Validity - Electric System Improvements - Public Utilities - CA

Section § 13161

Before any new bonds are issued under this chapter, the board must verify a few things through a formal decision process. They need to check the district's earned surplus from the electric system as of the last fiscal year end, ensuring it aligns with current accounting practices. However, this isn't needed for refunding bonds or when voters have approved bonds over the limit. They must also confirm the amount of currently outstanding bonds, and ensure the new bond issuance follows all chapter rules. Additionally, they need to make sure the total debt, including the new bonds, is within California's legal limits. Lastly, they must verify that all necessary legal steps have been properly followed before issuing these bonds.

Prior to the issue of any bonds to be issued pursuant to this chapter, the board, after satisfying itself respecting the relevant facts, shall, by resolution, find and determine—

(1) The amount of earned surplus derived from the operation of the electric system of the district to which the revenues out of which such bonds are to be payable pertain, as of the end of the last fiscal year which ended not less than four months prior to the making of such finding and determination, and that the ascertainment of such earned surplus has been in accordance with the then current accounting practice of the district; provided, however, that such finding and determination need not be made in the case of the authorization of refunding bonds, or in any case where the voters have assented to the issuance of bonds in excess of the limitation specified in this chapter.

(2) The amount of bonds issued under this chapter which are outstanding at the time of the adoption of such resolution.

(3) That the resolution or resolutions authorizing such issue of bonds in all respects conforms or conform with the provisions of this chapter.

(4) That the indebtedness to be evidenced by such issue of bonds, together with all other indebtedness of the district, pertaining to the electric system for or on account of which such bonds are to be issued, is within every debt or other limit prescribed by the Constitution and statutes of the State of California.

(5) That upon the issuance of such bonds any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the issuance thereof, will exist, will have happened and will have been performed, in due time, form and manner, as required by the Constitution and statutes of the State of California.

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Section § 13162

The board is allowed to officially state any other important facts that relate to whether something is legal or not by passing a formal resolution.

The board may also, by resolution, find and determine any other facts relevant to the legality of the issue.

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Section § 13163

This law allows a board to include a statement in each bond they issue that certifies all necessary legal steps and requirements were met in creating the bond and the debt it represents. This includes confirming the bond complies with California's Constitution and laws, and that the total debt is within legal limits.

The board, by resolution adopted in connection with any issue of bonds pursuant to this chapter, may direct that there shall be included in each of the bonds of that issue a certification and recital that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by that bond, and in the issuing of said bond, exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California, and that said bond, together with all other indebtedness of the district pertaining to the electric system for or on account of which the indebtedness evidenced by said bond was incurred, is within every debt and other limit prescribed by the Constitution and statutes of the State of California.

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Section § 13164

Once bonds are issued, any decisions or findings made by the board about those bonds are considered final proof of the facts in any court if the bond's validity is questioned. Additionally, people who buy these bonds don't need to verify any conditions or facts relating to the bonds before buying, nor are they responsible for checking how the money from the bond sales is used.

From and after the issuance of any issue of bonds the findings and determinations of the board respecting that issue made pursuant to this article shall be conclusive evidence of the existence of the facts so found and determined in any action or proceeding in any court in which the validity of such bonds is at issue, and no bona fide purchaser of any such bond containing the certification and recital permitted by this article shall be required to see to the existence of any fact, or to the performance of any condition, or the taking of any proceeding, required prior to such issue, or to the application of the purchase price paid for such bonds.

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Section § 13165

This section explains when bonds are officially considered 'issued.' Bonds are deemed issued when either the permanent bonds or temporary versions that can be swapped for permanent bonds are delivered to buyers, and payment is received. If the bonds are being exchanged for refunding purposes, they are considered issued once the exchange is completed.

Bonds shall be deemed to be issued, within the meaning of this article whenever the definitive bonds, or any temporary bonds or interim receipts exchangeable therefor, have been delivered to the purchasers thereof, and the purchase price thereof received, or in the case of bonds to be refunded through exchange, whenever such exchange has been made.

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Section § 13166

This section of the law states that if bonds are issued under the authority of this chapter, their legality isn't affected by rules or limits in other sections. Once the bonds are sold and the money is paid to the district, their validity cannot be challenged.

The validity of bonds reciting that they have been issued pursuant to this chapter shall not be affected by any provision or limitation contained in any other section or sections of this division. All bonds issued under this chapter shall be incontestable from and after the time of payment to the district of the purchase price thereof.

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