SECTIONS 5700-5703 - California Statutes

GOVERNMENT CODE

SECTION 5700-5703

5700. "Bonds" as used in this chapter means (a) any bonds or other
evidences of indebtedness issued after the effective date of this
chapter by the state or any state department, board, agency or
authority or (b) any bonds or other evidences of indebtedness issued
by any joint powers agency created under Chapter 5 (commencing with
Section 6500) of Division 7 that are payable from payments made with
respect to a lease or sale of property to or from the state or any
state department, board, agency, or authority. For purposes of this
chapter, "evidence of indebtedness" includes, but is not limited to,
certificates of participation or interests in any rental or lease
payments or installment purchase payments, in an aggregate principal
amount exceeding $10,000,000, to be made by the state or any state
department, board, agency, or authority with respect to buildings or
other capital improvements.

5701. The provisions of this chapter apply to every bond regardless
of any other provision of law or any provision of the bond's
authorization.

5702. The State Treasurer shall be the sole agent for offering and
selling bonds. In selling bonds on behalf of any department of state
government or agency of the state, the State Treasurer shall schedule
the sale of such bonds in such a manner that the sale shall be
coordinated with the program of such department or agency
necessitating the sale of such bonds.

5703. (a) Except as provided in subdivisions (b), (c), and (d), the
Treasurer, in exercising the duties of agent for offering and
selling bonds, whose duties include, among others, establishing the
timing of a sale, preparation or approval of the documentation for
the sale, sole authority to select the underwriters for negotiating
the sale, and executing the bond purchase agreement on behalf of the
state or the state's agencies, is responsible for developing and
implementing a competitive process for selection of underwriters for
negotiated offerings of bonds. The competitive process may be
conducted on a issue-by-issue basis or to establish one or more pools
of underwriters for various types of issues. The competitive process
shall have at least all of the following features:
(1) Solicitation of written qualifications from at least 20
underwriting firms.
(2) Consideration of the goals for minority and women business
enterprise participation in professional bond services contracts.
(3) The written submissions shall be available for inspection at
the office of the Treasurer for a period of at least six months.
(4) If a pool of underwriters is established, the competitive
process shall be repeated at least every 24 months to reestablish the
pool of underwriters.
(b) For negotiated offerings of bonds by state financing
authorities that act as conduits to provide financing to other
public, nonprofit, or private organizations, the Treasurer shall use
the competitive process described in subdivision (a) to establish one
or more pools of underwriters for each financing authority. The
Treasurer may make additions to a pool without competitive
solicitation, on a case-by-case determination upon the recommendation
of a project applicant, where the Treasurer finds that the
underwriter to be added has provided significant services to the
project applicant with the expectation of compensation for those
services from underwriting the revenue bonds which will fund the
applicant's project.
(c) The Treasurer may select underwriters for a negotiated sale of
bonds by means other than as described in subdivision (a) if the
Treasurer makes a written finding that extraordinary market
conditions do not allow enough time to comply with subdivision (a)
without risking financial detriment to the state.
(d) Subdivisions (a), (b), and (c) shall not apply to the issuance
of state bonds for which the Treasurer is precluded by statute from
selecting underwriters.
(e) For negotiated sales, the Treasurer shall maintain records of
all cost information pertinent to the initial offering of all state
bonds, except that in the case of bonds issued by a state financing
authority, as described in subdivision (b), the issuing state
financing authority shall instead be responsible for maintaining the
same cost information on bonds it has issued. The information shall
include, but not be limited to, all of the following:
(1) All amounts paid out of bond proceeds to the underwriter,
detailed by management fee, takedown, risk, and underwriter's
expenses.
(2) All costs paid out of bond proceeds to rating agencies for
rating of the bonds.
(3) All fees paid out of bond proceeds to bond counsels, trustees,
or financial advisers relating to the initial offering of the bonds.
(4) The interest rate to be paid on the bonds.
(f) For competitive sales, the Treasurer shall maintain records of
all bids submitted and the documentation of bid verifications
including the terms of sale and the calculation of net interest cost
or true interest cost.
(g) The State Auditor shall audit the cost records required to be
maintained pursuant to subdivision (e) and conduct a review of the
records required to be maintained pursuant to subdivision (f).
(h) The State Auditor shall report whether this section is being
fully implemented. The State Auditor shall make cost and interest
rate comparisons with similar initial bond offerings of other states
where possible. The State Auditor shall submit a report to the
Legislature on March 1, 1993, and March 1, 1995, for bonds sold
during the two calendar years immediately preceding the year in which
the report is due.
(i) Section 10295 of, and Article 4 (commencing with Section
10335) and Article 5 (commencing with Section 10355) of Chapter 2 of
Part 2 of Division 2 of, the Public Contract Code are not applicable
to agreements entered into by the Treasurer in connection with the
sale of any evidence of indebtedness.