Code Section Group

Water Code - WAT

DIVISION 13. CALIFORNIA WATER DISTRICTS [34000 - 38501]

  ( Division 13 added by Stats. 1951, Ch. 390. )

PART 6. FINANCIAL PROVISIONS [35900 - 36458.1]

  ( Part 6 added by Stats. 1951, Ch. 390. )

CHAPTER 2. Provisions Relating to All Bonds [35950 - 36064]

  ( Chapter 2 added by Stats. 1951, Ch. 390. )

ARTICLE 6. Refunding Bonds [36060 - 36064]
  ( Article 6 added by Stats. 1983, Ch. 676, Sec. 1. )

36060.
  

This article applies only to the Irvine Ranch, Moulton-Niguel, Rancho California, and Santa Margarita Water Districts. “District” as used in this article means the Irvine Ranch Water District, the Moulton-Niguel Water District, the Rancho California Water District, or the Santa Margarita Water District.

(Amended by Stats. 1986, Ch. 398, Sec. 1. Effective July 17, 1986.)

36061.
  

A district may, when necessary or proper, issue additional bonds in the same manner as provided for the original issue for any one or more of the following purposes:

(a) To accomplish one or more of the purposes specified in Section 35954.

(b) To refund any issue of bonds previously made. Refunding bonds may be issued pursuant to Article 9 (commencing with Section 53550) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code, without submitting the question of issuance of the refunding bonds to a vote of the qualified electors.

(Added by Stats. 1983, Ch. 676, Sec. 1. Effective September 11, 1983.)

36062.
  

A district may bring an action pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure or pursuant to Chapter 2 (commencing with Section 1084) of Title 1 of Part 3 of the Code of Civil Procedure to validate the issuance of any or all of the remaining bonds which were authorized by the voters at any given election, if the district’s board of directors has adopted a resolution authorizing the issuance of the remaining bonds of the authorization, inclusive of any refunding bonds that might be issued therefor under Section 36063, in such series and at such times as the board may, in its discretion, determine, and at the interest rates as may be authorized by law at the time of issuance, including, but not limited to, Article 8 (commencing with Section 53540) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code. The terms of a judgment obtained in a proceeding hereunder may include a ruling that the validation shall automatically incorporate any change made in the interest rate set forth in Article 8 (commencing with Section 53540) of Part 1 of Division 2 of Title 5 of the Government Code by a later-enacted statute. Any action commenced under this section may be filed either in a superior court or in a district court of appeals.

(Added by Stats. 1983, Ch. 676, Sec. 1. Effective September 11, 1983.)

36063.
  

(a) Whenever the board of directors determines that prudent management of the fiscal affairs of the district so requires, it may refund by defeasing or calling for redemption any outstanding bonds, subject to all of the following:

(1) The last-maturing refunding bonds shall mature not later than the date on which the last-maturing bonds being refunded would have matured.

(2) Refunding bonds shall not be issued unless the total interest cost to maturity of the refunding bonds added to the principal amount of those refunding bonds will be less than the total interest cost to maturity of the bonds being refunded added to the principal amount of the bonds being refunded. If any of the refunding bonds or the bonds being refunded, or both, bear or may bear interest at a variable rate, thereby making the actual total interest cost to maturity indeterminable in advance of maturity, the determination required by this paragraph may consist of a finding made by the board based on substantial evidence, which means evidence that is reasonable, credible, and of solid value and ponderable legal significance, based upon the record as a whole. The test in Section 53552 of the Government Code need not be met if the determination in this paragraph is made.

(3) The savings achieved through the refunding of bonds shall be used by the board of directors solely to reduce the assessments or charges, or both, which are fixed and collected for the payment of principal of, and interest on, the refunding bonds. The reductions to reflect the savings in any fiscal year shall be made not later than the next succeeding fiscal year.

(b) The refunding bonds shall be issued according to Article 9 (commencing with Section 53550) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code.

(c) When the originally issued bonds have been refunded, the refunding bonds shall thereafter take the place of, and be deemed for all purposes to be, the bonds corresponding to the portion of the authorization by the voters from which the refunded bonds were originally issued and shall be payable from the same funds as those refunded bonds. Following the refunding, the same portion of the corresponding voter authorization as was previously canceled by issuance of the refunded bonds shall remain canceled and shall be deemed to be the amount of indebtedness issued from the voter authorization representing the refunding bonds. However, refunding bonds issued under this section shall be used only for the purpose of reducing debt service costs on bonds issued from indebtedness approved by the voters prior to July 1, 1978, or refunding bonds issued in place thereof under this section.

(d) Notwithstanding Section 53569 of the Government Code and Section 35996 of this code, if the board of directors determines that to do so would be consistent with prudent management of the district’s fiscal affairs, the board may sell refunding bonds issued under this section at private sale without advertising for bids.

(e) The disbursement of the proceeds of the refunding bonds, pursuant to this section, shall be at the direction of the board of directors or the district’s authorized officers.

(Amended by Stats. 1985, Ch. 645, Sec. 2. Effective September 17, 1985.)

36063.5.
  

(a) The following terms shall have the following meanings for purposes of this section:

(1) “Bond counsel” means any attorney or firm of attorneys that represents the issuer of a new issue of bonds with respect to the issuance of the bonds and that renders a written legal opinion to, or as counsel for, the issuer with respect to the validity of the bonds.

(2) “Bond” means any bonds, notes, or other evidences of indebtedness issued by a district, or certificates of participation in any lease, sale, or other obligations of a district. “New issue of bonds” means the original issuance of bonds by a district to one or more purchasers until, in the case of underwriters, the end of the underwriting period. In the case of bonds with a tender or put option feature, or commercial paper, “new issue of bonds” means only the original issuance and not any remarketing, rollover, or reissuance.

(3)  A “financial advisory relationship” exists when an investment firm, or other person or firm in the business of providing financial advisory or financial consulting services to issuers with respect to municipal securities, renders, or enters into an agreement to render, financial advisory or financial consultant services to, or on behalf of, an issuer with respect to a new issue or issues of bonds, including advice with respect to the structure, timing, terms, and other similar matters concerning the issue or issues, for a fee or other compensation or in expectation of such compensation for the rendering of those services. However, a financial advisory relationship does not exist when, in the course of acting as an underwriter, an investment firm renders advice to an issuer, including advice with respect to the structure, timing, terms, and other similar matters concerning a new issue of bonds or when, for any new issue of bonds, an investment firm advises and assists an issuer with respect to obtaining consent from holders of previously issued bonds in connection with, among other things, amendments of covenants or defaults.

(4) “Investment firm” means any bank, investment bank, partnership, corporation, association, or other firm engaged in the business of buying and selling bonds for its own account or for the account of others as part of its regular business.

(b) No investment firm that has, or has had, a financial advisory relationship with respect to a new issue of bonds shall acquire as principal either alone or as a participant in a syndicate or other similar account formed for the purpose of purchasing, directly or indirectly, from the issuer all or any portion of the issue, or arrange for the acquisition or participation by a person controlling, controlled by, or under common control with the investment firm, unless the issue is to be sold by the issuer at competitive bid and the issuer has, prior to the bid, expressly consented in writing to the acquisition or participation. The limitations and requirements set forth in this section also apply to any investment firm controlling, controlled by, or under common control with the investment firm having a financial advisory relationship. The use of the term “indirectly” in this section does not preclude any investment firm which has a financial advisory relationship with respect to a new issue of bonds from purchasing any of those bonds from an underwriter, either for its own trading account or for the account of its customers, except to the extent that the purchase is made to contravene the purpose and intent of this section.

(c) Each financial advisory relationship shall be evidenced by a written document executed prior to, upon, or promptly after the inception of the financial advisory relationship, or promptly after the creation or selection of the issuer if the issuer does not exist or has not been determined at the time the relationship commences. That written document shall set forth the basis of compensation for the financial advisory services to be rendered, which shall be on a basis other than as a percentage of the amount of the bonds to be sold.

(d) No bond counsel with respect to a new issue of bonds shall also be counsel, with respect to that new issue of bonds, to the underwriter or other initial purchaser of the bonds. This section does not preclude the bond counsel from rendering one or more opinions to the underwriter or purchaser with respect to the bonds, the documents or laws pursuant to which the bonds are issued, the official statement, offering circular, or other disclosure document describing the bonds, or any related matter, if the opinion is rendered as bond counsel and not as counsel to the underwriter or purchaser.

(e) Injunctive relief shall be available, subject to judicial discretion, to prohibit or enjoin any violation of this section, but no violation shall affect the authority, validity, or enforceability of bonds.

(Added by Stats. 1985, Ch. 645, Sec. 2.5. Effective September 17, 1985.)

36064.
  

Bonds may be refunded by defeasance or call for redemption, subject to all of the following requirements:

(a) Notwithstanding Sections 53557 and 53585 of the Government Code, the proceeds of the sale of refunding bonds deposited in escrow or trust may be invested or reinvested in any combination of federal securities and securities permitted by subdivisions (c) and (d) of Section 53635 of the Government Code, except that investment and reinvestment of the proceeds shall not be permitted in securities issued by the district or on behalf of any of its improvement districts. The ratings of any securities permitted by subdivision (d) of Section 53635 of the Government Code in which the escrow or trust is invested or reinvested, or debt service insurance or other credit enhancement with respect to those securities, or any combination thereof, shall produce a rating on those securities when acquired equivalent to the highest long-term debt rating category of either Moody’s Investors Service, Inc., or Standard and Poor’s Corporation. Notwithstanding Section 53584 of the Government Code, the securities may be acquired from the issuer thereof or any other source approved by the board.

(b) The escrow or trust shall be established in an amount sufficient to pay when due the principal of, redemption premium, if any, and interest on, the bonds being refunded. Securities in the escrow or trust may be exchanged or sold and the proceeds used to purchase other securities only when the escrow agent or trustee holding the fund deems the exchange or sale necessary to maintain the ability to pay when due the principal of, redemption premium, if any, and interest on, the bonds being refunded. If the escrow or trust becomes insufficient to pay the principal, redemption premium, if any, and interest when due, the board may, to the extent of the insufficiency, augment the escrow or trust from assessments or charges, or both, fixed and collected for that purpose, notwithstanding Section 53561 of the Government Code and Section 36063 of this code.

(c) Notwithstanding Section 53583 of the Government Code, the bonds being refunded need not be called and paid at the first or any subsequent date on which the bonds may legally be called, if the board determines that to do so would be consistent with prudent management of the district’s fiscal affairs.

(Added by Stats. 1985, Ch. 340, Sec. 1. Effective July 29, 1985.)

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