CHAPTER 6. Revenue Bond Law of 1941

Heading of Chapter 6 amended by Stats. 1959, Ch. 597.

§§ 54300–54700 · 157 sections

1. ARTICLE 1. Definitions and General Provisions §§ 54300–54316 · 23 sections

   • § 54300 This chapter may be cited as the Revenue Bond Law of 1941.
   • § 54301 This chapter is full authority for the issuance of bonds and the acquisition, construction, or improvement of any enterprise pursuant to this chapter.
   • § 54301.1 This chapter is intended to provide to any local agency heretofore or hereafter created or authorized to be created an alternate method of financing any…
   • § 54302 The powers conferred by this chapter are in addition to, and the limitations imposed by this chapter do not affect, the powers conferred by any other law.
   • § 54303 If this chapter is inconsistent with any other law, this chapter is controlling.
   • § 54304 This chapter shall be liberally construed to promote its objects.
   • § 54305 If the jurisdiction of the legislative body to order the proposed act is not affected, the defect or omission of any officer or any local agency in proceedings…
   • § 54306 The terms defined in this article have the meanings set forth unless the context requires a different meaning.
   • § 54307 “Local agency” means any city, county, city and county, or any municipal or public corporation or district which is authorized to acquire, construct, own, or…
   • § 54307.1 “Local agency” also means any entity or agency created pursuant to Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 for the purpose of…
   • § 54307.2 “Local agency” also means any joint powers agency created pursuant to Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 for the generating,…
   • § 54307.3 “Local agency” also means any entity or agency created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 for the…
   • § 54307.4 Issuance of bonds for the construction of facilities for the generation, production, or transmission of electric energy by wind for lighting, heating, and…
   • § 54308 “Law” includes the charter of a local agency.
   • § 54309 “Enterprise” means a revenue-producing improvement, building, system, plant, works, facilities, or undertaking used for or useful for any of the following…
   • § 54309.1 “Enterprise” includes, but is not limited to, all parts of the enterprise, all appurtenances to it, and: (a) Lands, easements, rights in land, water rights,…
   • § 54310 “Enterprise” does not include, and this chapter does not authorize a local agency to borrow money and issue bonds for, systems, plants, works, or undertakings…
   • § 54311 Subject to the limitations of Sections 54309 and 54310, in any resolution calling an election for the issuance of bonds for acquiring, constructing, improving,…
   • § 54312 “Improve” means reconstruct, replace, extend, repair, better, equip, develop, embellish, or otherwise improve.
   • § 54313 “Bonds” means bonds, notes, or other obligations issued by a local agency pursuant to this chapter and payable exclusively from revenues of an enterprise and…
   • § 54314 “Charges” includes fees, tolls, rates, and rentals.
   • § 54315 “Revenues” mean all charges received for, and all other income and receipts derived by the local agency from, the operation of the enterprise or arising from…
   • § 54316 “Holder of bonds” or “bondholder” means: (a) The bearer of any outstanding bond registered to bearer or not registered. (b) The registered owner of an…
2. ARTICLE 2. Powers of a Local Agency §§ 54340–54358 · 24 sections

   • § 54340 A local agency may acquire any enterprise by gift, purchase, or eminent domain.
   • § 54341 A local agency may construct or improve any enterprise wholly or partially within or wholly without the local agency. By gift, lease, purchase, eminent domain,…
   • § 54342 A local agency may operate, maintain, repair, or manage all or any part of any enterprise, including the leasing for commercial purposes of surplus space or…
   • § 54343 The local agency may adopt reasonable rules or regulations for the conduct of the enterprise.
   • § 54344 A local agency may prescribe, revise, and collect charges for the services, facilities, or water furnished by the enterprise.
   • § 54345 The local agency may provide that charges for any sewer enterprise or service shall be collected together with and not separately from the charges for any…
   • § 54346 (a) If all or part of the bill is not paid, the local agency may discontinue any and all service for which the bill is rendered. (b) Commencing January 1,…
   • § 54346.1 The local agency may enter into a written contract with a privately owned public utility rendering other than gas or electric service, that the charges for any…
   • § 54346.2 If all or any part of the bill of any privately owned public utility on which any sewer enterprise or service charge is collected is not paid, the privately…
   • § 54346.3 The local agency may enter into a written contract with any person, firm or public or private corporation providing for the billing and collection by such…
   • § 54346.4 (a) A local agency whose jurisdiction is geographically coextensive with the county in which it operates, acquires, constructs, or improves a system, plan,…
   • § 54347 The local agency may provide for the collection of charges. Provisions may be made for, but are not limited to: (a) The granting of discounts for prompt…
   • § 54348 The local agency may provide for a basic penalty for nonpayment of the charges within the time and in the manner prescribed by it. Said basic penalty shall not…
   • § 54349 The local agency may issue bonds for funds to acquire, construct, improve or finance an enterprise. The bonds may be secured pursuant to this chapter.
   • § 54350 A local agency has police power over any enterprise acquired, constructed, or improved pursuant to this chapter and may make and enforce all necessary…
   • § 54351 If the local agency acquires, constructs, or improves a sanitation or garbage removal or disposal system, it may require its inhabitants to use the facilities…
   • § 54352 If the local agency acquires, constructs, or improves a sewer system pursuant to this chapter, it may declare that the further maintenance or use of cesspools…
   • § 54353 As a remedy established for the collection of due and unpaid deposits and charges and the penalties thereon an action may be brought in the name of the local…
   • § 54354 A local agency that acquires, constructs, or improves a system, plant, works, facilities or undertaking for the collection, treatment, or disposal of sewage or…
   • § 54354.5 A resolution or ordinance prescribing or revising charges for the services or facilities furnished by the enterprise and declaring that delinquent charges and…
   • § 54355 The lien provided by Section 54354 shall attach when the treasurer or other officer whose duty it is to collect the charge records a list of delinquent unpaid…
   • § 54356 As a separate, distinct and cumulative remedy established for the collection of said charges and penalties thereon an action may be brought in the name of the…
   • § 54357 Remedies for collecting and enforcing rates and charges set out in this chapter are cumulative and may be pursued alternately, or any thereof may be used…
   • § 54358 The local agency may execute all instruments, perform all acts, and do all things necesssary or convenient in the exercise of the powers granted by this…
3. ARTICLE 3. Authorization of Bonds §§ 54380–54387 · 8 sections

   • § 54380 By resolution of its legislative body to take effect upon adoption, a local agency may submit to its qualified voters, at an election held for that purpose,…
   • § 54381 By a majority of all members, the legislative body may adopt the resolution at a regular or special meeting and at the same meeting at which it is introduced.
   • § 54382 The resolution shall: (a) State the purpose for which the bonds are proposed to be issued. (b) State the estimated cost of the acquisition, construction,…
   • § 54383 The proposition may be submitted at an election for other propositions.
   • § 54384 The resolution shall state that the bonds are to be revenue bonds, payable exclusively from the revenues of the enterprise and from such of the other funds…
   • § 54385 The resolution shall be published once a day for at least seven days in a newspaper published at least six days a week in the local agency or published once a…
   • § 54386 The votes of a majority of all the voters voting on the proposition are required to authorize the issuance of the bonds.
   • § 54387 If the issuance of the bonds is authorized at the election, the legislative body shall provide for their issuance and sale by resolution to take effect upon…
4. ARTICLE 4. Provisions Relating to Bonds §§ 54400–54435 · 34 sections

   • § 54400 The legislative body may determine and provide in the resolution for: (a) The number of series in which the bonds are to be issued. (b) The date the bonds are…
   • § 54401 If the legislative body divides any issue of bonds into series, it may prescribe, and state in the resolution, different dates for the bonds of each series.…
   • § 54402 The legislative body may determine and provide in the resolution for: (a) The issuance of any bonds or a series in the form of serial bonds or sinking fund…
   • § 54403 Any premium payable on the bonds shall be in the amount or amounts specified by the legislative body.
   • § 54404 The bonds are not subject to call or redemption prior to their fixed maturity date unless the right to exercise a call is expressly stated on the face of the…
   • § 54405 The resolution may provide the terms and conditions upon which the bonds may be declared or become due and payable upon specified defaults.
   • § 54406 The resolution may provide for the replacement of mutilated, destroyed, stolen, or lost bonds.
   • § 54407 By resolution, the legislative body may provide the manner for authenticating the bonds and other terms to be contained in the bonds.
   • § 54408 Pending the preparation of the definitive bonds, interim receipts or temporary bonds, exchangeable for definitive bonds may be issued in the form and with the…
   • § 54409 In the absence of an express recital on its face that the bond or interim receipt is nonnegotiable, the bond or interim receipt is a negotiable instrument.
   • § 54410 In determining the amount of bonds to be issued, the legislative body may include: (a) All costs and estimated costs incidental to or connected with the…
   • § 54411 Bonds bearing the signature of officers of the local agency in office on the date of the signing are valid, notwithstanding that before delivery the persons…
   • § 54412 The validity of the authorization and issuance of the bonds is not affected by proceedings for the acquisition, construction, or improving of the enterprise or…
   • § 54413 Any resolution authorizing bonds may provide that the bonds may recite that it is issued pursuant to this chapter and bonds containing such recital are…
   • § 54414 Reference on the face of the bonds to the resolution by its date of adoption incorporates the provisions of the resolution and of this chapter into the bonds…
   • § 54415 Each taker and subsequent holder of the bonds and attached or detached coupons has recourse to all of the provisions of the resolution and of this chapter and…
   • § 54416 The legislative body may issue and sell the bonds in the manner it determines.
   • § 54417 The legislative body may sell the bonds in installments at different times or as an entire series of bonds at one time.
   • § 54418 The legislative body may sell the bonds at a price above or below par in a manner, at public or private sale, as it determines by resolution. If the…
   • § 54419 The sale price of all bonds sold shall include the interest accrued to the date of delivery of and payment for the bonds.
   • § 54420 The bonds are special obligations of the local agency and are secured by a pledge of and shall be a charge upon, and shall be payable, as to the principal…
   • § 54421 By resolution the legislative body may pledge, place a charge upon, and assign all or any part of the gross revenues of the enterprise and of any and all funds…
   • § 54422 The payment of interest on and principal of the bonds and any premiums upon the redemption of any thereof are secured by a pledge, charge, and lien upon the…
   • § 54423 The revenues and any interest earned on the revenues and all other funds specified in the resolution authorizing the issuance of the bonds constitute a trust…
   • § 54424 So long as any bonds or interest thereon are unpaid the revenues and interest thereon shall not be used for any other purpose, except as provided in Sections…
   • § 54425 If the interest and principal of the bonds and all charges to protect or secure them are paid when due an amount for the necessary and reasonable maintenance…
   • § 54426 In its discretion the legislative body may provide in the resolution providing for the issuance of the bonds that, the principal, interest, and sums for other…
   • § 54427 Bonds of the same issue shall be equally secured by a pledge, charge, and lien upon the revenues of the enterprise and all other funds specified in the…
   • § 54428 The general fund of the local agency is not liable for the payment of the bonds or their interest.
   • § 54429 The credit or taxing power of the local agency is not pledged for the payment of the bonds or their interest.
   • § 54430 The holder of the bonds or coupons shall not compel the exercise of the taxing power by the local agency or the forfeiture of its property.
   • § 54431 The principal of and interest on the bonds and any premiums upon the redemption of any thereof are not a debt of the local agency, nor a legal or equitable…
   • § 54432 Every bond shall recite in substance that the principal of and interest on the bond are payable solely from the revenues and other funds pledged or otherwise…
   • § 54435 The bonds and interest or income from the bonds are exempt from taxation in this State, except from gift, inheritance, and estate taxes.
5. ARTICLE 5. Additional Powers to Secure Bonds §§ 54460–54478 · 19 sections

   • § 54460 In the resolution authorizing the bonds, the legislative body may insert any of the provisions authorized by this article, which shall become a part of the…
   • § 54461 The legislative body may provide limitations on: (a) The purpose to which the proceeds of sale of any issue of bonds may be applied. (b) The issuance of…
   • § 54462 The legislative body may provide for the amount and kind of insurance on the enterprise including insurance against: (a) Accident to or destruction of any…
   • § 54463 It may provide for other insurance carried by private companies on property or risks on the same or similar enterprises.
   • § 54464 The legislative body may provide for the use and disposition of insurance money.
   • § 54465 Without limiting the authority granted, the legislative body may specifically provide that money collected from insurance against accident to or destruction of…
   • § 54466 The legislative body may also specifically provide that the proceeds of insurance against loss of revenue shall be used solely for the payment and retirement…
   • § 54467 The legislative body may insert in the resolution covenants against the mortgaging or otherwise encumbering, selling, leasing, pledging, placing any charge…
   • § 54468 It may insert covenants against the entering into any agreement which impairs the operation of the enterprise or any part of it necessary to secure adequate…
   • § 54469 The legislative body may provide for events of default and terms upon which the bonds may be declared due before maturity and the terms upon which the…
   • § 54470 The legislative body may provide for the rights, liabilities, powers, and duties arising upon the local agency’s breach of any covenants, conditions, or…
   • § 54471 The legislative body may provide for the vesting in a trustee of the right to enforce covenants to secure payment of or in relation to the bonds and the…
   • § 54472 The legislative body may provide for the terms upon which the bondholders or any percentage of them may enforce covenants or duties imposed by this chapter.
   • § 54473 The legislative body may provide in the resolution for a procedure for amending or abrogating the terms of the resolution with the consent of the holders of a…
   • § 54474 Any resolution containing such a procedure may also provide for meetings of bondholders or for their written assent without a meeting and the manner of…
   • § 54475 The resolution shall specifically state the effect of amendment upon the rights of the holders of all of the bonds and attached or detached interest coupons…
   • § 54476 The legislative body may provide for the purchase out of any available funds of any outstanding notes, bonds, or other obligations, and the price at which, and…
   • § 54477 The legislative body may provide for any other acts and things necessary, convenient, or desirable to secure the bonds or tending to make them more marketable.
   • § 54478 Except as hereinafter provided in this section, this chapter does not authorize any local agency to make any covenants, to perform any act, or to do anything…
6. ARTICLE 6. Duties of Local Agencies §§ 54510–54524 · 18 sections

   • § 54510 The duties prescribed by this article shall be performed by the local agency or its proper officers, agents, or employees.
   • § 54511 Such performance is of the essence of the local agency’s contract with the bondholders.
   • § 54512 The local agency shall pay or cause to be paid the principal and interest of the bonds on the date, at the place, and in the manner mentioned in the bonds and…
   • § 54513 Subject to the provisions of Section 54516.1, the local agency shall operate the enterprise in an efficient and economical manner.
   • § 54514 Subject to the provisions of Section 54516.1, the local agency shall prescribe, revise, and collect such charges that the services, facilities or water of the…
   • § 54515 After making allowances for contingencies and error in the estimates, the charges, together with any other funds which under this chapter can legally be, and…
   • § 54516 Subject to the provisions of Section 54516.1, the local agency shall operate, maintain and preserve the enterprise in good repair and working order.
   • § 54516.1 Subject to the provisions and limitations of any resolution authorizing the issuance of bonds and to the conditions specified in Section 54516.2 of this code,…
   • § 54516.2 The local agency shall let contracts made by it pursuant to Section 54516.1 to the lowest qualified responsible bidder after the publication of a notice…
   • § 54516.3 If the enterprise is a hospital, the local agency may provide for the administration, operation and maintenance of the whole or any part of the enterprise and…
   • § 54517 The local agency shall preserve and protect the security of the bonds and the rights of the bondholders and warrant and defend their rights against all claims…
   • § 54518 In order to fully preserve and protect the priority and security of the bonds the local agency shall pay and discharge all lawful claims for labor, materials,…
   • § 54519 The local agency shall hold in trust the revenues and other funds pledged to the payment of the principal of and interest on the bonds for the benefit of the…
   • § 54520 The local agency shall keep proper books of record and accounts of the enterprise, separate from all other records and accounts, in which complete and correct…
   • § 54521 At all times the books shall be subject to the inspection of the holders of not less than 10 percent of the outstanding bonds or their representatives…
   • § 54522 The local agency shall cause to be published a summary statement showing the amount of gross revenues and the amount of all other funds collected which are…
   • § 54523 In the resolution authorizing the bonds, the local agency may agree that the statement shall be prepared or audited by an independent certified public…
   • § 54524 The duties set forth in this article do not require the local agency to expend any funds other than revenues received or receivable from the enterprise and…
7. ARTICLE 7. Fiscal Agent §§ 54550–54552 · 3 sections

   • § 54550 In connection with the issuance of bonds a local agency may appoint a fiscal agent.
   • § 54551 The local agency may: (a) Provide for the powers, duties, functions, and compensation of the fiscal agent. (b) Limit the liabilities of the fiscal agent. (c)…
   • § 54552 The local agency may authorize the fiscal agent to receive, collect, hold, or disburse revenues collected from the enterprise for or on account of the local…
8. ARTICLE 8. Validating Proceedings § 54580 · 1 section

   • § 54580 An action to determine the validity of bonds may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil…
9. ARTICLE 9. Contributions §§ 54610–54615 · 6 sections

   • § 54610 Notwithstanding any provision of this chapter to the contrary, the legislative body may accept contributions or loans from the United States, or a federal…
   • § 54611 The local agency may enter into contracts and cooperate with the United States or a federal department, instrumentality, or agency in the making of preliminary…
   • § 54612 The legislative body may do any and all things necessary to avail itself of such aid and cooperation.
   • § 54613 The legislative body may accept contributions from, contract, and cooperate with, the State, any state department, instrumentality, or agency, or any municipal…
   • § 54614 The contributions may consist of money, rights of way, labor, materials, and other property.
   • § 54615 The local agency may also make contributions, for any of the purposes specified in this article, of any of the funds referred to in Section 54478.
10. ARTICLE 10. Remedies of Bondholders §§ 54640–54649 · 10 sections

    • § 54640 Subject to any contractual limitations binding upon a bondholder or his trustee, any bondholder or his trustee has the remedies set forth in this article for…
    • § 54641 Such contractual limitations include, but are not limited to, any limitation upon the exercise of a remedy to bondholders or their trustees holding a specific…
    • § 54642 By mandamus or other suit or proceeding at law or in equity a bondholder or his trustee may enforce his rights against the local agency, its legislative body,…
    • § 54643 By a suit in equity a bondholder or his trustee may require the local agency and its legislative body to account as the trustee of an express trust.
    • § 54644 By suit in equity a bondholder or his trustee may enjoin any acts or things which are unlawful or violate the bondholders’ rights.
    • § 54645 The remedies conferred upon any bondholder or his trustee by this chapter do not exclude any other remedy. Each remedy is cumulative and in addition to every…
    • § 54646 A waiver of any default or breach of duty or contract by any bondholder or his trustee does not affect any subsequent default or breach of duty or contract nor…
    • § 54647 The delay or omission of any bondholder or his trustee to exercise any right or power accruing upon any default does not impair the right or power and is not a…
    • § 54648 Every substantive right and remedy conferred upon the bondholders or their trustee may be enforced and exercised as often as is deemed expedient.
    • § 54649 If a suit, action, or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the bondholders or their trustees, the…
11. ARTICLE 11. Refunding Bonds §§ 54660–54662 · 3 sections

    • § 54660 A local agency may provide for the issuance, sale, or exchange of refunding bonds to redeem or retire bonds issued by it upon the terms, at the times, and in…
    • § 54661 All provisions of this chapter applicable to the issuance and sale of bonds, except the provisions of Article 3, are applicable to refunding bonds and to their…
    • § 54662 Funding or refunding bonds may be issued in a principal amount sufficient to provide funds for the payment of all of the following: (a) All bonds to be funded…
12. ARTICLE 11.5. Revenue Bond Anticipation Notes §§ 54664–54667 · 4 sections

    • § 54664 When the legislative body deems it in the best interests of the local agency, it may authorize the issuance of notes, on a negotiated or a competitive bid…
    • § 54665 All notes issued pursuant to this article and any renewal thereof shall be payable at a fixed time, except that in the event that the sale of the bonds shall…
    • § 54666 The principal of, and interest on, such notes may be paid from the revenues of the enterprise. If such notes, or any portion thereof, or the interest thereon,…
    • § 54667 Notes may be issued pursuant to this article in anticipation of the sale of bonds authorized either before or after the effective date of this article.
13. ARTICLE 12. Annexation and Exclusion §§ 54670–54672 · 3 sections

    • § 54670 Territory which has become annexed to a local agency which has authorized the issuance of bonds pursuant to this chapter, and which territory shall use the…
    • § 54671 Territory which has been withdrawn from a local agency which has authorized the issuance of bonds pursuant to this chapter, and which territory shall continue…
    • § 54672 A city to which any territory has been annexed, whether or not said territory has been withdrawn from a local agency which has authorized the issuance of bonds…
14. ARTICLE 13. Construction § 54700 · 1 section

    • § 54700 If any section, subsection, sentence, clause, or phrase of this chapter, or the application thereof to any person or circumstance, is for any reason held…