Palm Desert Municipal Code Ch. 17.10 Special Reserve Fund

In any proceedings leading to the issuance of bonds pursuant to this title, the city council may include, as an incidental expense of the proceedings, an amount to create a special reserve fund for the bonds.

The amount so provided shall not exceed ten percent of the total amount of contractual assessments to be levied under the proceedings.

(Ord. 1175 §1, 2008)

Where a special reserve fund is created for an issue or series of bonds and the amount to create a special reserve fund was included in the contractual assessment, the contractual assessment levied on any parcel for the payment of the bonds shall be reduced upon the prepayment following issuance of the bonds, in whole or in part, of the contractual assessment. The proportional reduction on the contractual assessment shall equal the ratio of the total amount initially provided for the special reserve fund to the total amount originally assessed in the proceedings for the bonds.

(Ord. 1175 §1, 2008)

Upon receipt of the proceeds from the sale of the bonds, the amount so provided for the special reserve fund pursuant to this chapter shall be transferred to the fund. The special reserve fund shall be identified by the name of the proceedings under which the bonds are issued and shall constitute a trust fund for the benefit of the bondholders, subject to and to be administered in accordance with the provisions of this chapter.

(Ord. 1175 §1, 2008)

The money in the special reserve fund shall be available for transfer into the redemption fund for the bonds. The amount so advanced shall be reimbursed from the proceeds of redemption or sale of the parcel for which payment of delinquent installments was made from the special reserve fund.

(Ord. 1175 §1, 2008)

Whenever a contractual assessment is paid off following the issuance of bonds, there shall be transferred, from the special reserve fund to the redemption fund, an amount equal to the reduction in the contractual assessment determined pursuant to Section 17.10.020.

(Ord. 1175 §1, 2008)

Provided that the amount to create the special reserve fund was included in the contractual assessment, whenever the balance in the special reserve fund is sufficient to retire all remaining outstanding bonds in the issue, whether by advance retirement or otherwise, collection of the principal and interest on the contractual assessments shall be discontinued and the special reserve fund shall be liquidated in retirement of the bonds.

In the event that the balance in the fund at the time of liquidation exceeds the amount required to retire all outstanding bonds in the issue or series, the excess shall be apportioned to each parcel upon which the individual contractual assessment remained unpaid at the time the balance in the special reserve fund was sufficient to retire all outstanding bonds in the issue. The payments shall be made in cash to the respective owners of the parcels except that, if the excess is not greater than one thousand dollars, the excess may be transferred to the general fund of the city.

(Ord. 1175 §1, 2008)

Money in the special reserve fund may be temporarily invested in any authorized investments pursuant to Article 1 (commencing with Section 53600) of Chapter 4 of Part 1 of Division 2 of Title 5 of the California Government Code, or in any authorized investments pursuant to law.

Any income realized from such investments shall be credited to the special reserve fund, and any loss or expense resulting from such investment shall be charged to that fund.

(Ord. 1175 §1, 2008)

Notwithstanding any other provision in this chapter, for the purposes of providing for reduction of the amount of money in the special reserve fund during the term of the bonds, the city council may, by trust indenture or resolution adopted prior to the issuance of bonds under this title, provide that money in the special reserve fund, including investment income, shall be used, in the amounts and at the times as the city council may determine, for either or both of the following:

A. Credit upon the contractual assessment in the manner provided in the trust indenture;

B. Transfer to the redemption fund for advance retirement of the bonds pursuant to this title.

(Ord. 1175 §1, 2008)