As used in this chapter, “nonprofit corporation” means any nonprofit corporation formed under the Corporations Code, or otherwise, which proposes to aid any public body by issuing securities to finance any one or more public projects.
Chapter 10Sale of Local Securities
Section § 5800
This section defines a 'nonprofit corporation' in the context of this chapter as any nonprofit organization set up under the Corporations Code or otherwise, that aims to support public entities by issuing securities to help fund various public projects.
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Section § 5801
This law section clarifies that the term "joint powers authority" refers to any entity as described in another legal section, specifically Section 6542.
As used in this chapter, “joint powers authority” means any entity defined in Section 6542.
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Section § 5802
This law defines the term "parking authority" as an organization established according to specific rules found in the Streets and Highways Code, starting at Section 31500.
As used in this chapter, “parking authority” means any entity created pursuant to Division 18 (commencing with Section 31500) of the Streets and Highways Code.
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Section § 5803
The term “issuer” in this context refers to a nonprofit corporation, a joint powers authority, or a parking authority.
As used in this chapter, “issuer” means a nonprofit corporation, a joint powers authority or a parking authority.
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Section § 5804
This law defines what is considered a 'public body' in this context. A 'public body' includes counties, cities, municipal corporations, political subdivisions, public districts, public corporations, public authorities, and their agencies. However, it excludes the federal government, state agencies, and entities from neighboring states.
As used in this chapter, “public body” means any county, city and county, city, municipal corporation, political subdivision, public district, public corporation or public authority, or any agency of any thereof, but does not include the federal government or any federal department or agency, this state, an adjoining state or any state department or agency.
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Section § 5805
This law defines 'securities' as any financial instruments, like bonds or notes, worth $500,000 or more, that are issued by an entity to fund a public project. It also includes interest coupons attached to these instruments.
As used in this chapter, “securities” means any bonds, notes, warrants or other evidences of indebtedness and the interest coupons, if any, attached thereto, issued or proposed to be issued in an aggregate principal amount of five hundred thousand dollars ($500,000) or more by any issuer to finance a public project.
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Section § 5806
This law defines a 'public project' as anything like land, buildings, facilities, or equipment that a public entity plans to acquire or complete using financing from bonds or other securities. The money to pay off these bonds comes from payments by one or more public bodies under a leaseback agreement.
As used in this chapter, “public project” means any land, structure, facility or equipment or other personal property, the acquisition, construction or completion of which is to be financed by securities of an issuer if any of the payments of principal of and interest on such securities is to be paid by such issuer from funds derived from rental or other payments which any one or more public bodies has agreed to pay to such issuer under a public leaseback.
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Section § 5807
This law defines 'public leaseback' as a type of lease agreement where a public body rents part or all of a public project from another entity called an issuer. The lease is signed before the public project is bought, built, or finished.
As used in this chapter, “public leaseback” means any lease by a public body of all or any part of a public project where the lease is between such public body as lessee and an issuer as lessor and the lease is executed before the public project is acquired, constructed or completed.
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Section § 5808
(a) If a public body in California wants to sell securities, it must first advertise them in a newspaper at least 10 days before the sale. They must invite bids and can sell to the highest responsible bidder. If no good bids are received, the issuer can either try again or sell privately.
(b) However, if they are acquiring a private water company or its stocks, they can negotiate directly with the owner without advertising, provided the deal was agreed upon before January 1, 1978.
(c) Also, issuers can exchange new securities for outstanding ones if the terms allow conversion.
(a)CA Government Code § 5808(a) Before selling any securities, any issuer shall advertise such securities for sale at public sale and shall invite sealed bids therefor by publication of a notice once at least 10 days before the date of such public sale in a newspaper of general circulation circulated within the boundaries of each public body to be aided by the public project to be financed by the issuance of such securities. If one or more satisfactory bids are received pursuant to such notice, such securities shall be awarded to the highest responsible bidder. If no bids are received or if the issuer determines that the bids received are not satisfactory as to price or responsibility of the bidders, the issuer may reject all bids received, if any, and either readvertise or sell such securities at private sale.
(b)CA Government Code § 5808(b) Any issuer may privately negotiate the acquisition of a private water company or the capital stock of such a company with the owner or owners thereof and issue its securities directly to such owner or owners without complying with any of the provisions of subdivision (a), provided that such acquisition is made pursuant to a written agreement entered into prior to January 1, 1978.
(c)CA Government Code § 5808(c) Any issuer utilizing the provisions of subdivision (b) may issue its securities to the holders of outstanding securities issued by the same issuer in connection with the exercise of a conversion privilege embodied in any such outstanding security.
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Section § 5809
This law states that certain financial instruments like securities, bonds, notes, and similar items, with a total amount under $500,000 and used to fund public projects through leasing arrangements, are not subject to state taxes in California. However, taxes on gifts, inheritances, and estates still apply. The rule confirms existing tax exemptions for securities or bonds issued by specific authorities like joint powers or parking authorities.
All securities as defined in Section 5805, and all bonds, notes, warrants or other evidences of indebtedness of an issuer in an aggregate principal amount less than five hundred thousand dollars ($500,000), that are issued to finance a public project either by public leaseback or by any lease between a public body as lessee and an issuer as lessor executed after the public project is acquired, constructed or completed and the interest thereon or income therefrom are exempt from all taxation in the state other than gift, inheritance and estate taxes. This section is declaratory of existing law as to the securities, bonds, notes, warrants or other evidences of indebtedness of any issuer that is a joint powers authority or parking authority.
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