A district may issue negotiable promissory notes pursuant to Sections 71811 and 71812. Such promissory notes shall bear interest at a rate not to exceed 12 percent per year. They shall be payable from revenues and taxes levied for purposes of the district other than the payment of principal and interest on any bonded debt of the district or of an improvement district therein.
Financial ProvisionsPromissory Notes
Section § 71810
This law allows a district to issue promissory notes, which are like IOUs, that can be bought and sold (negotiable). These notes can have an interest rate of up to 12% per year. The money to pay these notes comes from district revenues and taxes, but not from funds meant to pay off other bonds.
district promissory notes interest rate limit 12 percent interest
Section § 71810.5
This law allows the Otay Municipal Water District to issue promissory notes with an interest rate of up to 15% per year, which is an exception to the usual interest rate limits in Section 71810. However, this ability is only valid for five years after the law's effective date, and it won't invalidate any notes issued before the deadline.
Notwithstanding the provisions of Section 71810 which limit the rate of interest which promissory notes issued by a district may bear, the Otay Municipal Water District may issue promissory notes which bear interest at a rate not exceeding 15 percent per year. All other provisions of Section 71810 shall be applicable to the issuance of such notes. No promissory notes shall be issued by the Otay Municipal Water District pursuant to this section after five years following the effective date of this section, provided that this provision shall not affect the validity of any such notes issued prior to such date.
Otay Municipal Water District promissory notes interest rate
Section § 71811
This law allows certain districts to raise money by issuing promissory notes, which are promises to pay back borrowed funds. The notes have to be paid back within five years. The total amount of these notes can't exceed $5 million or 3% of the district's property value, whichever is lower. However, they must be at least $75,000. Notes from a related section, 71812, don’t count towards this limit.
A district may issue negotiable promissory notes pursuant to this section to acquire funds for any district purposes. The maturity of the promissory notes shall not be later than five years from the date thereof. The total aggregate amount of the notes outstanding, at any one time, may be at least equal to seventy-five thousand dollars ($75,000) in any district but shall not exceed the lesser of either five million dollars ($5,000,000) or 3 percent of the assessed valuation of the taxable property in the district or, if the assessed valuation is not obtainable, 3 percent of the county auditor’s estimate of the assessed valuation of the taxable property in the district evidenced by his certificate . Promissory notes issued pursuant to Section 71812 may be disregarded in computing the aggregate amount of notes that may be issued pursuant to this section.
district funding negotiable promissory notes maturity limit
Section § 71812
This law allows a district to issue promissory notes, which are like IOUs, to raise money for building or acquiring various facilities like offices and land. These notes have to be paid back within 10 years. The total amount of these notes can't be less than $50,000, but they also can't be more than $3,000,000 or 1% of the district's property value, whichever is less. Notes from a related law section, 71811, don't count toward this limit.
A district may issue negotiable promissory notes pursuant to this section for the purpose of acquiring funds to finance the construction or acquisition of administrative offices, construction headquarters, commercial offices, or facilities for similar district purposes and for the acquisition of land for district purposes. The maturity of such promissory notes shall not be later than 10 years from the date thereof. The total aggregate amount of such notes outstanding at any one time may be at least equal to fifty thousand dollars ($50,000) in any district, but shall not exceed the lesser of either three million dollars ($3,000,000) or 1 percent of the assessed valuation of the taxable property in the district, or, if the assessed valuation is not obtainable, 1 percent of the county auditor’s estimate of the assessed valuation of the taxable property in the district evidenced by his certificate. Promissory notes issued pursuant to Section 71811 may be disregarded in computing the aggregate amount of notes that may be issued pursuant to this section.
negotiable promissory notes district funding construction financing
Section § 71813
This law allows a district to borrow money in anticipation of selling authorized bonds for district improvements. The district can issue short-term notes that need to be repaid within five years. If the bonds are not sold by the time the notes are due, the district can issue new notes, which must be repaid within three years. These notes can include various terms, and interest can be paid using district funds. If the notes can't be paid back through bond sales or other funds, the district may levy a tax to cover them. If the tax is used, an equivalent amount of bonds won't be issued later. When bonds are eventually sold, they must mature within a certain time to cover the original notes.
A district may borrow money in anticipation of the sale of, but not in excess of the principal amount of, authorized bonds of an improvement district formed pursuant to Chapter 3 (commencing with Section 71870) or Chapter 4 (commencing with Section 71920) of Part 7 of this division which have not yet been sold and delivered, and for that purpose may issue and sell negotiable bond anticipation notes, and may refund such notes as provided in this section. Such notes may be issued in anticipation of the sale of all or any portion of the bonds which are duly authorized at the time the notes are issued. Such notes shall mature within a period not to exceed five years from the date of issuance. In the event that the sale of bonds shall not have occurred prior to the maturity of such notes, the district may issue renewal notes to meet the notes then maturing. There shall be only one renewal of any note issued pursuant to this section and such renewal note shall mature within a period not to exceed three years from the date of issuance. The notes shall be sold in such manner as the board may determine, and such notes and the resolution providing for the issuance of such notes may contain any provision, condition or limitation which a bond, or any resolution or ordinance providing for the issuance of bonds, may contain. The interest on bond anticipation notes shall be payable at the time or times provided in such notes and may be represented by interest coupons attached to the notes and shall be payable from the same funds from which the interest on bonds of the improvement district are payable. The principal of such notes may be paid from any moneys of the improvement district available for such purpose. If such notes, or any portion thereof, have not been previously paid, they shall be paid from the proceeds of the next sale of bonds in anticipation of which the notes were issued. The resolution providing for the issuance of bond anticipation notes may contain a provision that, if for any reason bonds of the improvement district are not sold in time to provide funds to pay any unpaid note, and, if other funds of the improvement district are not available for such payment, taxes shall be levied upon the taxable property in the improvement district for such payment in the same manner provided for the payment of bonds in such amount each year for such period of years as may be set forth in such resolution. To the extent bond anticipation notes are paid from a tax levy, authorized bonds in a corresponding amount shall be canceled and not issued thereafter. When bonds of the improvement district are issued and any portion of the proceeds of the sale are to be used to pay bond anticipation notes, such bond shall mature not later than the maximum permissible years for such bonds under Section 71951 from the date of such notes as originally issued.
bond anticipation notes district borrowing short-term notes
Section § 71814
This law allows a district to borrow money in advance of selling authorized bonds by issuing bond anticipation notes. Importantly, these notes cannot exceed the principal amount of the bonds. The notes, which can be sold as negotiable instruments, cannot have a maturity date longer than five years from when they were first issued. Interest on these notes is handled like bond interest, and if the notes are not repaid on time through bond sales, the district may levy taxes to cover them. This ensures the district doesn't exceed its planned debt load. If taxes are used for repayment, equivalent bond amounts must be canceled and not issued later. When actual bonds are issued to cover these notes, they must mature within the allowed timeframe per Section 71951 from the notes' original issue date.
A district may borrow money in anticipation of the sale of, but not in excess of the principal amount of, authorized bonds of the district which have not yet been sold and delivered, and for that purpose may issue and sell negotiable bond anticipation notes, and may refund such notes from time to time, but the maximum maturity of any such notes, as originally issued or as refunded, shall not exceed five years from the date of the original notes. The notes shall be sold in such manner as the board may determine, and such notes and the resolution providing for the issuance of such notes may contain any provision, condition or limitation which a bond, or any resolution or ordinance providing for the issuance of bonds, may contain. The interest on bond anticipation notes shall be payable at the time or times provided in such notes and may be represented by interest coupons attached to the notes and shall be payable from the same funds from which the interest on bonds of the district are payable. The principal of such notes may be paid from any moneys of the district available for such purpose. If such notes, or any portion thereof, have not been previously paid, they shall be paid from the proceeds of the next sale of bonds in anticipation of which the notes were issued. The resolution providing for the issuance of bond anticipation notes may contain a provision that, if for any reason bonds of the district are not sold in time to provide funds to pay any unpaid note, and, if other funds of the district are not available for such payment, taxes shall be levied upon the taxable property in the district for such payment in the same manner provided for the payment of bonds in such amount each year for such period of years as may be set forth in such resolution. To the extent bond anticipation notes are paid from a tax levy, authorized bonds in a corresponding amount shall be canceled and not issued thereafter. When bonds of the district are issued and any portion of the proceeds of the sale are to be used to pay bond anticipation notes, such bonds shall mature not later than the maximum permissible years for such bonds under Section 71951 from the date of such notes as originally issued.
borrow money in anticipation authorized bonds bond anticipation notes
