Form And Content Of Bonds - The Improvement Bond Act Of 1915 - CA Streets And Highways

Section § 8650

This section explains how bonds are issued and repaid when funding certain improvement projects. The bonds are to be paid back in annual installments starting one year after they are issued, and this payment continues until the entire amount, including interest, is paid off. Interest will not exceed the legal maximum and starts accruing either 31 days after the assessment record date or from the bond's issue date. Interest payments occur twice yearly, on March 2 and September 2, with the first payment being six months before the first bond series matures. The legislative body can adjust the first interest payment date if any part of the interest is funded.

(a) Except as provided otherwise by the legislative body pursuant to Section 8650.1, the bonds shall be issued in series and an even annual proportion of the aggregate principal sum thereof shall be payable on the second day of September every year succeeding the first 12 months after their date, until the whole is paid. The bonds shall bear interest at a rate not in excess of the maximum rate permitted by law from the 31st day after recording the assessment if the assessment was levied under the Improvement Act of 1911, or from their date if the assessment was levied under the Municipal Improvement Act of 1913 or other law, on all sums unpaid, until the whole of the principal sum and interest are paid.

(b) Interest shall be payable semiannually on the second day of March and September, respectively, of each year. The first payment of interest shall become due on the interest payment date which is six months before the maturity of the first series of bonds, but, if any portion of the interest is funded, the legislative body may specify that the first payment of interest shall become due on any earlier interest payment date following the date of the bonds. Interest shall be payable to the registered holders of the bonds as their names and addresses appeared on the records of the issuing agency or its registration agent on the 15th day of the calendar month preceding the interest payment date.

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(Amended by Stats. 1993, Ch. 194, Sec. 10. Effective January 1, 1994.)

Section § 8650.1

This law allows a legislative body to make decisions about how bonds for improvement projects are structured and paid off. They can choose different options for how much principal and interest is paid each year so that payment amounts are equal from year to year, except for the first payment, which accounts for interest earned. They also decide the form and date of the bonds, and can organize bonds into separate groups with different payment schedules.

Additionally, they can classify assessments so smaller ones are paid off quicker. The maturity date for the last installment of bonds can also be set as a maximum time frame rather than an exact date.

The legislative body, in its discretion, may determine, either (a) in the resolution of intention describing the improvement work, or (b) thereafter in any change proceedings taken under and in accordance with the provisions of the same act under which the resolution of intention was adopted, that the principal amount of the bonds maturing or becoming subject to mandatory prior redemption each year shall be other than an amount equal to an even annual proportion of the aggregate principal of the bonds, and it may determine that the amount of principal maturing or becoming subject to mandatory prior redemption in each year plus the amount of interest payable in that year will be an aggregate amount that is substantially equal each year, except for the moneys falling due on the first maturity or mandatory prior redemption date of the bonds which shall be adjusted to reflect the amount of interest earned from the date when the bonds bear interest to the date when the first interest is payable on the bonds. Notwithstanding Section 8651.5, to the extent that the determination to issue bonds pursuant to Section 8570 includes term bonds, the legislative body shall provide for mandatory prior redemption of those bonds, without premium, through annual sinking fund installments conforming to the requirements of this section.

Notwithstanding Section 8652, the legislative body may prescribe the form of the bonds and shall fix the date of the bonds. The legislative body may divide the principal amount of any issue into two or more divisions and fix different dates for the payment of bonds of each division. The bonds of one division may be made payable at different times than bonds of any other division.

The legislative body, in its discretion, may determine in like manner to classify assessments into different terms of maturity so that smaller assessments may be made to mature over a shorter period of time and, in that event, the bond declaration in the resolution of intention, or in the change proceedings taken under and in accordance with the provisions of the same act under which the resolution of intention was adopted, in the assessment, and in the notice of recording the assessment may recite that the last installment of bonds shall mature a maximum rather than an exact number of years from the second day of September next succeeding 12 months from their date.

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(Amended by Stats. 1993, Ch. 613, Sec. 1. Effective January 1, 1994.)

Section § 8651

This law states that the last payment for these bonds must be due no more than 39 years after September 2nd of the year following the bond issuance date.

The final series of installment of the bonds shall mature and be payable on a date which shall not exceed 39 years from the second day of September next succeeding 12 months from their date.

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(Amended by Stats. 1985, Ch. 65, Sec. 4. Effective June 6, 1985.)

Section § 8651.5

This law states that bonds can be redeemed before they mature on an interest payment date. To do so, the bond owner will receive the principal amount, any accrued interest up to that redemption date, and a redemption premium which is 5% of the principal. However, the legislative body can lower this premium for the first five years to at least 3%, and after that to any amount, possibly even zero.

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 equal to 5 percent of the principal. Prior to issuance of the bonds, the legislative body may provide for a reduction of the redemption premium to an amount equal to not less than 3 percent of the principal for the first five years of the term of the bonds or to any amount, including zero, after the first five years of the term of the bonds, or both.

bond redemption interest payment date accrued interest redemption premium principal amount legislative body premium reduction fixed amount bonds advance redemption maturity registered owner 5 percent premium 3 percent premium term of bonds first five years

(Amended by Stats. 1990, Ch. 446, Sec. 12.)

Section § 8652

This section outlines the standard form and provisions for Improvement Bonds issued by a city or county in California under the Improvement Bond Act of 1915. These bonds are used to finance public works, such as improvements or acquisitions, and are secured by funds raised from assessments on property owners who benefit from these improvements.

The bond specifies key details like the interest rate, maturity date, and payment terms. They are registered and transferable to new owners upon conditions set out in the issuing resolution. Interest is paid semiannually, and the bond remains valid until authentication and registration are completed. Redemption of the bond before maturity is allowed with proper prior notice to the holder.

The bonds shall be substantially in the following form:

United States of America
State of California
County of ______

REGISTERED
Number

REGISTERED
$

IMPROVEMENT BOND
City (or County) of (naming it)
__________
SERIES NO. ______

INTEREST
RATE

MATURITY
DATE

BOND
DATE
____, 20__

CUSIP
NUMBER

Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the Streets and Highways Code (the “Act”), the City (or County) of ____, County of ____, State of California, (the “City” or “County”) will, out of the redemption fund for the payment of the bonds issued upon the unpaid portion of assessments made for the acquisition, work, and improvements more fully described in proceedings taken pursuant to Resolution of Intention No. ____, adopted by the (legislative body) of the City (or County) of ____ on the ____ day of ____, 20__, (as later amended), pay to ____ or registered assigns, on the maturity date stated above, the principal sum of ____, in lawful money of the United States of America and in like manner will pay interest from the interest payment date next preceding the date on which this bond is authenticated, unless this bond is authenticated and registered as of an interest payment date, in which event it shall bear interest from such interest payment date, or unless this bond is authenticated and registered prior to ____, 20__, (first interest payment date) in which event it shall bear interest from its date, until payment of such principal sum shall have been discharged, at the rate per annum stated above, payable semiannually on March 2 and September 2 in each year commencing on ____, 20__. Both the principal hereof and redemption premium hereon are payable at ____ as Transfer Agent, Registrar, and Paying Agent, in ____, California, and the interest hereon is payable by check or draft mailed to the owner hereof at the owner’s address as it appears on the records of the ____ (issuing agency or registration agent) or at an address that has been filed with the ____ (issuing agency or registration agent) for that purpose, as of the 15th day of the calendar month immediately preceding each interest payment date.

This bond will continue to bear interest after maturity at the rate above stated; provided, it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay same. If it is not presented at maturity, interest thereon will run until maturity.

This bond shall not be entitled to any benefit under the Act or the Resolution Authorizing Issuance of Bonds (the “Resolution of Issuance”), or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the ____ (issuing agency or registration agent).

IN WITNESS WHEREOF, the City (or County) of ____ has caused this bond to be signed in facsimile by the Treasurer of the City (or County) and by its Clerk, and has caused its corporate seal to be reproduced in facsimile hereon all as of the ____ day of ____, 20__.

CITY (OR COUNTY) OF ________

Clerk

Treasurer

[SEAL]

Certificate of Authentication
and Registration

This is one of the bonds described
in the within mentioned Resolution
of Issuance, which has been
authenticated and registered
on

This bond is one of several annual series of bonds of like date, tenor, and effect, but differing in amounts, maturities, and interest rates, issued by the City (or County) of ____ under the Act and the Resolution of Issuance, for the purpose of providing means for paying for the improvements described in the proceedings, and is secured by the moneys in the redemption fund and by the unpaid portion of assessments made for the payment of those improvements, and, including principal and interest, is payable exclusively out of the redemption fund.

This bond is transferable by the registered owner hereof, in person or by the owner’s attorney duly authorized in writing, at the office of ____ (issuing agency or its registration agent), subject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this bond. Upon transfer, a new registered bond or bonds, of any authorized denomination or denominations, of the same maturity, for the same aggregate principal amount, will be issued to the transferee in exchange therefor.

Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership, or a trust.

Neither the issuing agency nor the registration agent shall be required to exchange or to register the transfer of bonds during the 15 days immediately preceding any interest payment date.

The issuing agency and the registration agent may treat the owner hereof as the absolute owner for all purposes, and the issuing agency and the registration agent shall not be affected by any notice to the contrary.

This bond or any portion of it in the amount of five thousand dollars ($5,000), or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the second day of March or September in any year by giving at least 30 days’ notice by registered or certified mail or by personal service to the registered owner hereof at the owner’s address as it appears on the registration books of the ____ (issuing agency or registration agent) by paying principal and accrued interest together with a premium equal to ____ percent of the principal.

This bond is not subject to refunding pursuant to the procedures of Division 11 (commencing with Section 9000) or Division 11.5 (commencing with Section 9500) of the Streets and Highways Code prior to ______, ___. (If applicable).

I hereby certify that the following is a correct copy of the signed legal opinion of _____.

Improvement Bond Act of 1915 bond issuance public works financing interest rate maturity date redemption fund property assessments bond registration transferable bonds semiannual interest payments bond authentication bondholder public improvements redemption notice principal sum

(Amended by Stats. 2019, Ch. 497, Sec. 268. (AB 991) Effective January 1, 2020.)

Section § 8653

This law allows bonds to be signed manually by the treasurer and the clerk of the legislative body. Alternatively, the legislative body can approve the use of printed or engraved signatures and seals on the bonds instead of handwritten ones.

The bonds shall be signed by the treasurer and the clerk of the legislative body. However, the legislative body may by order authorize the use upon the bonds of an engraved, printed, or lithographed signature of the treasurer and the clerk of the legislative body in place of a signature by hand. It may also authorize the seal to be placed in like manner on the bonds.

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(Amended by Stats. 2002, Ch. 221, Sec. 128. Effective January 1, 2003.)

Section § 8654

This law says that bonds will have an interest rate that is either specified or determined through certain proceedings. Each year, a series of bonds will mature, and this annual series will have a total principal (original amount borrowed) that matches the yearly portion of the total principal of the whole group of bonds issued previously.

The bonds shall bear interest at the rate specified or determined in the proceedings. The bonds maturing in any year shall constitute the annual series of that year and the aggregate principal of the bonds in such series shall equal the annual proportion of the aggregate principal sum of the entire bond issue hereinbefore referred to.

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(Amended by Stats. 1985, Ch. 65, Sec. 8. Effective June 6, 1985.)

Section § 8655

This section states that once bonds are issued, it confirms that all the steps taken before issuing them were done correctly according to the relevant laws and procedures.

The bonds, by their issuance, shall be conclusive evidence of the regularity of all proceedings had prior thereto under this division and under the law pursuant to which the assessment was levied.

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(Amended by Stats. 1993, Ch. 194, Sec. 12. Effective January 1, 1994.)