2023 California Code › Government Code - GOV › TITLE 2 - GOVERNMENT OF THE STATE OF CALIFORNIA › DIVISION 4 - FISCAL AFFAIRS › PART 3 - STATE BONDS › CHAPTER 4 - State General Obligation Bonds › ARTICLE 2 - Issuance of Bonds › Section 16731.6.

16731.6. (a) Notwithstanding any other provision of this chapter, and as an alternative to the procedures set forth in Section 16731, the committee may provide for the issuance of all or part of the bonds authorized to be issued as commercial paper notes. The committee shall adopt a resolution finding that issuance of the bonds in the form of commercial paper notes is necessary and desirable, directing the Treasurer to arrange for preparation of the requisite number of suitable notes, and specifying other provisions relating to the commercial paper notes, including all of the following:
(1) For each program of commercial paper notes authorized, the resolution shall contain the final date of maturity and the total aggregate principal amount of the commercial paper notes authorized to be outstanding at any one time up to the maturity date, in accordance with all of the following:
(A) The resolution may provide that the commercial paper notes may be issued and renewed from time to time until the final maturity date, and that the amount issued from time to time may be set by the Treasurer up to the maximum amount authorized to be outstanding at any one time.
(B) The resolution shall include methods of setting the dates, numbers, and denominations of the commercial paper notes.
(C) The determination of the final maturity date and total amount by the committee shall be made upon recommendation of the Treasurer to meet the needs of the state for funds, to provide the maximum benefit to potential purchasers, and to respond to the expected demand for the commercial paper notes.
(D) Notwithstanding any other provision of this chapter, whenever the committee determines to issue commercial paper notes, the committee is not required to comply with the requirements of Section 16732.
(2) The method of setting the interest rates and interest payment dates applicable to the commercial paper notes, in accordance with the following:
(A) Commercial paper notes may bear a stated rate of interest payable only at maturity, which rate or rates may be determined at the time of sale of each unit of commercial paper notes.
(B) The rate of interest borne by the commercial paper notes shall not exceed 11 percent per annum.
(C) Notwithstanding any other provision of this chapter, whenever the committee determines to issue commercial paper notes, the committee is not required to comply with the requirements of Section 16733.
(3) Any provisions for the redemption of the commercial paper notes prior to stated maturity.
(4) The technical form and language of the commercial paper notes.
(5) All other terms and conditions of the commercial paper notes and of their execution, issuance, and sale, deemed necessary and appropriate by the committee.
(b) Notwithstanding any other provision of this chapter, when the committee determines to issue commercial paper notes, all of the following shall apply:
(1) The commercial paper notes may be sold at negotiated sale at a price below the par value in a manner consistent with paragraph (2) of subdivision (a).
(2) During the term of any program of commercial paper notes, the renewal and reissuance from time to time of the commercial paper notes in an amount up to the maximum amount authorized by the resolution shall be deemed to be a refunding of the previously maturing amount, permitted by and consistent with Article 6 (commencing with Section 16780).
(3) Consistent with the intent for the General Fund to realize a savings in debt service costs when commercial paper notes are issued in place of bonds without shifting or adding financing and debt service costs to the bond funds, the state administrative costs of commercial paper and interest payable and other costs associated with commercial paper notes shall be paid for as follows:
(A) The proceeds of commercial paper notes are, notwithstanding Section 13340, continuously appropriated to pay the state administrative costs of commercial paper including, but not limited to, costs of the Treasurer’s office, the Controller’s office, and the Department of Finance.
(B) An amount necessary to pay the interest payable on maturing commercial paper notes, up to the maximum rate authorized by law, is, notwithstanding Section 13340, continuously appropriated from the General Fund to pay the interest.
(C) Notwithstanding Section 13340, there is continuously appropriated from the General Fund, an amount necessary to pay the costs associated with commercial paper notes that are not described in subparagraph (A), including, but not limited to, both of the following:
(i) Fees, costs, indemnities, and other similar expenses incurred under or in connection with agreements to purchase commercial paper notes, including, but not limited to, letters or lines of credit, not to exceed annually for each agreement 3 percent of the maximum principal amount of commercial paper notes that could be purchased and outstanding at any one time pursuant to an agreement.
(ii) All other costs, including, but not limited to, remarketing and dealer fees, issuing and paying agent fees, rating agency fees, and bond counsel fees, in an annual amount not to exceed 0.25 percent of the highest sum at any time during that year of the maximum principal amount of commercial paper notes authorized by all resolutions.
(Amended by Stats. 2014, Ch. 28, Sec. 40. (SB 854) Effective June 20, 2014.)