BILL NUMBER: SBX1 33 AMENDED
BILL TEXT
AMENDED IN SENATE FEBRUARY 14, 2001
INTRODUCED BY Senators Burton and Sher
FEBRUARY 6, 2001
An act to add Division 1.7 (commencing with Section 3400)
to the Public Utilities Code, relating to electric power.
An act to add Section 330.5 to the Public Utilities Code,
relating to electric power.
LEGISLATIVE COUNSEL'S DIGEST
SB 33, as amended, Burton. California Transmission
Authority Electric power: transmission facilities:
purchase .
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations
and other specified entities.
This bill would create the California Transmission Authority, with
powers and responsibilities as prescribed, including the issuance of
bonds, for the purposes of (1) owning and operating the assets of
the state's electric transmission grid; (2) providing certain
services relating to the grid; (3) monitoring the electric market to
identify and mitigate market power abuse; and (4) undertaking and
executing transmission planning and grid expansion; and (5) offering
to purchase the transmission assets of any investor-owned utility.
The bill would prohibit the authority, in its operation of the
transmission system, from taking any action to discriminate against
clean, efficient distributed generation, intermittent renewable
resources, or demand response or energy efficiency initiatives.
The bill would require transmission projects that are greater than
200 kilovolts and cost more than $10,000,000 to be subject to the
approval of the State Energy Resources Conservation and Development
Commission. The bill would require the commission to approve
projects submitted for review as specified not later than 12 months
after receipt of a completed application for approval. The bill
would create in the State Treasury the California Transmission
Authority Fund, and all money in the fund, upon appropriation, would
be available for the support of the authority.
This bill would authorize the Governor to formulate a plan,
through negotiation with representatives of electrical corporations,
as defined, for the state to purchase the transmission facilities
owned by electrical corporations in California.
The bill would require the Governor submit the plan to the
Legislature for its consideration for subsequent adoption by statute
and any necessary additional implementing legislation, including (a)
authority for the State Treasurer to issue revenue bonds to finance
the acquisition by the state of the transmission facilities of
electrical corporations and to finance necessary improvements and
expansion of the state's electrical transmission system and (2)
authority for the state to contract with electrical corporations for
the ongoing maintenance, repair, construction, expansion, or
improvement of the transmission facilities purchased by the state
under the adopted plan.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Division 1.7 (commencing with Section 3400)
SECTION 1. SEction 330.5 is added to the Public Utilities Code, to
read:
330.5. (a) The Governor may formulate a plan, through negotiation
with representatives of electrical corporations, as defined in
Section 218, for the state to purchase the transmission facilities
owned by electrical corporations in California.
(b) The Governor shall submit the plan formulated under
subdivision (a) to the Legislature for its consideration for
subsequent adoption by statute and any necessary additional
implementing legislation, which may include, but need not be limited
to, all of the following:
(1) Authority for the State Treasurer to issue revenue bonds to
finance the acquisition by the state of the transmission facilities
of electrical corporations and to finance necessary improvements and
expansion of the state's electrical transmission system.
(2) Authority for the state to contract with electrical
corporations for the ongoing maintenance, repair, construction,
expansion, or improvement of the transmission facilities purchased by
the state under the adopted plan. is added to the
Public Utilities Code, to read:
DIVISION 1.7. CALIFORNIA TRANSMISSION AUTHORITY ACT
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
3400. The Legislature finds and declares all of the following:
(a) Electricity is a commodity that uniquely impacts upon the
public interest.
(b) Because of that impact, the operation and expansion of the
transmission grid must be conducted in a manner that does all of the
following:
(1) Protects electricity consumers.
(2) Encourages fair competition.
(3) Protects the public health and the environment.
(4) Encourages renewable resources, clean and efficient
distributed generation, energy efficiency, and demand responsiveness.
(5) Balances supply and demand interests at the lowest cost to the
public.
(c) As a means of protecting and enhancing the interests of the
people of California, the state should become the owner and operator
of the assets of the transmission grid.
3401. This division shall be known and may be cited as the
California Transmission Authority Act.
3402. As used in this division, unless the context otherwise
requires, the following terms have the following meanings:
(a) "Act" means the California Transmission Authority Act.
(b) "Authority" means the California Transmission Authority
established pursuant to Section 3420 and any board, commission,
department, or officer succeeding to the functions thereof, or to
whom the powers conferred upon the authority by this division shall
be given by law.
(c) "Board" means the Board of Directors of the California
Transmission Authority.
(d) "Bond purchase agreement" means a contractual agreement
executed between the authority and a participating party, or a
special purpose trust authorized by the authority or a participating
party, or both, whereby the authority or special purpose trust
authorized by the authority agrees to purchase bonds of the
participating party for retention or sale.
(e) "Bonds" means bonds, including structured, senior, and
subordinated bonds or other securities; loans; notes, including bond
revenue, tax or grant anticipation notes; commercial paper; floating
rate and variable maturity securities; and any other evidences of
indebtedness or ownership, including certificates of participation or
beneficial interest, asset backed certificates, or lease-purchase or
installment purchase agreements, whether taxable or excludable from
gross income for state and federal income taxation purposes.
(f) "Commission" means the Public Utilities Commission.
(g) "Cost," as applied to a program, project or portion thereof
financed under this division, means all or any part of the cost of
construction, renovation, and acquisition of all lands, structures,
real or personal property, rights, rights-of-way, franchises,
licenses, easements, and interests acquired or used for a project;
the cost of demolishing or removing any buildings or structures on
land so acquired, including the cost of acquiring any lands to which
the buildings or structures may be moved; the cost of all machinery,
equipment, and financing charges; interest prior to, during, and for
a period after, completion of construction, renovation, or
acquisition, as determined by the authority; provisions for working
capital; reserves for principal and interest and for extension,
enlargements, additions, replacements, renovations, and improvements;
and the cost of architectural, engineering, financial and legal
services, plans, specifications, estimates, administrative expenses,
and other expenses necessary or incidental to determining the
feasibility of any project or incidental to the construction,
acquisition, or financing of any project.
(h) "Electrical corporation" has the same meaning as that term is
defined in Section 218.
(i) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(j) "Financial assistance" in connection with a project, includes,
but is not limited to, any combination of grants, loans, the
proceeds of bonds issued by the authority or a special purpose trust,
insurance, guarantees or other credit enhancements or liquidity
facilities, and contributions of money, property, labor, or other
things of value, as may be approved by resolution of the board or the
participating party, or both; the purchase or retention of authority
bonds, the bonds of a participating party for their retention or for
sale by the authority, or the issuance of authority bonds or the
bonds of a special purpose trust used to fund the cost of a project
for which a participating party is directly or indirectly liable,
including, but not limited to, bonds, the security for which is
provided in whole or in part pursuant to the powers granted by this
division; bonds for which the authority has provided a guarantee or
enhancement, including, but not limited to, the purchase of the
subordinated bonds of the participating party, the subordinated bonds
of a special purpose trust, or the retention of the subordinated
bonds of the authority pursuant to this division; or any other type
of assistance deemed appropriate by the authority or the
participating party.
(k) "Fund" means the California Transmission Authority Fund
established in the State Treasury under Section 3470.
(l) "Loan agreement" means a contractual agreement executed
between the authority or a special purpose trust and a participating
party that provides that the authority or special purpose trust will
loan funds to the participating party and that the participating
party will repay the principal and pay the interest and redemption
premium, if any, on the loan.
(m) "Local publicly owned electric utility" has the same meaning
as that term is defined in Section 9604.
(n) "Participating party" means either of the following:
(1) Any person, company, corporation, partnership, firm, or other
entity or group of entities, whether organized for profit or not for
profit, engaged in business or operations within the state and that
applies for financial assistance from the authority for the purpose
of implementing a project.
(2) Any subdivision of the state or local government, including
departments, agencies, commissions, cities, counties, nonprofit
corporations, special districts, assessment districts, and joint
powers authorities within the state or any combination of these
subdivisions, that has, or proposes to acquire, an interest in a
project and that makes application to the authority for financial
assistance in a manner prescribed by the authority.
(o) "Project" means plants, facilities, equipment, appliances,
structures, expansions, and improvements within the state that serve
the purposes of this division as approved by the authority, and all
activities and expenses necessary to initiate and complete those
projects.
(p) "Revenues" means all receipts, purchase payments, loan
repayments, lease payments, and all other income or receipts derived
by the authority or a participating party from the sale, lease, or
other financing arrangement undertaken by the authority, a
participating party, including, but not limited to, all receipts from
a bond purchase agreement, and any income or revenue derived from
the investment of any money in any fund or account of the authority
or a participating party.
(q) "Special purpose trust" means a trust, partnership, limited
partnership, association, corporation, nonprofit corporation, or
other entity authorized under the laws of the state to serve as an
instrumentality of the state to accomplish public purposes and
authorized by the authority to acquire, by purchase or otherwise, for
retention or sale, the bonds of a participating party or of the
authority made or entered into pursuant to this division and to issue
special purpose trust bonds or other obligations secured by these
bonds or other sources of public or private revenues.
(r) "State" means the State of California.
3404. Any action taken pursuant to this division is exempt from
the Administrative Procedure Act, as defined in Section 11370 of the
Government Code.
CHAPTER 2. PURPOSE OF THE CALIFORNIA TRANSMISSION AUTHORITY
3410. The authority may only exercise its powers pursuant to
Article 4 (commencing with Section 3440) of Chapter 3 to do all of
the following:
(a) Own and operate the assets of the transmission grid. The
authority shall be the successor agency to the Independent System
Operator (ISO) and the Power Exchange (PX) for the purposes of this
subdivision. Any reference in any provision of law to the ISO or PX,
with regard to the purposes of this subdivision, means the
authority.
(b) Provide all of the following:
(1) Security coordination.
(2) Real-time grid operation.
(3) Operation or facilitation of day-ahead and real-time markets
for day-ahead and ancillary services.
(4) Interconnection and operation of generation resources.
(5) Billing and settlements for energy and ancillary service
markets.
(c) Undertake market monitoring to identify and mitigate market
power abuse. For the purposes of this subdivision, the authority
shall coordinate with the Office of the State Attorney General, the
federal Securities and Exchange Commission, the federal Energy
Information Administration, and the Federal Energy Regulatory
Commission.
(d) Undertake and execute transmission planning and grid
expansion. Transmission projects that are greater than 200 kilovolts
and cost more than ten million dollars ($10,000,000) shall be subject
to the approval of the Energy Commission. The Energy Commission
shall approve projects submitted for review under this subdivision
not later than 12 months after receipt of a completed application for
approval.
(e) Issue revenue bonds.
(f) Establish tariffs and rates for the use of the transmission
system. The revenue generated from these tariffs and rates shall be
deposited in the fund and may be used to finance the costs of
acquisition of transmission assets and to undertake needed upgrades
and improvements of the transmission system.
(g) Offer to purchase the transmission assets of any
investor-owned utility. Upon acquisition of those assets, the
authority shall contract back with the utility for provision by the
authority of operation and maintenance services.
3412. In its operation of the transmission system, the authority
may not take any action to discriminate against clean, efficient
distributed generation, intermittent renewable resources, or demand
response or energy efficiency initiatives.
CHAPTER 3. THE CALIFORNIA TRANSMISSION AUTHORITY
Article 1. Creation of the Authority
3420. (a) There is hereby created in the state government the
California Transmission Authority, which shall be responsible for
administering this division.
(b) The authority shall be under the direction of an executive
director, who shall be appointed by a majority of the members of the
board, and shall serve at the direction of the board.
(c) The authority shall implement the purposes of Chapter 2
(commencing with Section 3410), and to that end finance projects and
programs in accordance with this division, all to the mutual benefit
of the people of the state and to protect their health, welfare, and
safety.
Article 2. Board of Directors
3425. (a) The authority shall be governed by a five-member board
of directors, who shall be appointed by the Governor, subject to
confirmation by the Senate.
(b) Three of the members shall constitute a quorum and the
affirmative vote of three board members shall be necessary for any
action to be taken by the board.
(c) Except as provided in this subdivision, the members of the
board shall serve without compensation, but shall be reimbursed for
actual and necessary expenses incurred in the performance of their
duties to the extent that reimbursement for these expenses is not
otherwise provided or payable by another public agency, and shall
receive one hundred dollars ($100) for each full day of attending
meetings of the authority.
3426. (a) The members of the board shall be subject to the
Political Reform Act of 1974 (Title 9 (commencing with Section
81000)) of the Government Code, the applicable rules and standards of
the Municipal Securities Rulemaking Board, and all other applicable
provisions of law.
(b) The board may purchase insurance for its fiduciaries or for
itself to cover liability or losses occurring by reason of the act or
omission of a fiduciary, if the insurance permits recourse by the
insurer against the fiduciary in the case of a breach of a fiduciary
obligation by the fiduciary.
3427. Meetings of the board shall be open to the public and
shall be conducted in accordance with the Bagley-Keene Open Meeting
Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1
of Division 3 of Title 2 of the Government Code).
Article 3. Executive Director
3430. The executive director shall manage and conduct the
business and affairs of the authority and the fund subject to the
direction of the board. Except as otherwise provided in this
section, the board may assign to the executive director, by
resolution, those duties generally necessary or convenient to carry
out its powers and purposes under this division. Any action
involving final approval of any bonds, notes, loans, or other
financial assistance shall require the approval of a majority of the
members of the board.
Article 4. Powers of the Authority
3440. The authority is authorized and empowered to do any of the
following:
(a) Adopt an official seal.
(b) Sue and be sued in its own name.
(c) Adopt rules and regulations for the regulation of its affairs
and the conduct of its business.
(d) Do all things generally necessary or convenient to carry out
its powers and the purposes under this division.
3441. The board may do all of the following:
(a) Exercise the power of eminent domain.
(b) Issue bonds and authorize special purpose trusts to issue
bonds to pay all or part of the cost of any project, or to otherwise
carry out the purposes of this division.
(c) Enter into joint powers agreements with eligible public
agencies pursuant to Chapter 5 (commencing with Section 6500) of
Division 7 of Title 1 of the Government Code.
(d) Subject to any statutory or constitutional limitation on their
use, do any of the following:
(1) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this division; employ attorneys and other advisers as
may, in the determination of the board, be necessary in connection
with the issuance and sale, or authorization of special purpose
trusts for the issuance and sale, of any bonds.
(2) Contract for engineering, architectural, accounting, or other
services of appropriate state agencies as may, in the determination
of the board, be necessary for the successful development of a
project.
(3) Pay the reasonable costs of consulting engineers, architects,
accountants, and construction, land use and environmental experts
employed by any participating party if, in the determination of the
board, those services are necessary for the successful development of
a project.
(e) Charge and equitably apportion among participating parties or
other public or private entities the authority's administrative costs
and expenses, including operating and financing-related costs
incurred in the exercise of the powers and duties conferred by this
division.
(f) Acquire, take title to, and sell by installment sale or
otherwise, lands, structures, real or personal property, rights,
rights-of-way, franchises, easements, and other interests in lands
that are located within the state as the authority determines to be
necessary or convenient for the financing of the project, upon terms
and conditions that it considers to be reasonable.
(g) Make, receive, or serve as a conduit for the making of, or
otherwise provide for, grants, contributions, guarantees, insurance,
credit enhancements or liquidity of facilities, or other financial
enhancements to a participating party as financial assistance for a
project. The sources may include bond proceeds, dedicated taxes,
state appropriations, federal appropriations, federal grants and loan
funds, public and private sector retirement system funds, and
proceeds of loans from the Pooled Money Investment Account, or any
other source of money, property, labor, or other things of value.
(h) Make loans to any participating party, either directly or by
making a loan to a lending institution or other financial
intermediary, in connection with the financing of a project in
accordance with an agreement between the authority and a
participating party, either as a sole lender or in participation with
other lenders.
(i) Make loans to any participating party, either directly or by
making a loan to a lending institution, in accordance with an
agreement between the authority and the participating party to
refinance indebtedness incurred by the participating party in
connection with projects undertaken and completed prior to any
agreement with the authority or expectation that the authority would
provide financing, either as a sole lender or in participation with
other lenders.
(j) Mortgage all or any portion of the authority's interest in a
project and the property on which any project is located, whether
owned or thereafter acquired, including the granting of a security
interest in any property, tangible or intangible.
(k) Assign or pledge all or any portion of the authority's
interests in assets, things of value, mortgages, deeds of trust,
bonds, bond purchase agreements, loan agreements, indentures of
mortgage or trust, or similar instruments, notes, and security
interests in property, tangible or intangible and the revenues
therefrom, of a participating party to which the authority has made
loans, and the revenues therefrom, including payment or income from
any interest owned or held by the authority, for the benefit of the
holders of bonds.
(l) Issue, obtain, or aid in obtaining, from any department or
agency of the United States, from other agencies of the state, or
from any private company, any insurance or guarantee to, or for, the
payment or repayment of interest or principal, or both, or any part
thereof, on any loan, lease, or obligation or any instrument
evidencing or securing the same, made or entered into pursuant to
this division.
(m) Enter into any agreement or contract, execute any instrument,
and perform any act or thing necessary or convenient to, directly or
indirectly, secure the authority's bonds, the bonds issued by a
special purpose trust, or a participating party's obligations to the
authority or to a special purpose trust, including, but not limited
to, bonds of a participating party purchased by the authority or a
special purpose trust for retention or sale, with funds or moneys
that are legally available and that are due or payable to the
participating party by reason of any grant, allocation, apportionment
or appropriation of the state or agencies thereof, to the extent
that the Controller shall be the custodian at any time of these funds
or moneys, or with funds or moneys that are or will be legally
available to the participating party, the authority, or the state or
any agencies thereof by reason of any grant, allocation,
apportionment, or appropriation of the federal government or agencies
thereof; and in the event of written notice that the participating
party has not paid or is in default on its obligations to the
authority or a special purpose trust, direct the Controller to
withhold payment of those funds or moneys from the participating
party over which it is or will be custodian and to pay the same to
the authority or special purpose trust or their assignee, or direct
the state or any agencies thereof to which any grant, allocation,
apportionment or appropriation of the federal government or agencies
thereof is or will be legally available to pay the same upon receipt
by the authority or special purpose trust or their assignee, until
the default has been cured and the amounts then due and unpaid have
been paid to the authority or special purpose trust or their
assignee, or until arrangements satisfactory to the authority or
special purpose trust have been made to cure the default.
(n) Purchase, with the proceeds of the authority's bonds, bonds
issued by, or for the benefit of, any participating party in
connection with a project, pursuant to a bond purchase agreement or
otherwise. Bonds purchased pursuant to this division may be held by
the authority, pledged or assigned by the authority, or sold to
public or private purchasers at public or negotiated sale, in whole
or in part, separately or together with other bonds issued by the
authority, and notwithstanding any other provision of law, may be
bought by the authority at private sale.
(o) Enter into purchase and sale agreements with all entities,
public and private, including state and local government pension
funds, with respect to the sale or purchase of bonds.
(p) Authorize a special purpose trust or trusts to purchase or
retain proceeds of the bonds of a special purpose trust or bonds
issued by, or for the benefit of, any participating party in
connection with a project or issued by the authority or a special
purpose trust, pursuant to a bond purchase agreement or otherwise.
Bonds purchased pursuant to this division may be held by a special
purpose entity, pledged or assigned by a special purpose entity, or
sold to public or private purchasers at public or negotiated sale, in
whole or in part, with or without structuring, subordination or
credit enhancement, separately or together with other bonds issued by
a special purpose trust, and notwithstanding any other provision of
law, may be bought by the authority or by a special purpose trust
at private sale.
3442. The fiscal powers granted to the authority by this division
may be exercised without regard or reference to any other
department, division, or agency of the state, except the Legislature
or as otherwise stated in this division. This division shall be
deemed to provide an alternative method of doing the things
authorized by this division, and shall be regarded as supplemental
and additional to powers conferred by other laws.
3443. No member of the board or any person executing bonds of the
authority or a special purpose trust pursuant to this division shall
be personally liable on the bonds or subject to any personal
liability or accountability by reason of the issuance thereof.
3444. All expenses incurred in carrying out this division shall
be payable solely from funds provided under the authority of this
division and no liability or obligation shall be imposed upon the
State of California and, none shall be incurred by the authority
beyond the extent to which moneys shall have been provided under this
division. Under no circumstances shall the authority create any
debt, liability, or obligation on the part of the State of California
payable from any source whatsoever other than the moneys provided
under this division.
3445. Bonds issued under this division shall not be deemed to
constitute a debt or liability of the state or of any political
subdivision thereof, other than the authority, or a pledge of the
faith and credit of the state or of any political subdivision, other
than the authority, but shall be payable solely from the funds herein
provided therefor. All bonds issued under this division shall
contain on the face thereof a statement to the following effect:
"Neither the faith and credit nor the taxing power of the State of
California or any local agency is pledged to the payment of the
principal of or interest on this bond." The issuance of bonds under
this division shall not directly or indirectly or contingently
obligate the state or any political subdivision thereof to levy or to
pledge any form of taxation whatever therefor or to make any
appropriation for their payment. Nothing in this section shall
prevent nor be construed to prevent the authority from pledging its
full faith and credit to the payment of bonds or issue of bonds
authorized pursuant to this division.
CHAPTER 4. CALIFORNIA TRANSMISSION AUTHORITY FUND
3470. (a) There is hereby established in the State Treasury the
California Transmission Authority Fund for expenditure by the
authority for the purpose of implementing the objectives and
provisions of this division. The authority may establish within the
fund additional accounts and subaccounts.
(b) The assets of the fund shall be available for the payment of
the salaries and other expenses charged against it in accordance with
this division.
(c) All moneys in the fund, upon appropriation, shall be available
for expenditure for the purposes stated in this division.
(d) The fund, on behalf of the authority, may borrow or receive
moneys from the authority, or from any federal, state, or local
agency or private entity, to create reserves in the fund as provided
in this division and as authorized by the board.
CHAPTER 5. BONDS AND NOTES
3480. The Treasurer may incur indebtedness and issue securities
of any kind, and renew them, if all indebtedness incurred by the
Treasurer is payable solely from the revenues derived pursuant to
this division.
3481. (a) At times that the authority desires to issue bonds, it
shall adopt a resolution specifying the total amount of bonds
proposed to be issued. The maximum aggregate principal amount of
bonds that may be issued under the this division is ____.
(b) The proceeds of any bonds issued under this chapter may be
used for the purpose of financing projects authorized under this
division.
3482. (a) The Treasurer may, from time to time, issue negotiable
bonds, notes, debentures, or other securities, collectively called
"bonds," for the purpose of this division.
3483. (a) In anticipation of the sale of the bonds as authorized
by Section 3480, or as may be authorized pursuant to Section 3481,
the Treasurer may issue and may renew, from time to time, negotiable
bond anticipation notes or commercial paper. The bond anticipation
notes and commercial paper may be paid from the proceeds of the sale
of the bonds of the Treasurer in anticipation of which they were
issued.
(b) Notes and relating agreements and bond anticipation notes and
commercial paper, collectively called "notes," and the resolution
authorizing the notes or commercial paper, may contain any
provisions, conditions, or limitations that a bond, a relating
agreement, and a bond resolution of the department may contain,
except that the notes and commercial paper, and renewals, shall
mature at a time not exceeding 20 years from the date of issue of the
original notes or commercial paper.
3484. (a) Except as may be otherwise expressly provided by the
Treasurer, every issue of bonds, notes, or other obligations shall be
payable from the revenues derived pursuant to this division, and not
otherwise pledged, subject only to any agreement with the holders of
particular bonds, notes, or other obligations pledging any
particular revenues or money and subject to any agreement with any
participating party.
(b) Notwithstanding that the bonds, notes, or other obligations
may be payable from a special fund, they shall be, and be deemed to
be, for all purposes negotiable instruments, subject only to the
provisions of the bonds, notes, or other obligations for
registration.
3485. (a) The bonds may be issued as serial bonds or as term
bonds, or the Treasurer, in his or her discretion, may issue bonds of
both types.
(b) The bonds shall be authorized by the Treasurer and shall bear
the date or dates, mature at the time or times, not exceeding 20
years from their respective dates, bear interest at the rate or
rates, be payable at the time or times, be in the denominations, be
in the form, either coupon or registered, carry the registration
privileges, be executed in the manner, be payable in lawful money of
the United States of America at the place or places, and be subject
to the terms of redemption, as the resolution or resolutions may
provide.
(c) The bonds or notes shall be sold by the Treasurer within 60
days of receipt of a certified copy of the department's resolution
authorizing the sale of the bonds, except that the department, at its
discretion, may adopt a resolution extending the 60-day period. The
sales may be at public or private sale, and for the price or prices
and on the terms and conditions, as the Treasurer shall determine.
(d) Pending preparation of the definitive bonds, the Treasurer may
issue interim receipts, certificates, or temporary bonds that shall
be exchanged for the definitive bonds. The Treasurer may sell any
bonds, notes, or other evidence of indebtedness at a price or prices
below par value without any limitation on price or prices.
3486. All expenses incurred in carrying out this chapter shall be
payable solely from funds provided under the authority of this
division and no liability or obligation shall be imposed upon the
State of California and, except as provided in Section 3499, none
shall be incurred by the state beyond the extent to which moneys
shall have been provided under this division. Under no circumstances
may the Treasurer create any debt, liability, or obligation on the
part of the State of California payable from any source whatsoever
other than the moneys provided under this division.
3487. Any resolution or resolutions authorizing any bonds, or any
issue of bonds, may contain provisions that shall be a part of the
contract with the holders of the bonds to be authorized, as to the
following:
(a) Pledging all or any part of the revenues of any asset or any
revenue-producing contract or contracts made by the authority with
any individual, partnership, authority, or association or other body,
public or private, to secure the payment of the bonds or of any
particular issue of bonds, subject to any agreement with bondholders
that may then exist.
(b) The rentals, fees, purchase payments, and other charges to be
charged, and the amounts to be raised in each year thereby, and the
use and disposition of the revenues.
(c) The setting aside of reserves or sinking funds, and the
regulation and disposition thereof.
(d) Limitations on the issuance of additional bonds, the terms
upon which additional bonds may be issued and secured and the
refunding of outstanding bonds.
(e) The procedure, if any, by which the terms of any contract with
bondholders may be amended or abrogated, the amount of bonds that
the holders who are required to consent thereto, and the manner in
which the consent may be given.
(f) Limitations on administrative or other expenses of the
Treasurer.
(g) Defining the acts or omissions to act which constitute a
default in the duties of the department to holders of obligations,
and providing the rights and remedies of the holders in the event of
a default.
(h) The mortgaging of any asset, or any portion of an asset, for
the purpose of securing the bondholders.
(i) Terms and conditions under which a buyer of all or a portion
of an asset may assume the responsibilities for repayment of the
remaining balance of the bonds issued by the Treasurer.
(j) Prior to issuance of the bonds, ratepayer liability for
repayment of the bonds shall be determined in a process established
by the Treasurer.
3488. The Treasurer may, from any available funds, purchase the
bonds or notes. The Treasurer may hold, pledge, cancel, or resell
the bonds, subject to and in accordance with agreements with the
bondholders.
3489. (a) All bonds, notes, and commercial paper issued by the
Treasurer under this chapter shall be issued only after a public
hearing on issuance has been held at the office of the Treasurer in
Sacramento, California, not less than 14 days following the date of
publication of a notice of the hearing in a financial publication
generally circulated throughout the state and in a newspaper of
general circulation published within each county in which is located
any portion of the asset to be financed with the bonds, notes, or
commercial paper.
(b) The notice shall include the date, time and place of the
hearing, the principal amount of bonds, notes, or commercial paper
that may be issued.
(c) Any or all of the requirements of this section may be waived
by the Treasurer if the requirement to be waived is not necessary to
qualify interest on the bonds, notes, or commercial paper for
exemption from federal income taxes.
3490. At the discretion of the Treasurer, any bonds issued under
this chapter may be secured by a trust agreement by and between the
Treasurer and a trustee or trustees, which may be any trust company
or bank having the powers of a trust company within or without the
state.
3491. (a) The trust agreement or the resolution providing for the
issuance of the bonds may pledge or assign the revenues to be
received or proceeds of any contract or contracts pledged and may
convey or mortgage the asset or assets, or any portion thereof, to be
financed out of the proceeds of the bonds. The trust agreement or
resolution providing for the issuance of the bonds may contain
provisions for protecting and enforcing the rights and remedies of
the bondholders as may be reasonable and proper and not in violation
of law, including particularly provisions specifically authorized to
be included in any resolution of the department authorizing bonds.
(b) Any bank or trust company doing business under the laws of
this state that may act as depository of the proceeds of bonds or of
revenues or other moneys may furnish indemnifying bonds or pledge
securities as may be required by the Treasurer.
(c) Any trust agreement may set forth the rights and remedies of
the bondholders and of the trustee or trustees, and may restrict the
individual right of action by bondholders. In addition, any trust
agreement or resolution may contain other provisions that the
Treasurer may deem reasonable and proper for the security of the
bondholders.
3492. Notwithstanding any other provision of law, the Treasurer
may not be deemed to have a conflict of interest by reason of acting
as trustee pursuant to this chapter.
3493. (a) Bonds issued under this chapter may not be deemed to
constitute a debt or liability of the state or of any political
subdivision of the state, or a pledge of the faith and credit of the
state or of any political subdivision, but shall be payable solely
from the funds provided by this chapter.
(b) All the bonds shall contain on the face a statement to the
following effect: "Neither the faith and credit nor the taxing power
of the State of California or of any local agency is pledged to the
payment of the principal of or interest on this bond."
(c) The issuance of bonds under this chapter may not directly or
indirectly or contingently obligate the state or any political
subdivision to levy, or to pledge any form of, taxation or to make
any appropriation for their payment.
3495. The Treasurer may provide for the issuance of bonds for the
purpose of refunding any bonds, notes, or other securities then
outstanding pursuant to this chapter, including the payment of any
redemption premium and any interest accrued or to accrue to the
earliest or subsequent date of redemption, purchase, or maturity of
the bonds and, if deemed advisable by the Treasurer, for the
additional purpose of paying all or any part of the cost of
constructing and acquiring additions, improvements, extensions, or
enlargements of an asset.
3496. (a) The proceeds of any bonds issued for the purpose of
refunding outstanding bonds, notes, or other securities may, in the
discretion of the Treasurer, be applied to the purchase or retirement
at maturity or redemption of outstanding bonds either on their
earliest or any subsequent redemption date or upon the purchase or
retirement at the maturity thereof and may, pending that application,
be placed in escrow to be applied to the purchase or retirement at
maturity or redemption on the date as may be determined by the
Treasurer.
(b) Pending that use, the escrowed proceeds may be invested and
reinvested by the Treasurer in obligations of, or guaranteed by, the
United States of America, or in certificates of deposit or time
deposits secured by obligations of, or guaranteed by, the United
States of America, maturing at time or times appropriate to assure
the prompt payment, as to principal, interest, and redemption
premium, if any, of the outstanding bonds to be refunded. The
interest, income, and profits, if any, earned or realized on the
investment may also be applied to the payment of the outstanding
bonds to be so refunded.
After the terms of the escrow have been fully satisfied and
carried out, any balance of the proceeds and interest, income, and
profits, if any, earned or realized on the investments may be
returned to the authority for use by it in any lawful manner.
3497. The proceeds of any bonds issued for the additional purpose
of paying all or any part of the cost of constructing and acquiring
additions, improvements, extensions, or enlargements of an asset may
be invested and reinvested by the Treasurer in obligations of, or
guaranteed by, the United States of America, or in certificates of
deposit or time deposits secured by obligations of, or guaranteed by,
the United States of America, maturing not later than the time or
times when the proceeds will be needed for the purpose of paying all
or any part of the cost. The interest, income, and profits, if any,
earned or realized on the investment may be applied to the payment of
all or any part of the cost or may be used by the authority in any
lawful manner.
3498. Bonds issued pursuant to Section 3495 are subject to this
chapter in the same manner and to the same extent as other bonds
issued pursuant to this chapter.
3499. No liability may be incurred by the Treasurer in excess of
the amount of money which has been provided under this division,
except that, for the purposes of meeting the necessary expenses of
initial organization and operation until such date that the authority
derives revenues or proceeds from bonds or notes as provided under
this division, the authority may borrow money as needed for those
expenses from private sources. The borrowed money shall be repaid
with interest within a reasonable time after the authority receives
revenues or proceeds from bonds or notes as provided under this
division.