As an alternative to any other authority, a legislative body may, at its discretion, issue bonds bearing a variable interest rate pursuant to this division. This part does not alter or restrict authority to authorize assessments or issue bonds pursuant to any other provision of this division in any way. All provisions of this division shall apply to proceedings pursuant to this part, except as expressly provided in this part.
Part 6.5VARIABLE INTEREST RATE BONDS
Section § 8660
This law allows a legislative body to issue bonds with a variable interest rate, using the rules set out in this division, as an additional option to any other methods they might have. It does not change or limit the power to authorize assessments or issue bonds in any other way under this division. The rules in this division still apply, unless specifically mentioned otherwise in this part.
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Section § 8660.5
This law allows a government body to issue bonds, either serial or term, with a variable interest rate. These bonds are backed by assessments used to fund certain approved projects or improvements. The bonds must be sold for at least 95% of their principal value, and the specific sales process is decided by the legislative body.
The legislative body may determine to issue serial or term bonds, or both, bearing a variable interest rate that represent and are secured by assessments which are made to pay the cost of any authorized work or improvement. The bonds shall be sold at not less than 95 percent of the principal amount in the manner determined by the legislative body.
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Section § 8661
This law section explains the process for a legislative body to issue bonds for funding a project or improvement. It says that when deciding to issue these bonds, the body must declare that the bonds are being issued for that specific purpose. They also need to state that the bonds can have a variable interest rate and specify the maximum interest rate these bonds can have.
If the legislative body determines to issue bonds as provided in this part to represent the expense of any proposed work or improvement, it shall, in the resolution of intention to do the work, do all of the following:
(a)CA Streets and Highways Code § 8661(a) Declare that the serial or term bonds are issued pursuant to this division to represent the expenses of the proposed work or improvement.
(b)CA Streets and Highways Code § 8661(b) Specify that the bonds may bear a variable rate of interest.
(c)CA Streets and Highways Code § 8661(c) Specify the maximum rate of interest which the bonds may bear.
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Section § 8662
This law section indicates that bonds must generally follow the form outlined in Section 8652, but they may be adjusted as necessary to fit the current part's requirements.
The bonds shall be substantially in the form set forth in Section 8652, except as revised to conform to this part.
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Section § 8663
This section explains how unpaid assessments, which are fees that need to be paid, should be collected. The usual method is described in another section, but the local government can decide to collect these payments more often and by a designated official other than the county tax collector. Additional fees to cover collection and registration costs are allowed as long as they don’t exceed certain limits. These payments are due at the end of each pay period, and if not paid on time, they become overdue and incur penalties and interest.
The unpaid assessments shall be payable in substantially the manner set forth in subdivision (a) of Section 8680, or in substantially the same manner, but at more frequent intervals, as provided by the legislative body by resolution. The legislative body may designate an official, including an official other than the county tax collector, or other agent, to collect and maintain records of the collection of the assessments, including a procedure other than through the property tax collection procedure prescribed in this division. The legislative body may authorize an additional assessment to pay the costs of collection, not to exceed the percentages or amounts set forth in Section 8682, and an additional amount to cover the costs of registration, not to exceed the percentages and amounts set forth in Section 8682.1. The legislative body may authorize an additional assessment to pay for incidental expenses of the financing. The assessments and the interest on the assessments for each pay period are payable at the end of the pay period and are delinquent thereafter, and shall bear the same proportionate penalties and interest after delinquency as the assessment installments in the subject proceedings.
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Section § 8663.5
This section states that if there are any unpaid assessments related to a bond, interest on those unpaid amounts starts accumulating from the date the bond was issued. The interest is calculated for each period in which interest is due, according to the schedule set by the bond terms.
Interest on all unpaid assessments shall run from the date of the bonds, and shall be computed for each interest pay period at the date determined pursuant to the terms of the bond for that interest pay period.
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Section § 8664
This law explains that bonds can be paid off early on interest payment dates. If an owner wants to redeem their bond before it matures, they will receive both the principal and any interest that has accrued up to the date of redemption. Additionally, there might be a redemption premium, which is an extra fee, decided by the legislative body, but it can’t be more than 5% of the bond’s principal amount.
Each bond, or any portion of the bond in a fixed amount or any integral multiple of the fixed amount, shall be subject to redemption in advance of its maturity on any interest payment date upon payment to the registered owner of the principal and accrued interest to the date of redemption together with a redemption premium, if any, as determined by the legislative body, not to exceed 5 percent of the principal.
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Section § 8664.3
This law allows a legislative body to decide, through a formal resolution, that the interest rate on certain bonds can change over time. The rate can be adjusted based on a bond index or another method specified in the resolution.
The legislative body may, by resolution, specify that the interest rate on the bonds may vary from time to time as determined by a bond index or some other means prescribed in the resolution.
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Section § 8664.5
This law gives a legislative body the power to decide the terms and conditions for converting bonds from a variable interest rate to a fixed interest rate.
The legislative body may, by resolution, specify terms and conditions under which the bonds may be converted to a fixed interest rate.
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Section § 8665
This law allows a city’s governing body to set terms for buying back its bonds. The city can use a letter of credit or similar tool to ensure payment or repurchase of these bonds, with related costs seen as incidental expenses. They can also hire certain agents to help manage the bonds, and their fees are considered incidental as well.
The legislative body may, by resolution, specify terms and conditions under which the city agrees to repurchase the bonds. The legislative body may secure a letter of credit or other instrument to secure payment or repurchase of any bonds, and the resulting costs, including costs of initially securing, maintaining, or making any payments arising from the exercise of, a letter of credit or other instrument, may be treated as incidental expenses. The legislative body may engage a remarketing agent and an indexing agent, subject to terms and conditions agreed to by the legislative body, and the resulting costs may be treated as incidental expenses.
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Section § 8665.5
This law requires that when a notice of assessment is filed with the county recorder, it must clearly state that any unpaid assessments will incur interest at a rate that can change over time.
The notice of assessment recorded with the county recorder pursuant to Section 3114 shall include the following statement:
Notice is further given that unpaid assessments are subject to interest at a variable interest rate.
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