds or bonded debt to be paid from the General Fund or future
revenues of the state other than the income from the investment of
the Refunding Escrow Fund.