i.4.4 Additional Legal Requirements – Internal Boards, Reporting to CDIAC, and Voter Approval

Even if the public agency has legal authority to issue the debt and the issuance will not violate the debt limit, there are other steps that the public agency must take in order to legally issue the debt. A short checklist of these steps includes the following:

OBTAIN VOTER APPROVAL TO ISSUE DEBT (IF REQUIRED).

PURSUE A VALIDATION ACTION. Although not a typical part of the issuance process, a public agency may pursue a validation action to obtain judicial approval before the bonds are issued, particularly if a bond transaction relies on a legal conclusion for which there is no clear precedence in case law. A validation action will establish that a court has deemed the bonds “valid.” Public agencies may use the validation process to preempt challenges as to the validity of the bonds that may be brought by other parties.

ADOPT A GOVERNING BOARD RESOLUTION OR ORDINANCE APPROVING THE DEBT AND LEGAL DOCUMENTS. The governing board adopts a resolution or ordinance authorizing the issuance of debt and the execution of legal documents. Specific requirements, such as the timing of the approval, may be established by state or local law.

EXECUTE LEGAL DOCUMENTS. Once the governing board has authorized its officers to execute the legal documents that will govern the transaction, the financing team finalizes them.

PROVIDE NOTICE TO CDIAC. State law requires public agencies to provide notice to CDIAC of any proposed debt issuance 30 days before sale and a report of final sale within 21 days after the sale.