SECTIONS 54510-54524 - California Statutes

GOVERNMENT CODE

SECTION 54510-54524

54510. The duties prescribed by this article shall be performed by
the local agency or its proper officers, agents, or employees.

54511. Such performance is of the essence of the local agency's
contract with the bondholders.

54512. The local agency shall pay or cause to be paid the principal
and interest of the bonds on the date, at the place, and in the
manner mentioned in the bonds and coupons and in accordance with the
resolution authorizing their issuance.

54513. Subject to the provisions of Section 54516.1, the local
agency shall operate the enterprise in an efficient and economical
manner.

54514. Subject to the provisions of Section 54516.1, the local
agency shall prescribe, revise, and collect such charges that the
services, facilities or water of the enterprise are furnished at the
lowest possible cost consistent with sound economy, and prudent
management, and the security and payment of the principal and
interest of the bonds.

54515. After making allowances for contingencies and error in the
estimates, the charges, together with any other funds which under
this chapter can legally be, and which are, pledged or otherwise made
available for the respective purposes hereinafter set forth, shall
be at least sufficient to pay the following amounts in the order set
forth:
(a) The interest on and principal of the bonds as they become due
and payable.
(b) All payments required for compliance with the resolution
authorizing the issuance of the bonds or any other contract with the
bondholders, including the creation of sinking and reserve funds.
(c) All payments to meet any other obligations of the local agency
which are charges, liens, or encumbrances upon, or payable from, the
revenues of the enterprise.
(d) All current expenses of maintenance and operation of the
enterprise, except that if the legislative body provides in the
resolution calling the election that maintenance and operation costs
of the enterprise shall be paid from the revenues prior to the
principal, interest and sums for other security funds, then the
current expenses of such maintenance and operation shall precede any
other payments provided in this section.

54516. Subject to the provisions of Section 54516.1, the local
agency shall operate, maintain and preserve the enterprise in good
repair and working order.

54516.1. Subject to the provisions and limitations of any
resolution authorizing the issuance of bonds and to the conditions
specified in Section 54516.2 of this code, the local agency may
contract, upon such terms and conditions as it may determine, with
any person, firm or corporation, for the operation or management of
an enterprise. Each such contract shall provide that all
consideration to be paid thereunder shall be payable solely from the
revenues of the enterprise, and all consideration under any such
contract payable by the local agency shall be paid only from such
revenues. A local agency shall not by any such contract transfer or
attempt to transfer to any person, firm or corporation, or in any way
restrict the exercise of the local agency's legal powers and duties
concerning:
(a) The issuance and sale of bonds to provide funds for the
acquisition, construction, improving or financing of the enterprise;
(b) The payment of the principal of and interest on such bonds;
(c) The receipt, handling and disbursement of and accounting for
the proceeds of sale of the bonds;
(d) The fixing of fees, tolls, rates, rentals and other charges
for the services, facilities or water furnished by the enterprise;
(e) The accounting for the revenues, receipts and other funds of
the enterprise; and
(f) The making and enforcing of ordinances and regulations to
protect and promote public health and safety in connection with the
enterprise and its operation.

54516.2. The local agency shall let contracts made by it pursuant
to Section 54516.1 to the lowest qualified responsible bidder after
the publication of a notice inviting bids two or more times, not less
than five days apart, in a newspaper of general circulation printed
and published in the city. If there is no newspaper of general
circulation printed or published in the city, copies of the notice
shall be posted in at least three public places in the city.
Publication shall be commenced or notice posted not less than 15 days
prior to the date set in the notice for the opening of bids.
The notice inviting bids shall distinctly and specifically
describe the enterprise involved and the period of time for which the
enterprise is to be operated or managed.
If no bid which the local agency finds to be reasonable and valid
is received upon the original advertising, the local agency need not
readvertise.

54516.3. If the enterprise is a hospital, the local agency may
provide for the administration, operation and maintenance of the
whole or any part of the enterprise and for such purpose may enter
into any lease agreement or contract which it believes will best
serve the interest of the local agency by publication of notice
inviting bids pursuant to Section 54516.2. Before entering into any
such lease or contract, the local agency must first hold a public
hearing on the question after publication or posting of notice
thereof given in the same manner and for the same time as a notice
inviting bids is required to be given by Section 54516.2.

54517. The local agency shall preserve and protect the security of
the bonds and the rights of the bondholders and warrant and defend
their rights against all claims and demands of all persons.

54518. In order to fully preserve and protect the priority and
security of the bonds the local agency shall pay and discharge all
lawful claims for labor, materials, and supplies, which if unpaid may
become a lien or charge upon the revenues prior or superior to the
lien of the bonds or impair the security of the bonds.

54519. The local agency shall hold in trust the revenues and other
funds pledged to the payment of the principal of and interest on the
bonds for the benefit of the bondholders and shall apply the same
pursuant to the resolution authorizing the issuance of the bonds or
to the resolution as modified. The local agency may invest funds held
in reserve, or in any sinking fund, or funds not required for
immediate disbursement, in property or securities in which cities may
legally invest funds subject to their control. No such investment
shall be made in contravention of any covenant or agreement in any
resolution authorizing the issuance of any outstanding bonds.

54520. The local agency shall keep proper books of record and
accounts of the enterprise, separate from all other records and
accounts, in which complete and correct entries shall be made of all
transactions relating to the enterprise.

54521. At all times the books shall be subject to the inspection of
the holders of not less than 10 percent of the outstanding bonds or
their representatives authorized in writing.

54522. The local agency shall cause to be published a summary
statement showing the amount of gross revenues and the amount of all
other funds collected which are required to be pledged or otherwise
made available as security for payment of the principal of and
interest on the bonds, the disbursements from such revenues and other
funds in reasonable detail, and a general statement of the financial
and physical condition of the enterprise. The statement shall be
published annually, not more than 120 days after the close of each
fiscal year. The local agency shall furnish a copy of the statement
to any bondholder upon request.

54523. In the resolution authorizing the bonds, the local agency
may agree that the statement shall be prepared or audited by an
independent certified public accountant or public accountant and
shall be in the form and contain the detail specified in the
resolution.

54524. The duties set forth in this article do not require the
local agency to expend any funds other than revenues received or
receivable from the enterprise and such other funds from any source
as are legally available and as are made available for the enterprise
or to secure payment of the principal of or interest on bonds as
provided in this chapter.