Newport Beach Municipal Code Art. VII Bonds

Whenever the City Council deems it necessary for the special improvement district to incur a bonded indebtedness, it shall, by resolution, set forth all of the following:

A. A declaration of the necessity for the indebtedness.

B. The purpose for which the proposed debt is to be incurred.

C. The amount of the proposed debt.

D. The time and place for a hearing by the City Council on the proposed debt issue.

(Ord. 94-40 § 2 (part), 1994)

The amount of the proposed bonded indebtedness may include all costs and estimated costs incidental to, or connected with, the accomplishment of the purpose for which the proposed debt is to be incurred, including, but not limited to, the estimated costs of construction or acquisition of buildings, or both; acquisition of land, rights-of-way, water, sewer, or other capacity or connection fees; satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the bonds are issued pursuant to this Code; architectural, engineering, inspection, legal, fiscal, and financial consultant fees; bond and other reserve funds; discount fees; interest on any bonds of the district estimated to be due and payable within two years of issuance of the bonds; election costs; and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, other credit enhancement costs, and printing costs.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 161, 2023)

The Clerk shall publish a notice of the hearing pursuant to California Government Code Sections 6060 and 6061 in a newspaper of general circulation circulated within the district. The notice shall state:

A. The time and place of the hearing on the proposal to issue debt.

B. That at the hearing the testimony of all interested persons, including all persons owning property in the area, for or against the proposed debt issuance, will be heard.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 162, 2023)

At the time and place fixed for the hearing on the resolution declaring the necessity for incurring the bonded indebtedness or at any time and place to which the hearing is adjourned, the City Council shall proceed with the hearing.

(Ord. 94-40 § 2 (part), 1994)

At the hearing any person interested, including persons owning property within the area, may appear and present any matters material to the questions set forth in the resolution declaring the necessity for incurring the bonded indebtedness.

(Ord. 94-40 § 2 (part), 1994)

For purpose of financing of, or contributing to the financing of, specified public facilities, the City Council may by resolution designate a portion or portions of the district as one or more improvement areas. An area shall be known as “Improvement Area No._____” of “City of Newport Beach Special Improvement District No._____.” After the designation of an improvement area, all proceedings for purposes of a bond election and for the purpose of levying special taxes for payment of the bonds, or for any other change pursuant to Article IV of this chapter, shall apply only to the improvement area for those specified facilities.

(Ord. 94-40 § 2 (part), 1994)

After the City Council has made its determination pursuant to Section 3.32.750, if it deems it necessary to incur the bonded indebtedness, it shall by resolution state all of the following:

A. That it deems it necessary to incur the bonded indebtedness.

B. The purpose for which the bonded indebtedness will be incurred.

C. Either of the following in accordance with its previous determination:

1. That the whole of the district will pay for the bonded indebtedness.

2. That a portion of the district will pay for the bonded indebtedness, which portion shall be described in the resolution of the City Council made pursuant to Section 3.32.750.

D. The principal amount of debt to be incurred.

E. The maximum term the bonds to be issued, which term shall not exceed forty (40) years.

F. The maximum annual rate of interest to be paid, payable annually or semiannually, or in part annually and in part semiannually, or in such other manner as may be provided by the City Council.

G. That the proposition will be submitted to the voters.

H. The date of the special improvement district election (which may be consolidated with a general or special district election including an election to levy a special tax) at which time the proposition shall be submitted to the voters.

I. If the election is not conducted by mail or hand-delivered ballot, the hours between which the polls shall be open.

J. If the election is conducted by mail or hand-delivered ballot, the hour when the ballots are required to be received in the office of the election officer conducting the election, and that if all qualified electors have voted, the election shall be closed.

(Ord. 94-40 § 2 (part), 1994)

The resolution provided for in Section 3.32.760 shall constitute the notice of such special bond election and such resolution shall be published in a newspaper of general circulation circulating within the special improvement district.

(Ord. 94-40 § 2 (part), 1994)

Propositions relating to the levy of a special tax, the incurring of bonded indebtedness, or to establish or change an appropriations limit, or any combination thereof, under this Code, may be combined into one ballot proposition as determined by the City Council. The qualified electors for all of these purposes shall be determined and the election shall be conducted in the same manner as for a special tax election pursuant to Section 3.32.330.

(Ord. 94-40 § 2 (part), 1994)

If the area designated in the resolution adopted pursuant to Section 3.32.760 does not include the entire special improvement district, a separate ballot shall be prepared for the vote upon the proposition to authorize bonds and to levy a special tax for payment of such bonds and only the voters entitled thereto shall be given such ballots.

(Ord. 94-40 § 2 (part), 1994)

A two-thirds vote shall be required for the issuance of revenue anticipation bonds under authority of this Code.

(Ord. 94-40 § 2 (part), 1994)

If the indebtedness is approved by the voters as required under Section 3.32.800, the City Council may, by resolution, at the time or times it deems proper, provide for the following:

A. The form of the bonds.

B. The execution of the bonds.

C. The issuance of any part of the bonds.

D. The appointment of one or more banks or trust companies within or outside of the state having the necessary trust powers as trustee, fiscal agent, paying agent, or bond registrar.

E. The execution of a trust agreement or indenture securing the bonds.

F. The pledge or assignment of any revenues of the special improvement district to the repayment of the bonds.

G. The investment of any bond proceeds and other revenues, including special tax revenues, by the trustee or fiscal agent in any securities or obligations described in the resolution, indenture, trust agreement, or other instrument providing for the issuance of the bonds. The resolution may provide for payment to the United States from any available revenues of a special improvement district of any excess investment earnings required to be rebated by Federal Law.

H. The date or dates to be borne by the bonds and the time or times of maturity of the bonds and the place or places and time or times that the bonds shall be payable.

I. The interest, fixed or variable, to be borne by the bonds.

J. The denominations, form, and registration privileges of the bonds.

K. Any other terms and conditions determined by the City Council to be necessary or desirable.

(Ord. 94-40 § 2 (part), 1994)

A. As a cumulative remedy, if debt is outstanding, the City Council may, not later than four years after the due date of the last installment of principal thereof, order that any delinquent special taxes levied in whole or in part for payment of the debt, together with any penalties, interest, and costs, be collected by an action brought in the superior court to foreclose the lien of special tax.

B. The City Council may, by resolution, adopted prior to the issuance of debt under this Code covenant for the benefit of debt holders to commence and diligently pursue to completion any foreclosure action regarding delinquent installments of any amount levied as a special tax for the payment of interest or principal of any bonds that are issued, or may employ a trustee to do so on behalf of the debt holders. The resolution may specify a deadline for commencement of the foreclosure action and any other terms and conditions the City Council determines reasonable regarding the foreclosure action.

C. Except as provided in Section 3.32.870, all special taxes, interest, penalties, costs, fees, and other charges that are delinquent at the time of the ordering of a foreclosure action shall be collected in the action. In the event that a lot or parcel of property has not been sold pursuant to judgment in the foreclosure action at the time that subsequent special taxes become delinquent, the court may include the subsequent special taxes, interest, penalties, costs, fees, and other charges in the judgment or modified judgment.

(Ord. 94-40 § 2 (part), 1994)

A. When any foreclosure actions are ordered, the tax collector shall be credited upon the current tax roll with the amount charged on account of the delinquent special taxes to be sued on, including applicable penalties, interest, and costs, and the tax collector shall be relieved of further duty in regard thereto. Any amounts not the subject of a foreclosure action shall remain collectible by the tax collector.

B. The tax collector may charge the actual cost incurred in removing these sums from the tax roll. This charge shall be added to the costs to be recovered in the foreclosure action.

(Ord. 94-40 § 2 (part), 1994)

At any time after the tax collector has been relieved of his or her duty to collect sums under Section 3.32.830 and before judgment in a foreclosure action, the City Council or trustee shall dismiss the action upon payment of all of the following:

A. The amount of any delinquent special taxes together with any penalties, interest, and costs accrued thereon to date of complete payment hereunder.

B. Costs of suit, including, but not limited to, litigation guarantees provided by title companies with respect to all claims of ownership or interest in the subject property.

C. Attorneys’ fees authorized by the local agency.

D. The tax collector’s costs authorized by subsection (B) of Section 3.32.830.

(Ord. 94-40 § 2 (part), 1994)

The foreclosure action shall be brought in the name of the City or trustee on behalf of the bond-holders pursuant to Section 3.32.820 and may be brought within the time specified in Section 3.32.820. The complaint may be brief and need only include the following allegations:

A. That on a stated date, a certain sum of special taxes, levied against the subject property (describing it) pursuant to this Code, became delinquent.

B. On that date, bonds issued pursuant to this Code, payable in whole or in part by the subject special taxes, were outstanding.

C. That the City Council or trustee has ordered the foreclosure.

(Ord. 94-40 § 2 (part), 1994)

Any judgment shall decree the amount of the continuing lien against each parcel to be foreclosed, and shall order the parcel to be sold on execution as in other cases of the sale of the real property by process of the court. The judgment amount shall include reasonable attorneys’ fees to be fixed by the court, together with interest, penalties, and other authorized charges and costs (all calculated up to date of judgment). The foreclosure action shall be governed and regulated by the provisions of this Code, and also where not in conflict with this Code, by other provisions of law generally applicable to foreclosure actions.

(Ord. 94-40 § 2 (part), 1994)

Property sold hereunder may not be sold for less than the amount of the judgment plus post-judgment interest and authorized costs without the consent of the owners of a majority by value of the outstanding bonds.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 163, 2023)

No special tax installment, interest or penalties thereon, or deed shall be held invalid for any error in computation if the error is found to be comparatively negligible, or is found to be in favor of the owner of the real property affected thereby.

(Ord. 94-40 § 2 (part), 1994)

The bonds shall be signed by a signatory authorized to so sign by the City Council and shall be countersigned by a signatory authorized to so countersign by the City Council. All signatures on the bonds may be printed, lithographed, or engraved. If any officer whose signature appears on the bonds ceases to be that officer before the delivery of the bonds, his or her signature is as effective as if he or she had remained in office. All bonds shall be payable at the office of the Director of Administrative Services or at the office of any agent designated by the City.

(Ord. 94-40 § 2 (part), 1994; Ord. 2025-37, 1/13/2026)

When the City Council provides for the fixing and levying of special taxes and charges for the special improvement district it shall also provide for the fixing and levying of that amount of special taxes and charges within the special improvement district which is required for the payment of the principal of and interest on any outstanding bonded debt of the special improvement district, including any necessary replenishment or expenditure of bond reserve funds or accumulation of funds for future bond payments, including any amount required by Federal law to be rebated to the United States on that bonded debt. The special tax or charge shall be levied and collected by the same officers and at the same time and in the same manner that all other special taxes and charges are levied and collected for the special improvement district or in any other manner specified by the City Council. The special taxes and charges shall not exceed the authority granted by Articles III and IV of this chapter. All of the collections for payment of principal of and interest on bonds shall be paid into the special improvement district bond fund and reserve or other fund for the particular special improvement district and shall be used solely for the payment of the principal of and interest on the outstanding bonds of the special improvement district.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 164, 2023)

An action to determine the validity of bonds issued pursuant to this Code or the validity of any special taxes levied pursuant to this Code may be brought pursuant to California Code of Civil Procedure Part 2, Title 10, Chapter 9, commencing with Section 860, but shall, notwithstanding the time limits specified in California Code of Civil Procedure Section 860, be commenced within thirty (30) days after the voters approve the issuance of the bonds or the special tax if the action is brought by an interested person pursuant to California Code of Civil Procedure Section 863. Any appeal from a judgment in that action or proceeding shall be commenced within thirty (30) days after entry of judgment.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 165, 2023)

The City may sell the bonds at public or private sale. However, all bonds sold at public sale shall be sold on sealed proposals to the highest bidder, after advertising for bids by publication of notice of sale pursuant to Section 3.32.240, not less than ten days prior to the date of sale in a newspaper of general circulation circulating in the City. If no bids are received or if the City Council determines that the bids received are not satisfactory as to price or responsibility of the bidders, the City Council may reject all bids received, if any, and either readvertise or sell the bonds at private sale.

(Ord. 94-40 § 2 (part), 1994)

The City Council may provide that bonds shall bear a variable interest rate, and for the manner and intervals in which the rate shall vary. The variable rate shall not exceed the maximum rate permitted by California Government Code Section 53531 or any other applicable provision of law limiting the maximum interest rate on bonds.

(Ord. 94-40 § 2 (part), 1994; Ord. 2023-22 § 166, 2023)

Any bonds issued by a district organized under the provisions of this Code are hereby given the same force, value and use as bonds issued by any municipality and shall be exempt from all taxation within the State.

(Ord. 94-40 2 (part), 1994)

The City Council may, by resolution, issue new bonds to refund any or all of the district bonds outstanding or improvement area bonds outstanding that have been issued pursuant to this article.

(Ord. 94-40 § 2 (part), 1994)

Refunding bonds shall not be issued if the total net interest cost to maturity on the refunding bonds plus the principal amount of the refunding bonds exceeds the total net interest cost to maturity on the bonds to be refunded plus the principal amount of the bonds to be refunded. Subject to such limitations, the principal amount of the refunding bonds may be more than, less than, or the same as the principal amount of the bonds to be refunded.

(Ord. 94-40 § 2 (part), 1994)

The total authorized amount of the bonded indebtedness of a district or an improvement area therein, as approved by the qualified voters thereof, shall not be reduced by the principal amount of any refunding bonds issued to refund any or all outstanding bonds of the district or improvement area.

(Ord. 94-40 § 2 (part), 1994)

Except as otherwise provided in this article, the City Council may issue refunding bonds without repeating any of the procedures required for the approval of the original bond issue.

(Ord. 94-40 § 2 (part), 1994)

If the City Council determines to issue refunding bonds pursuant to this article it shall adopt a resolution providing for their issuance. The resolution shall:

A. Describe the bonds being refunded and state the date on which it is anticipated that the exchange or purchase necessary to effect the refunding will occur.

B. Fix the date of the refunding bonds.

C. Designate the denomination or denominations of the refunding bonds.

D. Fix the minimum rate or rates of interest to be paid on the refunding bonds.

E. Fix the maturity dates of the refunding bonds, which shall not exceed the latest maturity date of the bonds being refunded.

F. Designate the place or places of payment of principal and interest on the refunding bonds and on the bonds to be refunded.

G. Describe the form of the refunding bonds.

H. State the costs of issuing the refunded bonds.

(Ord. 94-40 § 2 (part), 1994)

The City Council may sell the refunding bonds at public or private sale. The proceeds of any sale of refunding bonds shall be applied as provided in this article.

(Ord. 94-40 § 2 (part), 1994)

The proceeds of the refunding bonds and the earnings thereon shall be in an amount sufficient to meet either the requirements of subsections (A) or (B) of this section at the time of issuance of the refunding bonds, as certified by a certified public accountant licensed to practice in this state.

A. The proceeds (including any amounts in any reserve fund established for the bonds to be refunded and not needed for purposes of the refunding bonds) and investments, together with any interest or other gain to be derived from any such investment, shall be in an amount sufficient to pay the principal, interest, and redemption premiums, if any, on the refunded bonds as they become due or at designated dates prior to maturity and the costs of issuance of the refunding bonds.

B. The proceeds (including any amounts in any reserve fund established for the bonds to be refunded and not needed for purposes of the refunding bonds) and investments, together with any interest or other gain to be derived from any such investment, shall be in an amount sufficient to pay the principal, interest, and redemption premiums, if any, on the refunding bonds prior to the maturity of the bonds to be refunded or prior to a designated date or dates before the maturity of the bonds to be refunded, the principal and any redemption premiums due on the refunded bonds at maturity or upon that date or dates, and the designated costs of issuance of the refunding bonds.

(Ord. 94-40 § 2 (part), 1994)

Any savings achieved through the issuance of refunding bonds shall be used to reduce the special taxes which were levied to retire the bonds being refunded. At the time the City Council makes a determination to issue the refunding bonds, it shall determine and cause to be made any reductions in the annual tax in the district, which reduction shall be made on a pro rata basis.

(Ord. 94-40 § 2 (part), 1994)

Any bonds may be made callable in the document providing for their terms. When bonds are made callable a statement to that effect shall be set forth on the bonds. Callable bonds may be redeemed on any interest payment date prior to their fixed maturity in the amounts, manner and prices prescribed in the document providing for their terms.

(Ord. 94-40 § 2 (part), 1994)

A. The City Council may, by resolution and without the necessity of calling and holding an election, borrow money in anticipation of the sale of the bonds which have been authorized pursuant to this article, but which have not been sold and delivered, issue negotiable bond anticipation notes therefor, and renew the notes from time to time. The maximum maturity of any such notes, including the renewals thereof, shall not exceed five years from the date of delivery of the original notes.

B. The principal and interest on the notes may be paid from any money available for their payment. Any portion of the principal or interest which is due and payable shall be paid from the proceeds of the next sale of bonds in anticipation of which the notes were issued.

C. The proceeds of notes issued pursuant to this section may be used for any purpose for which the bonds in anticipation of which the notes were issued may be used.

D. The notes shall not be issued in any amount in excess of the aggregate principal amount of bonds which have been authorized to be issued, less the amount of any bonds of such authorized issue which have been previously sold and less the amount of other bond anticipation notes issued previously and outstanding at that time.

E. The City Council may, in its resolution authorizing the issuance of notes, provide that the note shall be subject to call and redemption prior to maturity, at the option of the City, at such price or prices as may be fixed in the resolution. The resolution shall fix the method of giving notice of redemption to the holders of notes to be redeemed and the price or prices at which the note shall be subject to redemption. Any notes that are subject to call and redemption prior to maturity shall contain a recital to that effect and no note shall be subject to call or redemption prior to its fixed maturity date unless it contains that recital.

F. The notes shall be issued and sold in the same manner as the bonds.

G. The notes and the resolution or resolutions authorizing the same may contain any provisions, conditions, or limitations which a resolution of the City Council may contain.

H. The City Council shall, in its resolution authorizing the issuance of notes, provide a remedy if the anticipated bonds cannot be sold at the time or in the amounts specified in the resolution, or if any default occurs with respect to the notes. Any remedy which is so provided shall limit the obligations of property owners within the special improvement district to the special tax authorized and levied pursuant to this Code, except that the City Council may enter into an agreement with any of the property owners within the district pledging some or all of the real property of those property owners who are a party to the agreement as additional security for the notes. The City Council may authorize the levy of supplemental special tax in an amount sufficient to secure a note issued pursuant to this section, if that special tax is fully described as to the rate, method of apportionment, and conditions under which it may be levied in the resolution of intention prepared pursuant to Section 3.32.220. This special tax shall be subject to the procedures and voting requirements for any special tax levied under the authority of this Code.

(Ord. 94-40 § 2 (part), 1994)