Bill Text: CA SB826 | 2009-2010 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: General obligation bonds.
Spectrum: Slight Partisan Bill (Democrat 9-4)
Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 205, Statutes of 2009. [SB826 Detail]
Download: California-2009-SB826-Introduced.html
Bill Title: General obligation bonds.
Spectrum: Slight Partisan Bill (Democrat 9-4)
Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 205, Statutes of 2009. [SB826 Detail]
Download: California-2009-SB826-Introduced.html
BILL NUMBER: SB 826 INTRODUCED
BILL TEXT
INTRODUCED BY Committee on Governmental Organization (Senators
Wright (Chair), Benoit, Calderon, Denham, Florez, Harman, Negrete
McLeod, Oropeza, Padilla, Romero, Wiggins, Wyland, and Yee)
MARCH 19, 2009
An act to amend Sections 16724.5, 16731, 16731.6, 16735, 16737,
16752, 16752.1, 16753, 16754, 16754.3, 16755, and 16757 of, and to
repeal Section 16736 of, the Government Code, relating to general
obligation bonds.
LEGISLATIVE COUNSEL'S DIGEST
SB 826, as introduced, Committee on Governmental Organization.
General obligations bonds.
(1) The State General Obligation Bond Law generally provides for a
procedure that may be adopted by other acts, with any necessary
modifications, in authorizing the issuance and sale of state general
obligation bonds and providing for the repayment of those bonds,
including the determination of interest rates the bonds shall bear.
Existing law requires, with regard to a resolution specifying that
the bonds may pay a variable interest rate, that the aggregate
principal amount of all state general obligations bonds bearing
variable interest rates do not exceed 20 percent of the aggregate
principal amount of all outstanding general obligation bonds.
Existing law exempts, from this calculation, variable rate bond that
have an effective fixed interest rate through a hedging contract.
This bill would require the Treasurer to determine, with regard to
those bonds that have an effective fixed interest rate through a
hedging contract, that the hedging contract either significantly
reduces variable rate risk or qualifies for integration with the
bonds in calculating the yield on the bonds under certain federal
rules.
(2) Existing law provides that certain amounts payable or
contractual obligations regarding bonds that bear a variable interest
rate under a bond act that was approved by the voters before July 1,
2002, are not backed by the full faith and credit of the state.
This bill would provide that those amounts payable or contractual
obligations are backed by the full faith and credit of the state, if
the bond act was approved on or after January 1, 2002.
(3) Existing law requires, for bonds approved by the voters after
January 1, 2006, that the payment of interest include the payment of
any amounts owed by a counterparty after any offset for payments owed
to the state on a hedging contract, and prohibits the total payments
of stated interest on the bonds and payments owed by the state from
exceeding a specified maximum rate after a specified offset.
This bill would instead provide that the payment of any amounts
owed by the state, after any offset, shall be deemed to be included
within the appropriation for interest on the bonds. The bill would
allow the payments of interest on a bond and the payments on a
hedging contract that exceed the maximum rate in a fiscal year to be
paid in subsequent fiscal years, under specified conditions.
(4) Existing law requires, when the finance committee created by
the bond act determines to issue commercial paper notes, for purposes
of determining the principal amount of outstanding bonds, that the
principal amount deemed outstanding be the maximum amount authorized
in the resolution.
This bill would delete that condition.
(5) Existing law authorizes the Treasurer, when the finance
committee created by the bond act deems it in the best interests of
the state, to issue notes, on a negotiated or a competitive-bid
basis, maturing within a period not to exceed 2 years, in
anticipation of the sale of bonds.
This bill would increase the maturation date of those notes to 5
years and make related changes.
(6) Existing law specifies the manner in which the Treasurer may
sell bonds.
This bill revise these provisions regarding the competitive sale
of bonds and the conditions for bidding in a competitive sale or
purchasing in a negotiated sale. The bill would make other conforming
and nonsubstansive changes to the bond law.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 16724.5 of the Government Code is amended to
read:
16724.5. There (a)
(1) For purposes of this section, "revolving
fund" means the General Obligation Bond Expense Revolving Fund
created pursuant to this section.
(b) There is in the State
Treasury the General Obligation Bond Expense Revolving Fund
, hereafter referred to in this section as the revolving fund. The
revolving fund consists , which shall
consist of all money appropriated by the Legislature
for such into that fund or payable into
such that fund in accordance with this section.
All
(c) All money in the revolving
fund is hereby appropriated and shall be available without regard to
fiscal years for the payment all of the
following:
(1) The payment of the expenses
incurred by the State Treasurer in having the bonds prepared and in
advertising their sale or their prior redemption , for
.
(2) For expenses incurred by the
committee pursuant to Section 16758 , and for
.
(3) For payment for legal
services pursuant to Section 16760. Whenever
(d) Except as provided in Section
16757, whenever bonds are sold, out of the first money realized
from their sale, there shall be redeposited in the revolving fund
such the sums as
that have been expended for the above
purposes specified in subdivision (c) , which may be used
for the same purposes and repaid in the same manner whenever
additional sales are made.
SEC. 2. Section 16731 of the Government Code is amended to read:
16731. Whenever the committee determines that the sale of all or
any part of the bonds authorized to be issued is necessary or
desirable, it shall adopt a resolution to that effect. The resolution
shall specify all of the following as to the bonds then
to be sold:
(a) The aggregate number, aggregate par value, denominations, and
the date of the bonds to be then sold. The denominations shall be in
the sum of one thousand dollars ($1,000) or multiples of that sum.
The date appearing on the bonds shall be deemed to be the date of
issuance for all purposes of this chapter, irrespective of the actual
date of delivery of the bonds and the payment of the purchase price
of the bonds.
(b) The dates of maturity and the amount of the bonds maturing at
each date of maturity, which amounts need not be equal. The last
dates of maturity shall be not more than 45 years after the date of
the bonds.
(c) Whether or not the bonds are to be subject to redemption or
tender prior to maturity, and, if so, the provisions for the
redemption or tender, the manner of the call or notice thereof, and
the price or prices at which the bonds shall be subject to redemption
or tender.
(d) (1) (A) The annual rate, or rates, of
interest that the bonds to be issued shall bear, which may be in
multiples of one-eighth or one-twentieth of 1 percent, but not in
excess of 11 percent. The rate or rates may be determined at the time
of the sale of the bonds. Alternatively,
(B) As an alternative to subparagraph
(A), the resolution may specify that the bonds may pay a
variable interest rate or rates , as prescribed in the
resolution , but not in excess of 11 percent per annum, and in
accordance with the requirements of this subparagraph .
However, at the time
(i) At the time and as the result
of the issuance of any bonds bearing a variable interest rate, the
aggregate principal amount of all state general obligation bonds
bearing variable interest rates may not exceed 20 percent of the
aggregate principal amount of all state general obligation bonds then
outstanding. For
(ii) For purposes of
this the calculation made pursuant to
clause (i) , variable rate bonds shall not include
bonds commercial paper issued pursuant to
Section 16731.6 or bonds that have an effective fixed interest rate
through a hedging contract, as specified in subparagraph (C),
but shall include bonds that have an effective variable
interest rate through a hedging contract. Notwithstanding
(iii) Notwithstanding any other
provision of this chapter, if the committee decides to issue state
general obligation bonds bearing variable interest rates, the
committee is not required to comply with Section 16732.
Notwithstanding
(iv) Notwithstanding any other
provision of law, if bonds are issued bearing a variable interest
rate under a bond act approved by the voters prior to
on or after January 1, 2002, and if the variable
interest rate bonds provide a right of tender, then any amount
payable by the state as a result of the tender with respect to
principal of and interest on the bonds prior to the regularly
scheduled principal or interest payment dates, or payable by the
state pursuant to redemption or call initiated as a means to repay
the obligation of the state resulting from the tender, is
not backed by the full faith and credit of the state and
shall not be payable under the bond act.
Further, no
(v) A contractual obligation of
the state under a standby bond purchase agreement or other liquidity
facility entered into in connection with variable interest rate bonds
providing a right of tender and issued under a bond act approved by
the voters prior to on or after January
1, 2002, shall be backed by the full faith and credit of the state
and shall not be payable under the bond act.
These obligations are
(vi) A right of tender or contractual
obligation not described in clauses (iv) and (v) is subject to
annual appropriation by the Legislature.
(C) For the purposes of clause (ii) of subparagraph (B), bonds
that have an "effective fixed interest rate through a hedging
contract" means bonds for which the Treasurer determines the hedging
contract meets either of the following conditions:
(i) Significantly reduces variable rate risk by providing changes
in fair values or cash flows that substantially offset the changes in
fair value or cash flows of the bonds.
(ii) Qualifies for integration with the bonds in calculating the
yield on the bonds under the rules prescribed in Section 148 of the
United States Internal Revenue Code (26 U.S.C. Sec. 148).
(D) The Treasurer shall make the determination specified in
subparagraph (C) at the time the hedging contract is entered into and
this determination shall apply through the maturity of the bonds,
unless the hedging contract is terminated prior to maturity.
(2) (A) (i) Notwithstanding any other
provision of law, for bonds approved by the voters after January 1,
2006, payment of interest on the bonds as provided in this
subdivision shall include payment of any amounts owed by
the state to a counterparty , after any offset for
payments owed to the state on any hedging contract described in
Section 5922 in connection with those bonds, and those
payments shall be deemed to be included within the
appropriation for interest on the bonds contained in the applicable
bond act. The
(ii) The total payments of stated
interest on the bonds together with payments owed by the state after
any offset for payments owed to the state on a hedging contract
shall not exceed the maximum rate set forth in this subdivision.
(iii) To the extent payments of interest on a bond, together with
payments on a hedging contract, would, in any fiscal year, exceed the
maximum rate permitted by law , the excess amounts may be paid in
subsequent fiscal years, if the aggregate amount of interest and that
excess amount paid in any year does not exceed the maximum rate
permitted by law.
(B) The Treasurer may not enter into any hedging contract
described by subparagraph (A) unless the committee has approved
policies developed by the Treasurer relating to the entering into and
managing of those hedging contracts . The policies shall
require that shall include both of the following:
(i) A requirement that any
hedging contract or program of contracts is designed to reduce the
amount or duration of payment, currency, rate, spread, or similar
risk or result in a lower cost of borrowing when used in combination
with the issuance or carrying of bonds. The policies shall
also include a
(ii) A description of the criteria
to be used to evaluate the potential risks and benefits to the state
of entering into a particular hedging contract or program of
contracts and to evaluate the performance of outstanding hedging
contracts in comparison to the objectives for which the hedging
contract was executed. The
(C) The policies approved
pursuant to this paragraph subparagraph (B)
are exempt from the requirements of Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3.
(e) The interest payment dates.
(f) The technical form and language of the bonds.
(g) Whether or not the right is reserved to make delivery in the
form of temporary or interim bonds, certificates, or receipts,
exchangeable for definitive bonds when executed and available for
delivery. If the right is reserved, the denominations and form of the
temporary securities shall be stated.
(h) Provisions for the registration and exchange of bonds and for
the use of a depository to hold book-entry bonds after issuance.
(i) All other terms and conditions of the bonds and of the
execution, issuance, and sale of the bonds, which shall be consistent
with all of this chapter.
SEC. 3. Section 16731.6 of the Government Code is amended to read:
16731.6. (a) Notwithstanding any other provision of this chapter,
and as an alternative to the procedures set forth in Section 16731,
the committee may provide for the issuance of all or part of the
bonds authorized to be issued as commercial paper notes. The
committee shall adopt a resolution finding that issuance of the bonds
in the form of commercial paper notes is necessary and desirable,
directing the Treasurer to arrange for preparation of the requisite
number of suitable notes, and specifying other provisions relating to
the commercial paper notes , including all of
the following:
(1) For each program of commercial paper notes authorized, the
resolution shall contain the final date of maturity and
the total aggregate principal amount of the commercial paper notes
authorized to be outstanding at any one time up to the maturity date
. The , in accordance with all of the
following:
(A) The resolution may provide
that the commercial paper notes may be issued and renewed from time
to time until the final maturity date, and that the amount issued
from time to time may be set by the Treasurer up to the maximum
amount authorized to be outstanding at any one time. The
(B) The resolution shall include
methods of setting the dates, numbers, and denominations of the
commercial paper notes. Determination
(C) The determination of the
final maturity date and total amount by the committee shall be made
upon recommendation of the Treasurer to meet the needs of the state
for funds, to provide the maximum benefit to potential purchasers,
and to respond to the expected demand for the commercial paper notes.
Notwithstanding
(D) Notwithstanding any other
provision of this chapter, whenever the committee determines to issue
commercial paper notes, the committee need
is not required to comply with the requirements of
Section 16732.
(2) The method of setting the interest rates and interest payment
dates applicable to the commercial paper notes . Commercial
, in accordance with the following:
(A) Commercial paper notes may
bear a state stated rate of interest
payable only at maturity, which rate or rates may be determined at
the time of sale of each unit of commercial paper notes. The
(B) The rate of interest borne by
the commercial paper notes shall not exceed 11 percent per annum.
Notwithstanding
(C) Notwithstanding any other
provision of this chapter, whenever the committee determines to issue
commercial paper notes, the committee need
is not required to comply with the requirements of
Section 16733.
(3) Any provisions for the redemption of the commercial paper
notes prior to stated maturity.
(4) The technical form and language of the commercial paper notes.
(5) All other terms and conditions of the commercial paper notes
and of their execution, issuance, and sale, deemed necessary and
appropriate by the committee.
(b) Notwithstanding any other provision of this chapter, when the
committee determines to issue commercial paper notes, all of the
following shall apply:
(1) The commercial paper notes may be sold at negotiated sale at a
price below the par value in a manner consistent with paragraph (2)
of subdivision (a).
(2) For purposes of determining the principal amount of bonds of
any voted authorization outstanding, in the case of any commercial
paper notes, the principal amount deemed outstanding at any time
during the term of a program of commercial paper notes shall be the
maximum amount authorized in the resolution.
(3)
(2) During the term of any program of
commercial paper notes, the renewal and reissuance from time to time
of the commercial paper notes in an amount up to the maximum amount
authorized by the resolution shall be deemed to be a refunding of the
previously maturing amount, permitted by and consistent with Article
6 (commencing with Section 16780).
(4)
(3) Consistent with the intent for the
General Fund to realize a savings in debt service costs when
commercial paper notes are issued in place of bonds without shifting
or adding financing and debt service costs to the bond funds, the
state administrative costs of commercial paper and interest payable
and other costs associated with commercial paper notes shall be paid
for as follows:
(A) The proceeds of commercial paper notes are, notwithstanding
Section 13340, continuously appropriated to pay the state
administrative costs of commercial paper including, but not limited
to, costs of the Treasurer's office, the Controller's office, and the
Department of Finance.
(B) The interest payable on maturing commercial paper notes and
other costs associated with commercial paper notes not specified in
paragraph (A), including, but not limited to, remarketing fees,
issuing and paying agent fees, the letter or line of credit provider
fees, the rating agency fees, and bond counsel fees, shall be paid
from the General Fund which, notwithstanding Section 13340, is
continuously appropriated to pay the interests and costs.
SEC. 4. Section 16735 of the Government Code is amended to read:
16735. Each bond shall contain a reference to the bond act, and
if subject to call or , tender, or
redemption prior to maturity, a recital to that effect.
SEC. 5. Section 16736 of the Government Code is repealed.
16736. When the committee deems it in the best interests of the
state, it may authorize the State Treasurer upon such terms and
conditions as may be fixed by the committee to issue notes, on a
negotiated or a competitive-bid basis, maturing within a period not
to exceed two years, in anticipation of the sale of bonds duly
authorized at the time such notes are issued. The proceeds from the
sale of such notes shall be used only for the purposes for which may
be used the proceeds of the sale of bonds in anticipation whereof the
notes were issued.
When the committee deems it in the best interests of the state, it
may authorize the State Treasurer to deliver such notes in payment
for work or material furnished to the state for a public improvement,
pursuant to a contract awarded in the manner prescribed by law. Such
notes shall be so delivered only for the purposes for which may be
used the proceeds of the sale of bonds in anticipation whereof the
notes were issued.
All notes issued and any renewals thereof shall be payable at a
fixed time, solely from the proceeds of the sale of the bonds and not
otherwise, except that in the event that the sale of the bonds shall
not have occurred prior to the maturity of the notes issued in
anticipation of the sale, the State Treasurer shall, in order to meet
the notes then maturing, issue renewal notes for such purpose. No
renewal of a note shall be issued after the sale of bonds in
anticipation of which the original note was issued.
Every note and any renewal thereof shall be payable from the
proceeds of the sale of bonds and not otherwise. The total amount of
such notes or renewals thereof issued and outstanding shall at no
time exceed the total amount of the unsold bonds.
Interest on the notes shall be payable from any appropriation made
for that purpose.
SEC. 6. Section 16737 of the Government Code is amended to read:
16737. (a) When the committee deems it in
the best interests of the state, it may authorize the State
Treasurer, upon such those
terms and conditions as that may be
fixed by the committee or determined by the Treasurer , to
issue notes, on a negotiated or a competitive-bid basis, maturing
within a period not to exceed two five
years, in anticipation of the sale of bonds duly authorized at the
time such the notes are issued. The
proceeds from the sale of such those
notes shall be deposited in the related fund and used only
for the purposes for which may be used the proceeds of the sale of
bonds in anticipation whereof the notes were issued or as
additionally authorized by this section .
(b) The notes authorized by this section may be sold at a price
at, above, or below the principal amount thereof, at the discretion
of the Treasurer.
(c) Any premium received from the sale of notes authorized by this
section may be applied to pay costs of issuance of the notes or
interest accruing on the notes.
(d) The notes authorized by this section may bear a fixed or
variable rate of interest.
(e) In connection with the sale of notes pursuant to this section,
the Treasurer may engage the services of legal and financial
advisers, credit enhancers, trustees or paying agents, and other
professionals that the Treasurer deems necessary, and may enter into
contracts for these services, to be paid from proceeds of the notes
or any duly enacted appropriation.
When
(f) When the committee deems it
in the best interests of the state, it may authorize the
State Treasurer to deliver such the
notes in payment for work or material furnished to the state
for a public improvement, pursuant to a contract awarded in the
manner prescribed by law. Such The
notes shall be so delivered only for the purposes for which may be
used the proceeds of the sale of bonds in anticipation whereof the
notes were issued.
All
(g) All notes issued
pursuant to this section and any renewals thereof shall be
payable at a fixed time, solely from the proceeds of the sale of the
bonds and not otherwise, except that in the event that
if the sale of the bonds shall not have
occurred did not occur prior to the maturity of
the notes issued in anticipation of the sale, the State
Treasurer shall, in order to meet the notes or the
renewals thereof then maturing, issue renewal notes for
such this purpose. No renewal of a note
or a renewal note shall be issued after the sale of bonds
in anticipation of which the original note was issued.
Every
(h) Every note issued
pursuant to this section and any renewal thereof shall ,
unless paid from a renewal note, be payable from the proceeds
of the sale of bonds and not otherwise. The total amount of
such the notes or renewals thereof issued and
outstanding shall at no time not exceed
the total amount of the unsold bonds.
Interest
(i) Interest on the notes
issued pursuant to this section shall be payable from any
appropriation made for that purpose or from proceeds of the sale
of the notes .
This section shall be effective only with respect to bond
anticipation notes issued in anticipation of the sale of bonds
authorized either at statewide elections held prior to September 15,
1961, or authorized at any statewide election duly called and held at
any time after the effective date of this section.
SEC. 7. Section 16752 of the Government Code is amended to read:
16752. The State Treasurer may from time to
time, by electronic means or by public announcement at the
place and at or before the time fixed for the
a competitive sale of bonds
, continue such the sale to
such the time and place as he
the Treasurer may select.
SEC. 8. Section 16752.1 of the Government Code is amended to read:
16752.1. The State Treasurer may cancel or
postpone the a competitive sale of
bonds to an indefinite date by public announcement made prior
to or at the time and place fixed for the sale of the bonds.
After two consecutive cancellations or postponements of such sale,
any further cancellations or postponements shall be with the prior
approval of the committee. The State
Treasurer may give such notice of the new time and
place of the sale of the bonds as he that
the Treasurer may deem advisable.
SEC. 9. Section 16753 of the Government Code is amended to read:
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 submits a bid
or underwriter submits a bid or proposal. In the case of a
competitive sale, the good faith deposit shall be based upon the
publicly announced principal amount of bonds offered for sale at
least three days prior to receipt of the bids . 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
rate.
SEC. 10. Section 16754 of the Government Code is amended to read:
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
public a competitive sale to the bidder
whose bid will result in the lowest interest cost on account of
those bonds , but the Treasurer .
(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 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) detached, to the date of the
purchaser's payment for the bond. The
(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.
The
(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. Under
(2) Under the present worth basis
method, the bonds shall be awarded to the bidder submitting the
lowest interest rate bid determined , 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. Under
(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.
SEC. 11. Section 16754.3 of the Government Code is amended to
read:
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 public
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 public
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. The
(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. Under
(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. Under
(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.
SEC. 12. Section 16755 of the Government Code is amended to read:
16755. (a) The deposit of each unsuccessful
bidder shall be returned to him the bidder
immediately upon the rejection of his
the bidder's bid or the acceptance of another bid.
The
(b) The deposit of the successful
bidder or underwriter in a negotiated sale shall,
immediately upon the acceptance of his the
bid or proposal , become and be the property of the
State and state, be placed in the State
Treasury to the credit of the fund, and shall be
credited to the successful purchaser bidder
or underwriter upon the purchase price of the bonds
bid for in case such when the purchase price is
paid in full by him within the time mutually agreed
upon between the successful bidder or underwriter and the
State Treasurer.
If
(c) If the purchase price is not
so paid in accordance with subdivision (b)
, the successful bidder or underwriter shall have no
right in and to the bonds or by reason of
his the bid , nor,
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
would not cannot be validly issued if
or delivered to the purchaser in the
form and manner proposed, shall such successful bidder have any right
to the recovery of the deposit accompanying his bid or to any
allowance or credit by reason of such deposit ,
unless the return of the good faith deposit is provided for in
the purchase contract .
SEC. 13. Section 16757 of the Government Code is amended to read:
16757. (a) The proceeds of each sale of
bonds, and such the amount as
that may have been paid as accrued interest on
such the bonds, shall be forthwith paid
over by the State Treasurer into the fund.
All
(b) All money deposited in the
fund under the provisions of pursuant to
this section which 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, prior to
transfer to the General Fund .
