Pasadena Municipal Code Art. XIV Water and Power Utility Operations

The City may operate water and power utilities through a department or departments or through such other form of organization as the City Council may approve by ordinance. The City shall not sell any such utility unless such sale is first submitted to the voters of the City and approved by a majority of those voting on the question.

(Sec. 1401 amended by vote of the people 11-3-1998.)

The books of account of the water utility and of the power utility shall be kept separately from the accounts of all other City departments and of each other, and in such manner as to show the value of the property of each utility, its earnings, and expenses in accordance with accepted accredited uniform system of accounts. Reports of each utility shall be published annually in printed pamphlet form for distribution within 150 days after the close of each fiscal year, showing the value of the properties, the financial status, including cash on hand and invested funds, the bonded debt and other obligations, the earnings for the year, the cost of production and distribution, the cost of equipment and the depreciation thereof, and a statement of all assets and liabilities.

The charges to be made for water and electrical energy shall be prescribed by ordinance.

All money and property received by the City in payment for water or electrical energy and for any service rendered in connection therewith, or from the sale, lease, or other disposition of any property acquired with funds or property of either of said utilities; from the proceeds of any bonds issued for the purpose of either of said utilities; or from any special taxes at any time authorized for the purposes of either of said utilities shall be exclusively devoted to and appropriated for the purposes of said utilities as in this Section required. However, nothing herein shall be deemed to prevent uses of such property for purposes not inconsistent with the purpose for which such property is held. Funds of each utility shall be kept separate and shall be limited to the use of that utility. The funds of the water and the power utilities shall be known and designated as "Water Fund" and "Light and Power Fund," respectively. No transfer of real property, nor of any personal property exceeding in value $10,000.00, shall be made from either of said utilities to the other or to any other department of the City in any manner other than by ordinance or resolution of the City Council.

(Sec. 1404 amended by vote of the people 3-9-1993.)

The funds derived from the water utility and the power utility shall be used only for the following purposes:

(1) The necessary or proper expenses of conducting each utility; the operation and maintenance of its works, plants, and distributing systems; the acquisition and improvement of facilities; and the publishing of reports.

(2) The payment of interest and principal on bonds issued for the purposes of said utility.

(3) The formation of surplus or reserves for future needs of the said utility and for unforeseen emergencies.

(4) Repayment of advances made from other funds of the City.

On authorization of the City Council, any surplus utility funds may be invested in any bonds issued by the City of Pasadena, or any bonds issued by any school district situated in whole or in part in the City, or any bonds or certificates of indebtedness issued by the State of California or the United States, or in banks in interest-bearing accounts, and any such securities may be sold and the proceeds of such sale may be invested in other such securities. Interest earned from such funds shall go to the credit of the respective utility interest expense account. In authorizing the investment of any such surplus funds, preference over other securities shall be given by the City Council to the bonds of the City issued for the purposes of either utility. No officer shall be personally liable for any loss to the City arising out of any such investment, unless such loss shall be the loss of the securities themselves due to the negligence or malfeasance of such officer.

(Sec. 1406 amended by vote of the people 3-9-1993.)

(Sec. 1407 repealed by vote of the people 11-3-2020)

Each fiscal year the City Council shall transfer from the Light and Power Fund an amount equal to twelve percent (12%) of the gross income of the electric works received during the immediately preceding fiscal year from the sale of electric energy at rates and charges fixed by ordinance. Said sum shall be transferred to the General Fund of the City by resolution not earlier than the receipt of the report by an independent certified public accountant on the examination of the books of account of the power utility nor later than the first day of June next succeeding the date of determination of the amount to be transferred. Nothing herein contained shall prohibit an advance of not to exceed seventy-five percent (75%) of the estimated amount prior to the receipt of the said report. The amount thus transferred may be expended for any municipal purpose.

Notwithstanding anything herein contained, if the City Council at the time of or before the adoption of the budget shall determine that the transfer of such amount from the Light and Power Fund would be detrimental to the proper functioning and administration of the power utility during the budget year under consideration, the City Council may so find by resolution, and, in such event, no transfer of such amount shall be made within that fiscal year. If the City Council shall determine that the transfer of an amount less than twelve percent (12%) from the Light and Power Fund would not be detrimental to the proper functioning and administration of the power utility during the budget year under consideration, the City Council may so declare by resolution, and shall transfer a smaller amount.

The City Council is authorized to set charges for electric service that, during the period when the charges are in effect, are sufficient to pay both the expenses of the power utility, as set forth in Section 1405, and all amounts that the City Council projects will be directed for transfer pursuant to this Section, before any adjustments based on the net income of the electric works.

(Sec. 1408 amended by vote of the people 3-5-2024; Sec. 1408 amended by vote of the people 11-3-2020: Sec. 1408 amended by vote of the people 3-9-1993: Sec. 1408 amended by vote of the people 6-6-1972.)

Whenever the City Council determines that the surplus or reserve in the Light and Power Fund is in excess of reasonable future needs of the power utility, such excess may be appropriated for other municipal purposes, provided that such appropriation be made by an ordinance stating its purpose, and further provided that such ordinance shall not be effective until submitted to the people and approved by two-thirds of the qualified electors voting.

(Sec. 1409 amended by vote of the people 3-9-1993.)

Any surplus or reserve in the Water Fund or the Light and Power Fund may temporarily be used for other municipal purposes in case there shall be insufficient funds in the City Treasury to pay the current expenses of the general government of the City before the collection of taxes levied in any fiscal year. In case moneys from either of said funds are used pending the receipt of taxes, the amount so used shall be repaid not later than February 15 of the same fiscal year.

Revenue bonds for the purpose of providing moneys for the acquisition and construction of additions to, extensions, improvements, or repairs of the water works and electric works of the City, or the purchase for intertie purposes of undivided joint interests or rights of use in other generation or transmission facilities, constructed either by governmental agencies or investor-owned companies may be issued only as provided in this Article. Such revenue bonds shall not constitute an indebtedness of the City but shall constitute obligations which shall be payable principal and interest and any premiums upon the redemption of any thereof prior to maturity only from the fund derived from the public utility involved (the "Water Fund" established in this Article in the case of revenue bonds issued for waterworks purposes and the "Light and Power Fund" established in this Article in the case of revenue bonds issued for electric works purposes; and each of said funds may hereinafter in this Article be referred to as a "Revenue Fund"); provided, however, that this shall not preclude the payment thereof from the proceeds of bonds issued to refund said revenue bonds. Refunding bonds issued under this Article may be issued only as provided in this Article and shall be payable only from the fund from which the revenue bonds to be refunded are payable. No restrictions or limitations upon, or procedure for, the issuance of bonds in other articles of this Charter shall apply to such revenue bonds (including refunding revenue bonds) and this Article shall constitute complete authority for the issuance of such revenue bonds (including such refunding revenue bonds), and no action or proceeding not required by this Article shall be necessary for the valid authorization and issuance of such revenue bonds.

Whenever the City Council proposes the issue revenue bonds pursuant to this Article, it shall adopt an ordinance authorizing the issuance of such bonds which shall recite the objects and purposes for which the bonds are to be issued, the principal amount of the bonds, the maximum rate of interest to be paid, the date of issue of said bonds, the maturity dates thereof, and the fund from which the bonds and the interest thereon and premiums upon the redemption of any thereof are to be payable and such provisions authorized by Section 1413 of this Article as the City Council deems desirable. Said bonds shall be negotiable. The recitals of regularity of proceedings in any revenue bond issued and sold under this Article shall be conclusive evidence of compliance with the provisions of this Article and of the validity of such bond.

(Sec. 1412 amended by vote of the people 3-9-1993.)

In the ordinance authorizing the issuance of said bonds, the City Council may also fix additional terms and conditions thereof and may in any article, section or clause thereof make such provision as it may deem necessary or desirable to facilitate the issuance and sale of the bonds or for the protection or security of the holders thereof, including, without affecting the generality of the foregoing, provision for any or all of the following:

(A) The denomination or denominations of the bonds, the medium payment thereof, the place or places of payment thereof, which may be within or without the State of California, the form of said bonds (including recitals of regularity) and of interest coupons pertaining thereto, the form, denomination, and conditions of any temporary bonds or interim certificates, and the manual and facsimile signatures to be affixed to said bonds or certificates (one signature upon which must be manual) and the manual or facsimile signature to be affixed to interest coupons.

(B) The terms and conditions under which said bonds may be issued, sold, paid, redeemed before maturity (including the premiums, if any, to be payable upon bonds redeemed prior to maturity), exchanged, registered, transferred, and negotiated.

(C) Rates to be charged for services furnished by the public utility added to, extended, improved, or repaired with the proceeds of said bonds (or in the case of refunding bond, with the proceeds of the bonds to be refunded), such rates to provide revenue at least sufficient to pay, as the same become due, principal and interest of such bonds, and all other obligations payable from the Revenue Fund of such works (or from any fund derived therefrom) and the necessary expenses of maintaining and operating such works, and the extent to which such services may be furnished or rendered to the City or to any public corporation or body, free or at lower rates than otherwise charged.

(D) The Revenue Fund from which said bonds and the interest thereon shall be paid; the collection, deposit, and safekeeping of the revenue; the permissible uses thereof, including restrictions upon or prohibitions against any contributions provided for in this Article; provided, however, that nothing in this Article or in any ordinance authorizing the issuance of revenue bonds hereunder or in any resolution or order in the revenue bond proceeding shall prevent, restrict, or prohibit the payment from the revenues of the necessary or proper expenses of maintenance and operation and conduct of the utility prior to the payment of principal and interest of the revenue bonds or the setting aside in the bond service, sinking, redemption, reserve, or other fund, monthly or otherwise, of funds therefor; the special fund or funds to be pledged and kept for the payment of principal and interest of the bonds, including reserve, sinking, bond service, redemption, and trust funds, and any revenue bond payable from the Revenue Fund of a public utility may be paid from any such special fund set up therefor; the permissible investments for monies in said funds or any thereof; the accounts and records to be kept, audits thereof and examination thereof by bondholders and others.

(E) The carrying of insurance upon such public utility or any part thereof against any or all risks, and in case of loss the application of the insurance proceeds.

(F) Prohibitions against or limitations upon the sale, lease, or other disposition of such public utility.

(G) Prohibitions or limitations upon the issuance of any additional bonds payable from the revenues of the public utility so added to, extended, improved, or repaired with the proceeds of said bonds, but no bonds shall be issued pursuant to this Article or under any other provision of this Charter or any other law having any priority in payment of principal or interest out of such revenues over revenue bonds theretofore or thereafter issued and payable out of said revenues.

(H) Provisions whereby the consent or agreement of a stated percentage or number of the holders of the bonds may bind all holders to modifications of the provisions of any ordinance, resolution, or order authorizing or providing for the issuance of such bonds, or to a refunding of said bonds and to calls or exchanges in connection with such refunding.

(I) For the issuance of a duplicate in the manner and upon such terms and conditions as the City Council may determine, in the event any bond, temporary bond, coupon or interim certificate of any such issue is lost, stolen, destroyed, or mutilated.

(J) Any other provision valid under the Constitutions of the State of California and the United States of America which the City Council deems necessary or desirable to facilitate the issuance and sale of said bonds or for the protection of holders thereof.

Such ordinance shall be subject to referendum in the manner that other ordinances of the City are subject to referendum. The ordinance authorizing the issuance of said bonds and all other ordinances, resolutions or orders in the proceeding for the issuance of said bonds shall constitute a contract with the holders of the bonds, and such contract may be enforced by any holder by mandamus, injunction, or any applicable legal action, suit, proceeding, or other remedy.

(Sec. 1413 amended by vote of the people 3-9-1993.)

The following limitations shall apply to the issuance of bonds under this Article:

(A) Said bonds shall be payable within not more than forty years from the date of issue thereof, and not less than one-fortieth part of the whole of any issue of bonds shall be payable annually beginning not later than ten years from the date of such issue.

(B) Said bonds shall be designated "Revenue Bonds" and such bond shall state on its face that it does not constitute an indebtedness of the City of Pasadena but is an obligation payable, principal and interest, only from the Revenue Fund of the utility for which the proceeds of the bonds will be used.

(C) Said bonds shall be sold only at public sale following such notice as the City Council by resolution or order may prescribe; provided, however, that if no satisfactory bid is received pursuant to such notice the City Council may reject all bids received, if any, and thereafter sell said bonds at public or private sale: provided, further, that the provisions of this subsection shall not apply to the exchange of any refunding bonds. Any such revenue bonds may be sold at a fixed rate of interest or the bidders may be invited to state the rate or rates of interest at which they will purchase said bonds, but no rate on any of the bonds shall exceed the maximum rate stated in the ordinance authorizing the issuance of such bonds. If the bidders are invited to state the interest rate or rates, then upon the acceptance of a bid the City Council shall by resolution or order, which shall not be subject to referendum, fix such interest rate or rates as have been bid by the successful bidder as the rate or rates of interest on the bonds.

(D) Said bonds shall be sold for not less than par and accrued interest to date of delivery. The proceeds from the sale (except premium and accrued interest which shall be paid into the Bond Service or other fund designated or established for the payment of principal and interest of the bonds) shall be paid into the construction fund designated by the ordinance authorizing the issuance of such bonds, and not into the "Water Fund" or the "Light and Power Fund," and shall be applied exclusively to the objects and purposes set forth in such ordinance; provided, however, (1) that the Revenue Fund from which the bonds are payable may be reimbursed from such proceeds for expenditures for purposes for which the bonds were issued made from such Revenue Fund after the ordinance authorizing the issuance of such bonds became effective, (2) that said proceeds may be used for the payment of interest on said bonds during the period of acquisition and construction and for the first six months thereafter, and (3) that when the objects and purposes for which the bonds were issued have been accomplished any remaining unexpended funds derived from the sale of said bonds shall be used for the payment of the principal and interest of said bonds.

(Sec. 1414 amended by vote of the people 3-9-1993.)

Refunding bonds may be issued for the purpose of refunding any revenue bonds issued pursuant to this Article, and such refunding bonds may be issued in principal amount sufficient to refund the outstanding bonds proposed to be refunded thereby, including payments of accrued interest and of any premiums thereon. Refunding bonds shall be authorized, issued, and sold in the manner provided for the sale of other revenue bonds hereunder, or may be exchanged for the outstanding bonds to be refunded upon such terms and conditions as may be stated in the ordinance authorizing such refunding bonds.

To the extent that any provision of an ordinance authorizing the issuance of bonds pursuant to this Article or any provision of any ordinance, resolution or order pertaining to such bonds adopted pursuant to the authority of this Article is inconsistent with any of the provisions of any other Article of this Charter, the provisions of such ordinance, resolution, or order shall control so long as any of the bonds and interest coupons to which the same pertain are outstanding and unpaid. No bond shall be deemed to be outstanding and unpaid within the meaning of this Article if moneys for the purpose of paying the same or redeeming the same prior to maturity and sufficient therefor have been irrevocably set aside in a Bond Service Fund, sinking fund, redemption fund, or other trust fund created to insure the payment or redemption thereof.