Article 3 - Issuance and Sale of Bonds

California Education Code — §§ 15140-15150

Sections (15)

Amended by Stats. 1999, Ch. 667, Sec. 6. Effective January 1, 2000.

(a)Bonds of a school district or community college district shall be offered for sale by the board of supervisors of the county, the county superintendent of which has jurisdiction over the district, or the community college district governing board, where appropriate, as soon as possible following receipt of a resolution duly adopted by the governing board of the school district or community college district. The resolution shall prescribe the total amount of bonds to be sold. The resolution may also prescribe the maximum acceptable interest rate, not to exceed 8 percent, and the time or times when the whole or any part of the principal of the bonds shall be payable, which shall not be more than 25 years from the date of the bonds.

(b)Notwithstanding subdivision (a) or another provision of this chapter, the board of supervisors of any county may provide by resolution that the governing board of any school district or community college district over which the county superintendent of schools has jurisdiction, and which has not received a qualified or negative certification in its most recent interim report, may issue and sell bonds on its own behalf pursuant to this chapter without further action of the board of supervisors or officers of that county or of any other county in which a portion of the school district or community college district is located. The county shall levy and collect taxes, pay bonds, and hold bond proceeds and tax funds pursuant to this chapter for the bonds issued and sold pursuant to this subdivision.

(c)Whenever the governing board of a school district or community college district issues bonds or refunding bonds payable from ad valorem taxes the governing board shall transmit the authorizing resolution and debt service schedule, including the debt service schedule for the bonds to be refunded, to the county auditor and county treasurer in sufficient time to permit the county to establish tax rates and necessary funds or accounts for the bonds.

§ 15140.5

Added by Stats. 2013, Ch. 477, Sec. 1. (AB 182) Effective January 1, 2014.

For purposes of this article, “bonds” means bonds, notes, warrants, or other evidence of indebtedness payable, both principal and interest, from the proceeds of ad valorem property taxes that may be levied without limitation as to rate or amount upon property subject to taxation by the governing board of the school district or community college district.

§ 15141

Repealed and added by Stats. 1996, Ch. 277, Sec. 2. Effective January 1, 1997. Operative January 1, 1998.

When authorized by the governing board of a school district or a community college district, bonds of a school district or a community college district may be offered for sale as a group by the board of supervisors of the county, the county superintendent of schools, or the governing board of a community college district, which has jurisdiction over the district, at a time determined by the board of supervisors following receipt of a resolution duly adopted by the governing board of the school district or community college district. The resolution shall prescribe the total amount of bonds to be sold. The resolution may also prescribe the maximum acceptable interest rate, not to exceed 8 percent, and the time or times when the whole or any part of the principal of the bonds shall be payable, which shall not be more than 25 years from the date of the bonds. Bidders shall be required to bid a lump-sum bid on all bonds as a group. If bids satisfactory to the governing board of each school district included in the group are received, the bonds offered for sale shall be awarded to the bidder whose bid will result in the lowest net interest cost for the group or for the bonds of any district included within the group. Bonds shall be issued and sold in the name of each school district or a community college district in the same manner as provided in this chapter.

§ 15142

Repealed and added by Stats. 1996, Ch. 277, Sec. 2. Effective January 1, 1997. Operative January 1, 1998.

The bonds shall be issued in the denomination or denominations as the board of supervisors or governing board of the community college district may prescribe.

§ 15143

Repealed and added by Stats. 1996, Ch. 277, Sec. 2. Effective January 1, 1997. Operative January 1, 1998.

The bonds shall not bear a rate of interest greater than 8 percent per annum, payable annually or semiannually.

§ 15144

Repealed and added by Stats. 1996, Ch. 277, Sec. 2. Effective January 1, 1997. Operative January 1, 1998.

The number of years the whole or any part of the bonds are to run shall not exceed 25 years, from the date of the bonds or the date of any series thereof.

§ 15144.1

Added by Stats. 2013, Ch. 477, Sec. 2. (AB 182) Effective January 1, 2014.

The ratio of total debt service to principal for each bond series shall not exceed four to one.

§ 15144.2

Added by Stats. 2013, Ch. 477, Sec. 3. (AB 182) Effective January 1, 2014.

A bond that allows for the compounding of interest, including, but not limited to, a capital appreciation bond, maturing more than 10 years after its date of issuance shall be subject to redemption before its fixed maturity date, with or without a premium, at any time, or from time to time, at the option of the issuer, beginning no later than the 10th anniversary of the date the bond that allows for the compounding of interest was issued.

§ 15144.3

Added by Stats. 2013, Ch. 477, Sec. 4. (AB 182) Effective January 1, 2014.

A school district or community college district with a note issued before December 31, 2013, pursuant to Section 15150 may seek from the state board or the Chancellor of the California Community Colleges, as applicable, a one-time waiver from one or more of the requirements of Sections 2, 3, 5, and 6 of Assembly Bill 182 of the 2013–14 Regular Session, if both of the following are satisfied:

(a)The proceeds of the issuance subject to the waiver will be used only for the purpose of paying the note.

(b)The school district or community college district has provided to the state board or the Chancellor of the California Community

Colleges, as applicable, an analysis from a financial adviser unaffiliated with the school district, the community college district, or the underwriter used by the school district or community college district, showing the total overall costs of the proposed bond, how the issuance is the most cost-effective method, and the reasons why the school district or community college district is unable to meet those requirements of Sections 2, 3, 5, and 6 of Assembly Bill 182 of the 2013–14 Regular Session that are the subject of the waiver.

§ 15145

Repealed and added by Stats. 1996, Ch. 277, Sec. 2. Effective January 1, 1997. Operative January 1, 1998.

(a)The board of supervisors by an order entered upon its minutes shall prescribe the form of the bonds. The bonds shall be signed by the chairperson of the board of supervisors, or by any other member thereof as the board of supervisors shall, by resolution adopted by a four-fifths vote of all its members, authorize and designate for that purpose, and also signed by the treasurer of the county, and shall be countersigned by the clerk of the board of supervisors or by a deputy of either of the officers. Unless the board of supervisors otherwise provides, all the signatures and countersignatures may be printed, lithographed, engraved, or otherwise mechanically reproduced except that one of the signatures or countersignatures to the bonds shall be manually affixed. Any signature may be affixed in accordance with the provisions of the Uniform Facsimile Signatures of Public Officials Act, Chapter 6 (commencing with Section 5500) of Title 1 of the Government Code. All expense incurred for the preparation, sale, and delivery of the school bonds, including but not limited to, fees of an independent financial consultant, the publication of the official notice of sale of the bonds, the preparation, printing and distribution of the official statement, the obtaining of a rating, the purchase of insurance insuring the prompt payment of interest and principal, the preparation of the certified copy of the transcript for the successful bidder, the printing of the bonds, and legal fees of independent bond counsel retained by the school district or community college district issuing the bonds are legal charges against the funds of the district issuing the bonds and may be paid from the proceeds of sale of the bonds.

(b)Notwithstanding subdivision (a), the board of supervisors may, in its discretion, determine that all of the required signatures and countersignatures shall be by facsimiles, provided, however, that the bonds shall not be valid or become obligatory for any purpose until manually signed by an authenticating agent duly appointed by the board or its authorized designee.

§ 15146

Amended by Stats. 2016, Ch. 472, Sec. 1. (AB 2738) Effective January 1, 2017.

(a)The bonds shall be issued and sold pursuant to Section 15140, payable out of the interest and sinking fund of the school district or community college district. The governing board of the school district or community college district may sell the bonds at a negotiated sale or by competitive bidding.

(b)(1) Before the sale, the governing board of the school district or community college district shall adopt a resolution, as an agenda item at a public meeting, that includes all of the following:

(A) Express approval of the method of sale.

(B) Statement

of the reasons for the method of sale selected.

(C) Disclosure of the identity of the bond counsel, and the identities of the bond underwriter and the financial adviser if either or both are used for the sale, unless these individuals have not been selected at the time the resolution is adopted, in which case the governing board of the school district or community college district shall disclose their identities at the public meeting occurring after they have been selected.

(D) Estimates of the costs associated with the bond issuance.

(E) If the sale includes bonds that allow for the compounding of interest, including, but not limited to, capital appreciation bonds, disclosure of the financing term and time of maturity, repayment ratio,

and the estimated change in the assessed value of taxable property within the school district or community college district over the term of the bonds.

(2)If the sale includes bonds that allow for the compounding of interest, including, but not limited to, capital appreciation bonds, the resolution shall be publicly noticed on at least two consecutive meeting agendas, first as an information item and second as an action item.

(c)If the sale includes bonds that allow for the compounding of interest, including, but not limited to, capital appreciation bonds, the agenda item shall identify that bonds that allow for the compounding of interest are proposed and the governing board of the school district or community college district shall be presented with all of the

following:

(1)An analysis containing the total overall cost of the bonds that allow for the compounding of interest.

(2)A comparison to the overall cost of current interest bonds.

(3)The reason bonds that allow for the compounding of interest are being recommended.

(4)A copy of the disclosure made by the underwriter in compliance with Rule G-17 adopted by the federal Municipal Securities Rulemaking Board.

(d)After the sale, the governing board of the school district or community college district shall do both of the following:

(1)Present the actual cost information for the sale at its next scheduled public meeting.

(2)Submit an itemized summary of the costs of the bond sale to the California Debt and Investment Advisory Commission.

(e)The governing board of the school district or community college district shall ensure that all necessary information and reports regarding the sale or planned sale of bonds by the school district or community college district it governs are submitted to the California Debt and Investment Advisory Commission in compliance with Section 8855 of the Government Code.

(f)The bonds may be sold at a discount not to exceed 5 percent and at an interest rate not to exceed the maximum rate permitted by law. If

the sale is by competitive bid, the governing board of the school district or community college district shall comply with Sections 15147 and 15148. The bonds shall be sold by the governing board of the school district or community college district no later than the date designated by the governing board of the school district or community college district as the final date for the sale of the bonds.

(g)The proceeds of the sale of the bonds, exclusive of any premium received, shall be deposited in the county treasury to the credit of the building fund of the school district, or community college district as designated by the California Community Colleges Budget and Accounting Manual. The proceeds deposited shall be drawn out as other school moneys are drawn out. The bond proceeds withdrawn shall not be applied to any purposes other

than those for which the bonds were issued. At no time shall the proceeds be withdrawn by the school district or community college district for investment outside the county treasury. Any premium or accrued interest received from the sale of the bonds shall be deposited in the interest and sinking fund of the school district or community college district.

(h)The governing board of the school district or community college district may cause to be deposited proceeds of sale of any series of the bonds in an amount not exceeding 2 percent

of the principal amount of the bonds in a costs of issuance account, which may be created in the county treasury or held by a fiscal agent appointed by the school district or community college district for this purpose, separate from the building fund and the interest and sinking fund of the school district or community college district. The proceeds deposited shall be drawn out on the order of the governing board of the school district or community college district or an officer of the school district or community college district duly authorized by the governing board of the school district or community college district to make the order, only to pay authorized costs of issuance of the bonds. Upon the order of the governing board of the school district or community college district

or duly authorized officer of the school district or community college district, the remaining balance shall be transferred to the county treasury to the credit of the building fund of the school district or community college district. The deposit of bond proceeds pursuant to this subdivision shall be a proper charge against the building fund of the school district or community college district.

(i)The governing board of the school district or community college district may cause to be deposited proceeds of sale of any series of the bonds in the interest and sinking fund of the school district or community college district in the amount of the annual reserve permitted by Section 15250 or in any lesser amount, as the governing board of the school district or community college district shall determine from time to time. The deposit

of bond proceeds pursuant to this subdivision shall be a proper charge against the building fund of the school district or community college district.

(j)The governing board of the school district or community college district may cause to be deposited proceeds of sale of any series of the bonds in the interest and sinking fund of the school district or community college district in the amount not exceeding the interest scheduled to become due on that series of bonds for a period of two years from the date of issuance of that series of bonds. The deposit of bonds proceeds pursuant to this subdivision shall be a proper charge against the building fund of the school district or community college district.

§ 15147

Amended by Stats. 2004, Ch. 7, Sec. 1.5. Effective January 22, 2004.

Before selling the bonds, or any part of them, the board of supervisors or community college district, as appropriate, shall give notice as required by Section 53692 of the Government Code.

§ 15148

Amended by Stats. 2002, Ch. 221, Sec. 10. Effective January 1, 2003.

If satisfactory bids are received, the bonds offered for sale shall be awarded to the highest responsible bidder or bidders, and the clerk of the board of supervisors shall prepare and certify to all of the proceedings on file in his or her office relative to the issuance and sale of the bonds, which transcript of proceedings shall be delivered to the successful bidder or bidders without charge. If no bids are received, or if the board determines that the bids received exceed either the maximum acceptable interest rate prescribed by the governing board or the maximum rate prescribed by Section 15143, or that they are not satisfactory as to price or responsibility of the bidders, the board may reject all bids received, if any, and without further authorization from the governing board, either readvertise or sell the bonds at private sale.

For the purpose of determining whether or not a bid exceeds the maximum acceptable interest rate, the interest rate of that bid shall be deemed to be the interest rate resulting from the total net interest cost arrived at by computing the total amount of interest which the district would be required to pay from the date of the bonds to the respective maturity dates thereof at the rate or rates specified in the bid and by deducting therefrom any premium bid.

§ 15149

Repealed and added by Stats. 1996, Ch. 277, Sec. 2. Effective January 1, 1997. Operative January 1, 1998.

The issuing school district or community college district by action of its governing board may prepare, or have prepared, bond brochures to serve as a prospectus for bond buyers to assist in the satisfactory sale of the bonds, the expense of the brochures to be payable out of the funds of the district. The brochures may be prepared only after the issuance of the bonds to be sold has been approved by the electors of the district pursuant to Sections 15120 to 15126, inclusive.

The issuing school district or community college district by action of its governing board may expend district funds for the purposes of advertising the availability of the bonds for purchase in any publication or newspaper which in the opinion of the governing board will give notice to prospective bond buyers that the bonds are available for purchase by bond buyers.

§ 15150

Amended by Stats. 2012, Ch. 715, Sec. 1. (AB 794) Effective January 1, 2013.

(a)When the governing board of a school district or a community college district deems it in the best interests of the district, it may by resolution, upon terms and conditions that it shall prescribe, issue notes, on a negotiated or competitive-bid basis, maturing within a period not to exceed five years, in anticipation of the sale of bonds authorized pursuant to Section 15100 or Section 15340 at the time the notes are issued. The proceeds from the sale of the notes shall be used only for authorized purposes of the bonds or to repay outstanding notes authorized by this section.

(b)All notes issued and any renewal of notes shall be payable at a

fixed time not more than five years from the date of the original issuance of the note. If the sale of the bonds does not occur before the maturity of the notes issued in anticipation of the sale, the fiscal officer of the school district or community college district, in order to meet the notes then maturing, shall issue renewal notes for this purpose. The renewal of a note may not be issued after the sale of bonds in anticipation of which the original note was issued and the maturity date of the renewed note shall not be later than five years from the date of the original issuance of the note.

(c)Every note and any renewal of a note shall be payable from the proceeds of the sale of bonds or of any renewal of notes or from other funds of the school district or community college district lawfully available for the purpose of repaying the notes,

including state grants. The total amount of the notes or renewals of notes issued and outstanding may not at any time exceed the total amount of the unsold bonds.

(d)(1) Interest on the notes may be payable from proceeds of the sale of bonds in anticipation of which the notes are issued, including any premium received on the sale of those bonds.

(2)Interest on the notes may be paid from a property tax levied for that purpose under the following conditions:

(A)A resolution of the governing board of the school district or community college district authorizes the levying of the tax. The tax for payment of the interest on the notes is a tax authorized by law for payment of the bonds in anticipation of which the notes are issued.

(B)The principal amount of the notes does not exceed the remaining principal amount of authorized but unissued bonds.

(3)The notes may be issued only if the tax rate levied to pay interest on the notes would not cause

the school district or community college district to exceed any of the limitations set forth in Section 15268 or 15270, as applicable.

(e)The original issuance of notes and any renewal of notes may be in the form of commercial paper notes. Each issuance of commercial paper notes to repay outstanding notes shall be deemed to be a renewal of notes subject only to the requirements of this section.