ARTICLE 4. Provisions Relating to Bonds [54400. - 54435.]

Cal. Government Code - GOV 4.
in effect

Cal. Government Code - GOV § 54400. Section 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 to bear. (c) The maturity dates of the bonds, not exceeding forty years from their respective dates.

Cal. Government Code - GOV § 54401. Section 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. The maximum maturity date of each series shall be calculated from the date on the face of each bond separately.

Cal. Government Code - GOV § 54402. Section 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 bonds with serial or term maturities. (b) The interest of the bonds either fixed or variable, the rate or rates, payable at the times and in the manner specified therein. Under no conditions may the annual fixed or variable interest rate exceed the maximum rate specified in Section 53531 of the Government Code. (c) The denomination of the bonds. (d) The form of the bonds, coupon, registered, or book entry. (e) The registration and conversion privileges of the bonds. (f) The manner in which the bonds are to be executed. (g) The medium and place of payment. (h) The terms of redemption, with or without a premium.

Cal. Government Code - GOV § 54404. Section 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 bonds.

Cal. Government Code - GOV § 54405. Section 54405.

The resolution may provide the terms and conditions upon which the bonds may be declared or become due and payable upon specified defaults.

Cal. Government Code - GOV § 54407. Section 54407.

By resolution, the legislative body may provide the manner for authenticating the bonds and other terms to be contained in the bonds.

Cal. Government Code - GOV § 54408. Section 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 provisions the legislative body determines.

Cal. Government Code - GOV § 54409. Section 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.

Cal. Government Code - GOV § 54410. Section 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 acquisition, construction, improving or financing of the enterprise. (b) All engineering, inspection, legal and fiscal agent’s fees, costs of the bond election and of the issuance of said revenue bonds, bond reserve funds and working capital and bond interest estimated to accrue during the construction period and for a period of not to exceed twelve months after completion of construction.

Cal. Government Code - GOV § 54411. Section 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 signing have ceased to be officers.

Cal. Government Code - GOV § 54412. Section 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 by contracts in connection therewith.

Cal. Government Code - GOV § 54413. Section 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 conclusively deemed valid and issued in conformity with this chapter.

Cal. Government Code - GOV § 54414. Section 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 and their coupons.

Cal. Government Code - GOV § 54415. Section 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 is bound by their terms.

Cal. Government Code - GOV § 54418. Section 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 legislative body decides to sell the bonds at private sale rather than public sale, the local agency shall send a written statement to the California Debt Advisory Commission, no later than two weeks after the sale of the bonds, explaining the reasons for that decision.

Cal. Government Code - GOV § 54420. Section 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 thereof, interest thereon, and any premiums upon the redemption of any thereof, solely from and secured by a lien upon the gross revenues of the enterprise and such funds as are described in the resolution authorizing the issuance of the bonds.

Cal. Government Code - GOV § 54421. Section 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 referred to in Section 54478 for the security of the bonds. The gross revenues of the enterprise include revenues of improvements and extensions later constructed or acquired and revenues of existing systems, plants, works, or undertakings to be improved or extended or for the improvement or extension of which the bonds are to be issued.

Cal. Government Code - GOV § 54422. Section 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 revenues of the enterprise and upon such other funds as shall be specified in the resolution authorizing the issuance of the bonds.

Cal. Government Code - GOV § 54423. Section 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 fund for the security and payment of the interest on and principal of the bonds.

Cal. Government Code - GOV § 54424. Section 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 and 54426.

Cal. Government Code - GOV § 54425. Section 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 and operation costs of the enterprise, which costs include the reasonable expenses of management, repair and other expenses necessary to maintain and preserve the enterprise in good repair and working order, may be apportioned from the revenues, and subject to any limiting covenants in the resolution providing for the issuance of bonds, the remaining surplus may be used for any lawful purpose of the local agency.

Cal. Government Code - GOV § 54426. Section 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 security funds shall be paid from the revenues prior to paying the maintenance and operation costs of the enterprise.

Cal. Government Code - GOV § 54427. Section 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 resolution authorizing the issuance of the bonds, without priority for number, date of bonds, of sale, of execution, or of delivery pursuant to this chapter and the resolution authorizing the issuance of the bonds; except that any local agency may authorize the issuance of bonds of different series and may provide that the bonds in any series shall, to the extent and in the manner prescribed in the resolution, be subordinated and be junior in standing, with respect to the payment of principal and interest and the security thereof, to such other bonds as may be specified in the resolution.

Cal. Government Code - GOV § 54430. Section 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.

Cal. Government Code - GOV § 54431. Section 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 pledge, charge, lien, or encumbrance, upon any of its property, or upon any of its income, receipts, or revenues except the revenues of the enterprise and other funds that may be legally applied, pledged, or otherwise made available to their payment.

Cal. Government Code - GOV § 54432. Section 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 made available to its payment and that the local agency is not obligated to pay it except from the revenues of the enterprise and from such other funds.

Cal. Government Code - GOV § 54435. Section 54435.

The bonds and interest or income from the bonds are exempt from taxation in this State, except from gift, inheritance, and estate taxes.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026

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