(a) A special district may issue securitized limited obligation notes after the adoption, by a four-fifths vote of all the members of the governing body, of a resolution reciting each of the following:
(1) That the resolution is being adopted pursuant to this subdivision.
(2) The purposes of incurring the indebtedness, and that the indebtedness shall be used solely for those purposes.
(3) The estimated amount of the indebtedness.
(4) The maximum amount of notes to be issued, and the source of revenue or revenues to be used to secure the limited obligation notes.
(5) The maturity date of the securitized limited obligation notes.
(6) The form of the securitized limited obligation notes.
(7) The manner of execution of the securitized limited obligation notes.
(b) The resolution may also provide for any of the following matters:
(1) Insurance for the securitized limited obligation notes.
(2) A schedule for the completion of the purposes for which the indebtedness was incurred.
(3) Procedures in the event of default, terms upon which the securitized limited obligation notes may be declared due before maturity, and the terms upon which that declaration may be waived.
(4) The rights, liabilities, powers, and duties arising upon the special district’s breach of any agreement with regard to the securitized limited obligation notes.
(5) The terms upon which the holders of the securitized limited obligation notes may enforce agreements authorized by this section.
(6) A procedure for amending or abrogating the terms of the resolution with the consent of the holders of a specified percentage of the securitized limited obligation notes. If the resolution contains this procedure, the resolution shall specifically state the effect of amendment upon the rights of the holders of all of the securitized limited obligation notes.
(7) The manner in which the holders of the securitized limited obligation notes may take action.
(8) Other actions necessary or desirable to secure the securitized limited obligation notes or tending to make the notes more marketable.
(c) The securitized limited obligation notes shall bear interest at a rate not exceeding the rate permitted under Article 7 (commencing with Section 53530) of Chapter 3.
(d) The securitized limited obligation notes may not mature later than 10 years after the date of the issuance of the notes.
(e) The total amount of the securitized limited obligation notes outstanding at any one time within a special district may not exceed the sum of two million dollars ($2,000,000).
(f) The agreement between the special district and the purchasers of the securitized limited obligation notes shall state that the notes are securitized limited obligation notes payable solely from specified revenue of the special district. The pledged revenue shall be sufficient to pay the following amounts annually, as they become due and payable:
(1) The interest and principal on the notes.
(2) All payments required for compliance with the resolution authorizing issuance of the notes or agreements with the purchasers of the notes.
(3) All payments to meet any other obligations of the special district that are charges, liens, or encumbrances on the pledged revenue.
(g) The securitized limited obligation notes are special obligations of the special district, and shall be a charge against, and secured by a lien upon, and payable, as to the principal thereof and interest thereon, from the pledged revenue. If the revenue described in the authorizing resolution is insufficient for the payment of interest and principal on the notes, the special district may make payments from any other funds or revenues that may be applied to their payment. The revenue and any interest earned on the revenue constitute a trust fund for the security and payment of the interest on and principal of the notes.
(h) So long as any securitized limited obligation notes or interest thereon are unpaid following their maturity, the pledged revenue and interest thereon may not be used for any other purpose.
(i) If the interest and principal on the securitized limited obligation notes and all charges to protect them are paid when due, the special district may expend the pledged revenue for other purposes.
(j) Securitized limited obligation notes of the same issue shall be equally secured.
(k) The general funds of the state and the special district are not liable for the payment of the principal of, or the interest on, the securitized limited obligation notes.
(l) The holders of the securitized limited obligation notes may not compel the exercise of the taxing power by the special district, other than the revenue pledged, or the forfeiture of the special district’s property.
(m) Every agreement shall recite in substance that the principal of, and interest on, the securitized limited obligation notes are payable solely from the revenue pledged to the payment of the principal and interest and that the special district is not obligated to pay the principal or interest except from the pledged revenue.
(Added by Stats. 2004, Ch. 114, Sec. 1. Effective January 1, 2005.)
Last modified: October 25, 2018