1.1.2 General Bond Statutes

Numerous statutes spread across several California codes give public agencies the power to borrow. As practices in the municipal bond market have evolved over time, some of the provisions in these statutes have become outdated and have made it difficult for public agencies to issue and sell bonds. Rather than amending each individual statute, the State Legislature has addressed some of the problems that have arisen through the adoption of statutes that apply to all public agencies (and are sometimes referred to as the “general bond statutes”). For example, after federal tax law was modified in the early 1980s to require that bonds must be issued in registered form in order for the interest on the bonds to be excluded from income for federal income tax purposes, the State Legislature passed the Registered Public Obligations Act of California (California Government Code Section 5050 et seq.) providing all public agencies in California the ability to establish a system of registration and to issue registered bonds.

Over time, state general bond statutes have covered numerous aspects of the issuance of debt, ranging from issuance of refunding bonds, registration of bonds, execution of bonds, pledges of security for bonds, interest payment dates, and issuance of bonds using an indenture or trust agreement or another instrument.