CHAPTER 4.9. Alternative Provisions for the Formation of Improvement Districts and the Issuance of Bonds Therefor [36410. - 36446.]

Cal. Water Code - WAT 4.9.

in effect

Cal. Water Code - WAT § 36410. Section 36410.

This chapter provides an alternative method for the formation of improvement districts consisting of a portion of the territory within a district and the issuance of bonds and warrants of said district for said improvement districts. This chapter shall not apply to or affect any other provisions of this division for the formation of improvement districts or the incurring of indebtedness therefor.

Cal. Water Code - WAT § 36411. Section 36411.

Improvement districts consisting of contiguous or noncontiguous portions of the territory of a district may be formed within a district and bonds and warrants of the district may be issued for such improvement districts as provided in this chapter.

Cal. Water Code - WAT § 36412. Section 36412.

Bonds and warrants of a district for an improvement district may be issued for any purpose for which bonds and warrants of the district may be issued; provided, that the carrying out of such purpose shall benefit the lands within such improvement district. Such bonds or warrants may be either general obligation bonds or warrants or revenue bonds.

Cal. Water Code - WAT § 36413. Section 36413.

Whenever the board is of the opinion that an improvement district should be formed, the board of directors shall adopt a resolution of intention which shall state: (a) the intention of the board to form the proposed improvement district, (b) the purpose for which the proposed improvement district is to be formed, (c) the estimated expense of carrying out said purpose, (d) if assessments are to be levied for carrying out such purpose, such assessments shall be levied exclusively upon the lands in said proposed improvement district, (e) if revenue bonds are to be used for carrying out such purpose, only the revenues derived from the operation of improvement district works shall be pledged to the payment of principal and interest on such bonds, and no tax or assessment shall ever be levied or collected to pay principal or interest on such bonds, (f) that a map showing the exterior boundaries of said proposed improvement district, which map shall govern for all details as to the extent of the proposed improvement district, is on file with the secretary of the district and is available for inspection by any person or persons interested, (g) the time and place for a hearing by the board on the formation of said proposed improvement district, the extent thereof, the purpose for which it is to be formed, the benefit to lands within the proposed improvement district from carrying out said purpose, the estimated expense of carrying out said purpose or any other matter relating to any of the foregoing, which hearing may be held concurrently with the hearing required by Chapter 2 (commencing with Section 35950) of this part, and (h) that at said time and place any persons interested, including all persons owning lands in the district or in the proposed improvement district, may appear and be heard.

Cal. Water Code - WAT § 36414. Section 36414.

Notice of said hearing shall be given by publishing a copy of the resolution of intention in a newspaper of general circulation published in each affected county, pursuant to Section 6066 of the Government Code, the first publication to be at least fourteen (14) days prior to the time fixed for the hearing. Said notice shall also be given by posting a copy of said resolution in three public places within the proposed improvement district for at least fourteen (14) days prior to the time fixed for said hearing. No notice other than that required by this section need be given.

Cal. Water Code - WAT § 36415. Section 36415.

At the time and place so fixed, or at any time or place to which the hearing is continued, the board shall hold the hearing provided for by said resolution of intention, at which hearing any person interested, including all persons owning land in the district, or in the proposed improvement district, may appear and be heard concerning any matters set forth in the resolution of intention or any matters material thereto.

Cal. Water Code - WAT § 36416. Section 36416.

At the hearing the board may adopt a resolution proposing modifications relating to any or all of the following: (a) a modification of the boundaries of the proposed improvement district, (b) the addition to the proposed improvement district of lands which in its opinion will be benefited by carrying out the purpose described in the resolution of intention, (c) the exclusion from the proposed improvement district of any lands described in the resolution of intention which in its opinion will not be benefited by carrying out said purpose or (d) the increasing, decreasing or otherwise modifying of the purpose stated in the resolution of intention. Said resolution proposing modification shall describe the proposed modifications, state the change, if any, in the estimated expense of carrying out the purpose, and shall fix a time and place for hearing by the board thereon.

Cal. Water Code - WAT § 36417. Section 36417.

The board shall not order any modifications except after publication of the resolution proposing said modifications once in the same newspaper in which the resolution of intention was published, said publication to be at least fourteen (14) days prior to the date of hearing on said proposed modifications.

Cal. Water Code - WAT § 36418. Section 36418.

The hearing on any proposed modifications, or any continuance thereof, may be held at the same time and place as any continued hearing on the resolution of intention and both said hearings may be held and conducted concurrently.

Cal. Water Code - WAT § 36419. Section 36419.

At the conclusion of the hearing on the resolution of intention and of the hearing, if any, upon proposed modifications, the board may by resolution order the improvement district formed for the purpose and with the exterior boundaries described in the resolution of intention, or for the purpose and with the exterior boundaries as proposed to be modified in the resolution, if any, proposing modifications. Said resolution ordering the district formed shall state the estimated expense of carrying out the purpose described therein. Said resolution shall also number and designate said improvement district substantially as “Improvement District No. ____ of ____ District.”

Cal. Water Code - WAT § 36420. Section 36420.

(a) After adopting the resolution ordering the improvement district formed, the board may provide for and call a special bond election within such improvement district to submit to the voters of the improvement district a proposition of whether or not an indebtedness of the district shall be incurred and bonds issued therefor in an amount not exceeding the estimate stated in the resolution ordering the improvement district formed. (b) If such bonds are to be general obligation bonds, such indebtedness and the bonds shall be payable from assessments to be levied and collected upon lands within said improvement district. (c) If such bonds are to be revenue bonds only revenues derived from the operation of the improvement district works shall be pledged to the payment or redemption thereof and the payment of interest thereon, and such revenue bonds shall not be a general debt liability or obligation of the district.

Cal. Water Code - WAT § 36421. Section 36421.

Except as otherwise provided in this chapter, special bond elections within an improvement district shall be called, noticed, held, conducted and the results thereof canvassed in substantially the same manner as is provided in this division for bond elections held in the entire district.

Cal. Water Code - WAT § 36423. Section 36423.

Bonds of said district for said improvement district shall be issued and sold in substantially the same manner and upon the same terms and conditions as bonds of the entire district, except that (a) if such bonds are general obligation bonds of the district for such improvement district, assessments for the payment of said bonds and the interest thereon shall be levied and collected from annual assessments to be levied upon and collected from lands within said improvement district or (b) if such bonds are revenue bonds, only the net revenues of the improvement district shall be pledged to the payment or redemption thereof and the payment of interest thereon. The bonds shall be issued in the name of the district and, if general obligation bonds, shall be designated “Bonds of ____ District for Improvement District No. ____” and each bond and all interest coupons shall state that the assessment for the payment thereof shall be limited to annual assessments to be levied upon and collected from the lands within said improvement district, except to the extent that provision for such payment has been made by the board, as may be permitted by law or, if revenue bonds, shall be designated “Revenue Bonds of ____ District for Improvement District No. ____” and each bond and all interest coupons shall state that it is payable from revenues of the improvement district, except to the extent that provision for such payment has been otherwise made by the board, as may be permitted by law.

Cal. Water Code - WAT § 36424. Section 36424.

Except to the extent that provision has otherwise been made by the board, as may be permitted by law, for the payment of the principal of and interest upon general obligation bonds and warrants of said district for such improvement district as they become due and also for the payment of operating expenses of said improvement district, the annual estimate made by the board of the sum required by the district to discharge all of its obligations shall, in addition to the other amounts required to be included therein, include an amount sufficient to pay the principal of general obligation bonds and warrants of the district for said improvement district and the interest thereon as the same becomes due and also to pay operating expenses for said improvement district.

Cal. Water Code - WAT § 36424.1. Section 36424.1.

(a) This section applies only to the Santa Margarita Water District. (b) The Legislature finds and declares both of the following: (1) In 1978, the voters of the Santa Margarita Water District authorized the sale of bonds for its improvement district number four in which the bond proceeds are available for water and sewer facilities. (2) In 1998, the Capistrano School District created a Mello-Roos Community Facilities District in which the bond proceeds are available for water, sewer, roads, and other facilities for a portion of the area to be served by the improvement district. (c) It is the intent of the Legislature to allow the Santa Margarita Water District the flexibility to establish equity with regard to the manner in which the district’s water and sewer bonds are repaid, recognizing that a portion of the water and sewer facilities for the improvement district area will be financed by bonds issued pursuant to the Mello-Roos Community Facilities Act of 1982 (Ch. 2.5 (commencing with Sec. 53311), Pt. 1, Div. 2, Title 5, Gov. C.), instead of all water and sewer facilities being financed by the district’s water and sewer bonds. (d) For the purpose of making the annual estimate of the amount required to pay the principal of, and interest on, general obligation bonds of the Santa Margarita Water District for improvement district number four pursuant to Section 36424, the board of the district may designate two separate areas within the improvement district, with one area financed by the school district’s bonds under Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code and the other area not so financed. (e) If the district exercises the authority authorized by this section, the amount of principal and interest allocated each year to the area without the bonds issued under Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code (1) shall not be less, to the extent possible, than the amount needed to repay the principal and interest actually owed on the water and sewer bonds if that amount is spread uniformly across all of the assessed value of property within the improvement district, and (2) shall not be more, to the extent possible, than that amount that would have been allocated if (A) all water and sewer facilities had been financed by the water district’s water and sewer bonds, subject to a limit of the amount of water and sewer bonds actually authorized, and (B) the entire improvement district was responsible to repay these amounts. (f) The board shall not designate separate areas unless it receives a report from an independent financial consultant or engineer that the designation of the proposed areas and the allocation of the estimated amount required to repay the principal of, and interest on, the bonds to the areas, in accordance with subdivision (e), will not adversely affect the board’s ability to levy ad valorem assessments that will be sufficient to pay the principal of, and interest on, the bonds and the board determines that the designation of the areas and the allocation of the amount will not be adverse to the interests of the holders of the bonds. Notwithstanding subdivision (e), if the report indicates that the allocation described in subdivision (e) will adversely affect the board’s ability to levy ad valorem assessments that are sufficient to pay the principal of, and interest on, the bonds or that that allocation may be adverse to the interests of the holders of the bonds, the district may designate two separate areas within improvement district number four in accordance with subdivision (d) and levy ad valorem assessments in amounts necessary to avoid those adverse effects.

Cal. Water Code - WAT § 36425. Section 36425.

In addition to the charges authorized to be fixed and collected pursuant to Article 4 (commencing with Section 35470) of Chapter 2 of Part 5 of this division, the board in lieu, in whole or in part, of raising money for the payment of the principal of and interest on bonds and warrants of the district issued for an improvement district or for the operating expenses of that improvement district, may fix and collect charges for the making of water available to the holders of title to land in that improvement district or the occupants thereon. The additional charges within an improvement district shall be fixed and collected in substantially the same manner and upon the same terms and conditions as is provided in Article 4 for charges to be fixed and collected within the entire district, except that the additional charges fixed and collected from an improvement district shall be expended only for the payment of the principal of, and interest upon, bonds and warrants of the district issued for the improvement district or for payment of the operating expenses of the improvement district.

Cal. Water Code - WAT § 36426. Section 36426.

Except as otherwise provided in this chapter, the provisions of this division applicable to bonds and warrants of the district and assessments therefor shall, so far as consistent with this chapter, apply to bonds and warrants of the district for improvement districts therein.

Cal. Water Code - WAT § 36427. Section 36427.

If general obligation bonds of the district for an improvement district thereof shall have been issued, the treasurer shall establish within the general obligation bond fund for the district provided for in Section 35902 a separate account for general obligation bonds of the district for each improvement district to which shall be apportioned such portion of the general obligation bond fund as is applicable to the general obligation bonds of the district for the particular improvement district. The money in any separate account shall be used for the payment of the general obligation bonds of the district for the particular improvement district and interest thereon and until the general obligation bonded indebtedness of the district therefor is discharged shall not be used for any other purpose.

Cal. Water Code - WAT § 36428. Section 36428.

After the formation of an improvement district additional lands contiguous or noncontiguous thereto may be included therein upon such terms and conditions as may be fixed by the board. If the board is of the opinion that territory should be added to an improvement district, the board shall adopt a resolution of intention which shall state: (a) The intention of the board to add certain territory to Improvement District No. ____ of ____ District; (b) That a map showing the exterior boundaries of the territory to be annexed, which map shall govern for all details as to the extent of the area to be annexed, is on file with the secretary of the district and is available for inspection by any person or persons interested; (c) The terms and conditions of annexation, if any; (d) If assessments will be levied for carrying out any purpose of said improvement district including the payment of principal of and interest on any general obligation bonds or warrants outstanding, such assessments shall be levied exclusively upon the lands in said proposed improvement district including the territory annexed thereto; (e) If revenues are to be used for carrying out any purpose of such improvement district, including the payment of principal of and interest on any revenue bonds outstanding, such revenues shall be limited to revenues derived from the operation of the improvement district works, including the territory annexed thereto. (f) The time and place for hearing by the board on the question of the annexation of said territory to said improvement district and any other matter relating to any of the foregoing; and (g) That at said time and place any persons interested including persons owning land within the area to be annexed to the improvement district may appear and be heard. Notice of said hearing shall be given in the same manner as provided in Section 36414.

Cal. Water Code - WAT § 36429. Section 36429.

At the time and place fixed or at any time and place to which the hearing is continued, the board shall hold the hearing provided for by said resolution of intention at which hearing any person interested, including all persons owning land in the district or in the territory to be annexed to the improvement district, may appear and be heard concerning any matters set forth in the resolution of intention or any matters material thereto.

Cal. Water Code - WAT § 36430. Section 36430.

At the hearing the board may adopt a resolution proposing modifications relating to any or all of the following: (a) Modification of the boundaries of the territory to be annexed; (b) The addition to the territory proposed to be annexed of lands of which in its opinion will be benefited by being annexed to said improvement district; (c) The exclusion from the territory to be annexed of any lands described in the resolution of intention which in its opinion will not be benefited by being annexed to said improvement district; or (d) The terms and conditions set forth in the resolution of intention or if none the board may adopt terms and conditions. Said resolution proposing modification shall describe the proposed modifications and shall fix a time and place for a hearing by the board thereon. The board shall not order any modifications except after publication of the resolution proposing said modifications as provided in Section 36417.

Cal. Water Code - WAT § 36431. Section 36431.

At the conclusion of the hearing on the resolution of intention and of the hearing, if any, upon proposed modifications the board may by resolution order the territory annexed to said improvement district upon the terms and conditions set forth in said resolution of intention.

Cal. Water Code - WAT § 36432. Section 36432.

As an alternative procedure for the annexation of land to an improvement district, additional lands may be included within any improvement district by resolution of the board declaring the territory annexed after receipt by the board of written consent of the owners of all of the land to be annexed thereto which consent shall include the terms and conditions of annexation, if any.

Cal. Water Code - WAT § 36433. Section 36433.

The board may advance general funds of the district to accomplish an approved plan of works of an improvement district.

Cal. Water Code - WAT § 36434. Section 36434.

The board shall repay the district for any advance of funds with any money received which is authorized by law to be used for such a purpose including the proceeds of the sale of bonds and warrants authorized for the purposes of the improvement district.

Cal. Water Code - WAT § 36435. Section 36435.

After adopting the resolution ordering the improvement district formed, the board may provide for the issuance of warrants of the district for the improvement district in an amount not exceeding the estimate stated in the resolution ordering the improvement district formed, such warrants to be payable from assessments to be levied and collected upon the lands within said improvement district.

Cal. Water Code - WAT § 36436. Section 36436.

Warrants of said district for said improvement district shall be issued and sold in substantially the same manner and upon the same terms and conditions as warrants of the entire district, except that assessments for the payment of said warrants and the interest thereon shall be levied and collected from annual assessments to be levied upon and collected from lands within said improvement district. The warrants shall be issued in the name of the district and shall be designated “Warrants of ____ District for Improvement District No. __” and each warrant and all interest coupons thereon shall state that the assessment for the payment thereof shall be limited to annual assessments to be levied upon and collected from the lands within said improvement district, except to the extent that provision for such payment has been made by the board, as may be permitted by law.

Cal. Water Code - WAT § 36437. Section 36437.

Except as otherwise provided in this chapter, the provisions of this division applicable to warrants of the district and assessments therefor shall, so far as consistent with this chapter, apply to warrants of the district for an improvement district therein.

Cal. Water Code - WAT § 36438. Section 36438.

Pursuant to the procedure hereinafter set forth in this chapter, two or more existing coterminous improvement districts formed pursuant to the provisions of this chapter may be consolidated into one improvement district. In such instance the consolidated improvement district may be designated in such manner as the board may designate. Any authorized but unissued bonds may be issued and sold as the bonds of the consolidated improvement district. Such bonds, as well as any funds on hand from bonds previously issued by any of the improvement districts consolidated into one improvement district as hereinafter provided or any other funds of any such improvement districts, shall be used in the manner provided by law for the original authorized purposes. However, any such use of funds shall be to accomplish the plan of works originally established or as subsequently amended. To the extent assessment, standby charges, or other charges are necessary to be levied or collected by reason of any such improvement districts consolidated hereunder into one improvement district, such assessments, standby charges, or other charges may be collected by the consolidated improvement district provided for hereunder. Thereafter, the amount so collected shall be utilized to satisfy the obligations for which such assessments or standby charges were levied and collected.

Cal. Water Code - WAT § 36439. Section 36439.

In the event that the board determines it to be in the best interests of the district to consolidate any two or more existing coterminous improvement districts formed under this chapter, it may by resolution adopted by a four-fifths vote, declare its intention to consolidate such improvement districts. The resolution so adopted shall identify the improvement districts to be consolidated and shall set forth the total amount of authorized bonds, as well as the amount of outstanding bonds, of each of the improvement districts proposed to be consolidated, the purposes of each such improvement district, and the designation of the proposed consolidated improvement district. The resolution of intention shall set forth a legal description of the existing coterminous improvement districts to be consolidated and provide that notice be given in a manner provided in Section 36414. Additionally, the resolution shall fix a date, time, and place for a public hearing on the proposed consolidation.

Cal. Water Code - WAT § 36440. Section 36440.

At the conclusion of the hearing on the resolution of intention provided for in Section 36439, the board may adopt a resolution declaring the existing coterminous improvement districts described in the resolution of intention to be consolidated in one improvement district which shall be designated therein. The resolution shall contain the legal description thereof as well as a statement of the purposes of the consolidated improvement district. If the parent district has adopted the alternative method for the levy, collection and enforcement of district assessments by the county and is operating under the provisions of Part 7.5 (commencing with Section 37200) of this division, it shall file a statement as required by Chapter 8 (commencing with Section 54900) of Part 1, Division 2, Title 5 of the Government Code. The resolution shall contain a determination that such consolidation is in the best interests of the present and future property owners and taxpayers. Any such resolution shall be subject to referendum held within the boundaries described in the resolution adopted as provided for herein.

Cal. Water Code - WAT § 36441. Section 36441.

The provisions of Sections 36438 to 36440, inclusive, are in the alternative to and shall not affect any existing provisions of this division.

Cal. Water Code - WAT § 36442. Section 36442.

After the formation of an improvement district, lands may be detached therefrom upon any terms and conditions as may be fixed by the board. If the board determines that territory should be detached from an improvement district, the board shall adopt a resolution of intention which shall state the following: (a) The intention of the board to detach certain territory from Improvement District No. ____ of ____ District. (b) That a map showing the exterior boundaries of the territory to be detached, which map shall govern for all details as to the extent of the area to be detached, is on file with the secretary of the district and is available for inspection by any person or persons interested. (c) The terms and conditions of the proposed detachment. (d) That the assessments for carrying out any purpose of the improvement district, including the payment of principal of and interest on any bonds or warrants outstanding, shall or shall not be continued to be levied to the extent and in the manner provided for in the District Reorganization Act of 1965 upon the lands in the territory to be detached. (e) The time and place for a hearing by the board on the question of the detachment of such territory from the improvement district and any other matter relating to any of the foregoing. (f) That at such time and place any persons interested, including persons owning land within the area to be detached from the improvement district, may appear and be heard. Notice of such hearing shall be given in the same manner as provided in Section 36414.

Cal. Water Code - WAT § 36443. Section 36443.

At the time and place fixed, or at any time and place to which the hearing is continued, the board shall hold the hearing provided for by such resolution of intention. At the hearing any person interested, including all persons owning land in the district or in the territory to be detached from the improvement district, may appear and be heard concerning any matters set forth in the resolution of intention or any matters material thereto.

Cal. Water Code - WAT § 36444. Section 36444.

At the hearing, the board may adopt a resolution proposing modifications relating to any or all of the following: (a) Modification of the boundaries of the territory to be detached. (b) The exclusion from the territory to be detached of any lands described in the resolution of intention which, in its opinion, will be benefited by remaining part of the improvement district. (c) The terms and conditions set forth in the resolution of intention, or if none, the board may adopt terms and conditions. Such resolution proposing modifications shall describe the proposed modifications and shall fix a time and place for a hearing by the board thereon. The board shall not order any modifications except after publication of the resolution proposing the modifications as provided in Section 36417.

Cal. Water Code - WAT § 36445. Section 36445.

At the conclusion of the hearing on the resolution of intention and of the hearing, if any, upon proposed modifications, the board may by resolution order the territory detached from the improvement district upon the terms and conditions set forth in the resolution of intention.

Cal. Water Code - WAT § 36446. Section 36446.

As an alternative procedure for the detachment of land from an improvement district, lands may be detached from any improvement district by resolution of the board declaring the territory detached after receipt by the board of written consent of the owners of all of the land to be detached therefrom, which consent shall include the terms and conditions of annexation, if any.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026