In connection with the exercise of the power to borrow money, to issue bonds, and to refund indebtedness, pursuant to this chapter, the board may, from time to time, establish and maintain a reserve fund or funds in the district treasury, or a special trust account or accounts with an agent or agents designated by the board as a sinking fund or otherwise, to insure the payment, when due or payable, whether at maturity or upon redemption, of the principal of, and interest on, bonds issued as aforesaid, including premiums, if any, due upon the redemption of any thereof, or for any of said purposes. Money in any such reserve fund may be used for the purchase of bonds of the
issue in connection with which it was established, for cancellation and retirement pursuant to any mandatory requirement of the redemption of sinking fund bonds. Each such fund or account shall be established and maintained out of the revenues pertaining to the electric system on account of which such power is exercised or out of any moneys which under the terms of this article are applicable to the purpose, through transfers or payments made at such times and in such amounts as the board may direct.
Electric System ImprovementsReserve Funds
Section § 13121
The board has the authority to create and maintain special reserve funds or trust accounts in connection with borrowing money, issuing bonds, and handling debt. These funds ensure the payment of the principal and interest on bonds, including any extra charges for early redemption. Money in these funds can be used to buy back and cancel bonds when required. The funds are set up and maintained using revenues from the electric system related to the borrowing activity and must be managed according to the board's directions.
reserve fund trust accounts sinking fund
Section § 13122
This law section explains that money set aside in a reserve fund or special trust account must stay there until it is used for its designated purpose. The funds can be temporarily invested, but only as specified by the chapter. Money can also be transferred between similar funds if the bond agreement allows it. If there's extra money left in the fund after all bond payments (including interest and redemption premiums) are covered, it can be returned to the original revenue fund.
Money set aside and placed in any such reserve fund or special trust account shall remain therein until from time to time expended for the purposes thereof, and shall not be used for any other purpose whatsoever, except for temporary investment thereof as provided in this chapter; provided, however,
(1)CA Public Utilities Code § 13122(1) That money may be paid or transferred from any such fund or account in furtherance of the purpose of its establishment, to any other such fund or account established for a like purpose in connection with the same issue of bonds, to such extent as may be required or permitted under the terms of the resolution
authorizing that issue; and
(2)CA Public Utilities Code § 13122(2) That all money remaining in any such fund or account in excess of the amount required to make provision for the payment in full of the principal of, and interest on, the bonds with respect to which it was established, including premiums, if any, due upon the redemption of any thereof, may be returned and transferred to the revenue fund out of which such reserve fund was established.
reserve fund special trust account temporary investment
Section § 13123
This law explains how money can be taken out of a reserve fund. Generally, money can only be accessed with a demand signed by the district's accountant. However, the board can allow the treasurer to use the fund without this signed demand to pay off bonds and their related coupons when they mature, to cover interest due on registered bonds, and to pay any premiums for redeeming bonds, but only when these items are presented and surrendered.
Money in any such reserve fund shall be drawn therefrom only upon demands authenticated by the signature of the accountant of the district; provided, however, that the board may, in its discretion, direct and authorize the payment from such reserve fund, by the treasurer, without such authenticated demand, (i) of bonds of the issue in connection with which such reserve fund is so established when due upon maturity or call, or of coupons pertaining to bonds of such issue when due, but only upon presentation and surrender of such bonds or coupons, (ii) of interest upon registered bonds of such issue when due, or (iii) of premiums, if any, due upon the redemption of any such bonds.
reserve fund accountant signature district treasurer
Section § 13124
The law states that funds in a special trust account can only be accessed or used following the instructions given or approved by the board in charge.
Money in any such special trust account shall be drawn therefrom only in accordance with directions given or authorized by the board.
special trust account board authorization funds access
