Chapter 9
PUBLIC ENTERPRISE FINANCING LAW

Sections:

Article 1. General Provisions and Definitions

3-9.101    Title.

3-9.102    Purpose.

3-9.103    Definitions.

Article 2. Financing Enterprises

3-9.201    Acquisition of enterprises.

3-9.202    Construction or improvement of enterprises: Acquisition and disposition of property.

3-9.203    Operation and maintenance of enterprises: Leasing of space.

3-9.204    Adoption of rules and regulations.

3-9.205    Charges: Authority to prescribe, revise, and collect.

3-9.206    Charges: Billing and collection with bills for other services.

3-9.207    Charges: Discontinuance of service for nonpayment.

3-9.208    Police powers: Regulations to protect the public health.

3-9.209    Professional services.

3-9.210    Additional powers.

Article 3. Bonds

3-9.301    Issuance of bonds: Bonds not debts of the City.

3-9.302    Cost of issuance.

3-9.303    Resolutions: Bond form.

3-9.304    Bond provisions.

3-9.305    Pledge of revenues, moneys, or property: Liens.

3-9.306    No personal liability.

3-9.307    Purchases of bonds.

3-9.308    Actions by bondholders.

3-9.309    Refunding bonds.

3-9.310    Bond or grant anticipation notes.

3-9.311    Validity of bonds.

3-9.312    Actions to test validity of bonds.

Article 4. Duties of the City

3-9.401    Performance of duties.

3-9.402    Payment of principal and interest.

3-9.403    Operation of enterprises efficiently and economically.

3-9.404    Charges: Payments affecting amounts.

3-9.405    Maintenance of enterprises in good repair and working order.

3-9.406    Protection of security of bonds and rights of bondholders: Defense against claims and demands.

3-9.407    Payment of claims for labor and materials.

3-9.408    Holding of revenues and funds in trust: Application and investment of funds.

3-9.409    Books of records and accounts.

Article 5. Supplemental Provisions

3-9.501    Liberal construction.

3-9.502    Omissions not to affect validity of bonds.

3-9.503    Full authority.

3-9.504    Additional authority.

3-9.505    Chapter provisions controlling.

3-9.506    Severability.

Article 1. General Provisions and Definitions

3-9.101 Title.

This chapter may be cited as the City of Watsonville Public Enterprise Financing Law.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.102 Purpose.

The Council hereby finds and declares that it is necessary, essential, a public purpose, and a municipal affair for the City to be authorized to provide financing for public enterprises of the City.

(§ l, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.103 Definitions.

For the purposes of this chapter, unless otherwise apparent from the context, certain words and phrases used in this chapter are defined as follows:

(a)    “Bond” shall mean any bond, note, certificate, debenture, or other obligation issued or entered into by the City pursuant to this chapter.

(b)    “City” shall mean the City of Watsonville, California.

(c)    “Council” shall mean the Council of the City of Watsonville.

(d)    “Enterprise” shall mean a revenue-producing improvement, building, system, plant, works, facility, or undertaking used for or useful for any of the following purposes:

(1)    The obtaining, conserving, treating, and supplying of water for domestic use, irrigation, sanitation, industrial use, fire protection, recreation, or any other public or private use;

(2)    The collection, treatment, or disposal of garbage or refuse matter;

(3)    The collection, treatment, or disposal of sewage, waste, or storm water, including drainage;

(4)    The providing of public parking lots, garages, or other automotive or vehicular parking facilities, including any and all public off-street vehicular parking facilities; and

(5)    The providing of public airports and the facilities appurtenant thereto.

“Enterprise” shall include, but shall not be limited to, all parts of the enterprise, all appurtenances to it, and:

(1)    Lands, easements, rights in land, water rights, contract rights, and franchises;

(2)    Approaches, dams, reservoirs, trunk, connecting, and other water mains, filtration works, pumping stations, and water supply, storage, and distribution facilities and equipment;

(3)    Garbage trucks, equipment, dumps, garbage disposal plants, and incinerators or other disposal facilities, including facilities to sort and prepare components of solid waste for sale and facilities to convert solid waste to energy and reusable materials;

(4)    Sewage treatment plants, sewage disposal plants, intercepting and collecting sewers, outfall sewers, and trunk, connecting, and other sewer mains; and

(5)    All buildings, structures, improvements, equipment, ditches, canals, and facilities whatsoever appurtenant or relating to the enterprise.

(e)    “Improve” shall mean to reconstruct, replace, extend, repair, better, equip, develop, embellish, or otherwise improve.

(f)    “Revenue” shall mean all charges received for, and all other income and receipts derived by the City from, the operation of any enterprise or arising from any enterprise, any amount received by the City as investment earnings on moneys deposited in any fund or account securing bonds, and such other legally available money as the Council, in its discretion, may lawfully designate as revenue.

(§ l, Ord. 535-81 C-M, eff. September 24, 1981)

Article 2. Financing Enterprises

3-9.201 Acquisition of enterprises.

The City may acquire any enterprise by gift, purchase, lease, or eminent domain.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.202 Construction or improvement of enterprises: Acquisition and disposition of property.

The City may construct or improve any enterprise wholly or partially within or wholly without the City. By gift, lease, purchase, eminent domain, or otherwise, the City may acquire any real or personal property, or any interest in or improvement on any such property, or any water rights for an enterprise, except that no property of a State public body may be acquired without its consent. The City may sell, lease, exchange, transfer, assign, or otherwise dispose of any real on personal property or any interest in such property.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.203 Operation and maintenance of enterprises: Leasing of space.

The City may operate, maintain, repair, or manage all or any part of any enterprise, including the leasing for commercial or other purposes of surplus space or other space which it is not economical to use for such enterprise.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.204 Adoption of rules and regulations.

The City may adopt reasonable rules or regulations for the conduct of any enterprise.

(§ l, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.205 Charges: Authority to prescribe, revise, and collect.

The City may prescribe, revise, and collect charges for the services, facilities, or water furnished by any enterprise.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.206 Charges: Billing and collection with bills for other services.

The City may provide that charges for any enterprise or service shall be collected together with and not separately from the charges for any other utility service rendered by the City and that all charges shall be billed upon the same bill and collected as one item.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.207 Charges: Discontinuance of service for nonpayment.

If all or part of any bill is not paid, the City may discontinue any and all services for which the bill is rendered.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.208 Police powers: Regulations to protect the public health.

The City shall have police power over any enterprise acquired, constructed, or improved pursuant to this chapter and may make and enforce all necessary regulations to protect the public health in the operation and maintenance of the enterprise.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.209 Professional services.

The City may employ such engineering, architectural, contracting, financial, accounting, legal, or other services as may be necessary in the judgment of the City for the purposes of this chapter.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.210 Additional powers.

In addition to all other powers specifically granted by this chapter, the City may do all things necessary or convenient to carry out the purposes of this chapter.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

Article 3. Bonds

3-9.301 Issuance of bonds: Bonds not debts of the City.

(a)    The City, from time to time, may issue bonds for any of the purposes specified in Article 2 of this chapter.

(b)    Every issue of bonds shall be a limited obligation of the City, payable from all or any specified part of the revenues and the moneys and assets authorized by this chapter to be pledged or assigned to secure the payment of bonds. Bonds issued under the provisions of this chapter shall not be deemed to constitute a debt or liability of the City or a pledge of the faith and credit of the City but shall be payable solely from specified revenues, moneys, and assets. The issuance of bonds shall not directly, indirectly, or contingently obligate the City to levy or pledge any form of taxation.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.302 Cost of issuance.

In determining the amount of bonds to be issued, the City may include:

(a)    All costs and estimated costs incidental to or connected with the acquisition, construction, improving, or financing of the enterprise; and

(b)    All engineering, inspection, legal, financing, trustees’ and fiscal agents’ fees and all other costs of the issuance of bonds, reserve funds and working capital, and funded bond interest.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.303 Resolutions: Bond form.

Bonds may be issued as serial bonds, term bonds, installment bonds, or pass-through certificates, or any combination thereof. Bonds shall be authorized by resolution of the Council and shall bear such date or dates, mature at such time or times, bear interest at such fixed or variable rate or rates, be payable at such time or times, be in such denominations, be in such form, either coupon or registered, carry such registration privileges, be executed in such manner, be payable in lawful money of the United States of America at such place or places, be subject to such terms of redemption, and have such other terms and conditions as such resolution may provide. Bonds may be sold at either a public or private sale and for such price or prices as the City shall determine.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.304 Bond provisions.

Any resolution authorizing any bonds or any issue of bonds may contain provisions respecting any of the following terms and conditions which shall be a part of the contract with the holders of such bonds:

(a)    The terms, conditions, and form of such bonds and the interest and principal to be paid thereon;

(b)    Limitations on the uses and purposes to which the proceeds of the sale of such bonds may be applied and the pledge or assignment of such proceeds to secure the payment of such bonds;

(c)    Limitations on the issuance of additional bonds, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding bonds;

(d)    The setting aside of reserves and sinking funds and such other funds as are necessary or appropriate and the regulation and disposition thereof;

(e)    The pledge or assignment of all or any part of the revenues and of any other moneys or assets legally available therefor and the use and disposition of such revenues, moneys, and assets, subject to such agreements with the holders of bonds as may then be outstanding;

(f)    Limitations on the use of revenues for the maintenance and operation costs of the enterprise and administration or other expenses of the City;

(g)    The specification of the acts or omissions to act which shall constitute a default in the duties of the City to holders of such bonds and providing the rights and remedies of such holders in the event of default, including any limitations on the right of action by individual bondholders;

(h)    The appointment of a corporate trustee or fiscal agent to act on behalf of the City and the holders of its bonds, the pledge or assignment of revenues or security interests to such trustee or fiscal agent, and the rights of such trustee or fiscal agent;

(i)    The procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of such bonds the holders of which must consent thereto, and the manner in which such consent may be given; and

(j)    Any other provision which the Council may deem reasonable and proper for the purposes of this chapter and the security of the bondholders.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.305 Pledge of revenues, moneys, or property: Liens.

Any pledge of revenues or other moneys or assets pursuant to the provisions of this chapter shall be valid and binding from the time such pledge is made. Revenues, moneys, and assets so pledged and thereafter received by the City shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the City, irrespective of whether such parties have notice thereof. Neither the resolution nor any indenture by which a pledge is created need be filed or recorded, except in the records of the City.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.306 No personal liability.

Neither the members of the Council, the officers or employees of the City, nor any person executing any bond shall be liable personally on the bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.307 Purchases of bonds.

The City shall have the power out of any funds available therefor to purchase its bonds. The City may hold, pledge, cancel, on resell such bonds, subject to and in accordance with agreements with the bondholders.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.308 Actions by bondholders.

Any holder of bonds issued under the provisions of this chapter or any of the coupons appertaining thereto, and any trustee appointed pursuant to any resolution authorizing the issuance of bonds, except to the extent the rights thereof may be restricted by such resolution, may, either at law or in equity, by suit, action, mandamus, or other proceeding, protect or enforce any and all rights specified in law or in such resolution and may enforce and compel the performance of all duties required by this chapter or by such resolution to be performed by the City or by any officer, employee, or agent thereof, including the fixing, charging, and collecting of rates, fees, interest, and charges authorized and required by the provisions of such resolution to be fixed, charged, and collected.

(§ l, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.309 Refunding bonds.

(a)    The City may issue bonds for the purpose of refunding any bonds then outstanding, including the payment of any redemption premiums thereof and any interest accrued or to accrue to the earliest or any subsequent date or dates of redemption, purchase, or maturity of such bonds.

(b)    The proceeds of bonds issued for the purpose of refunding any outstanding bonds, in the discretion of the City, may be applied to the purchase or retirement at maturity or redemption of such outstanding bonds, either at their earliest or any subsequent redemption date or dates or upon the purchase on retirement at the maturity thereof and, pending such application, may be placed in escrow to be applied to such purchase or retirement at maturity or redemption on such date or dates as may be determined by the City.

(c)    Pending use for the purchase, retirement at maturity, or the redemption of outstanding bonds, any proceeds held in escrow pursuant to subsection (b) of this section may be invested and reinvested as provided in the resolution. Any interest or other increment earned or realized on any such investment may be applied to the payment of the outstanding bonds to be refunded or to the payment of interest on the refunding bonds.

(d)    All bonds issued pursuant to this section shall be subject to the provisions of this chapter in the same manner and to the same extent as other bonds issued pursuant to this chapter.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.310 Bond or grant anticipation notes.

In anticipation of the sale of bonds or the receipt of proceeds of grants, the City may issue bond or grant anticipation notes and may renew such notes from time to time. Such notes shall be payable from any revenue or other money authorized by this chapter to be pledged to secure the payment of bonds which are not otherwise pledged, or from the proceeds of the sale of the bonds or receipt of the grants in anticipation of which they were issued. Such notes shall be issued in the same manner as bonds. Such notes and the resolution providing for their issuance may contain any provision, condition, or limitation which a bond, or a resolution providing for the issuance thereof, may contain.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.311 Validity of bonds.

The validity of the authorization and issuance of any bond shall not be dependent on and shall not be affected in any way by any proceeding taken by the City for the acquisition, construction, or improving of the enterprise or by contracts in connection therewith.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.312 Actions to test validity of bonds.

An action to determine the validity of bonds may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure of the State.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

Article 4. Duties of the City

3-9.401 Performance of duties.

The duties prescribed by this article shall be performed by the City or its proper officers, agents, or employees. Such performance shall be the essence of the City’s contract with the bondholders.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.402 Payment of principal and interest.

The City 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 from revenues in accordance with the resolution authorizing their issuance.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.403 Operation of enterprises efficiently and economically.

The City shall operate or cause to be operated any enterprise in an efficient and economical manner.

(§ l, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.404 Charges: Payments affecting amounts.

After making allowances for contingencies and errors 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 set forth in this chapter, shall be at least sufficient to pay the following amounts:

(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 City which are charges, liens, or encumbrances upon, or payable from, the revenues of the enterprise; and

(d)    All expenses of the maintenance and operation of the enterprise.

(§ l, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.405 Maintenance of enterprises in good repair and working order.

The City shall operate, maintain, and preserve any enterprise in good repair and working order.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.406 Protection of security of bonds and rights of bondholders: Defense against claims and demands.

The City 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.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.407 Payment of claims for labor and materials.

In order to fully preserve and protect the priority and security of the bonds, the City 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.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.408 Holding of revenues and funds in trust: Application and investment of funds.

The City 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 City may invest funds held in reserve funds, or in any sinking fund, or in 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.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.409 Books of records and accounts.

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

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

Article 5. Supplemental Provisions

3-9.501 Liberal construction.

This chapter, being necessary for the welfare of the City and its inhabitants, shall be liberally construed to effect its purposes.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.502 Omissions not to affect validity of bonds.

If the jurisdiction of the Council to order the proposed act is not affected, any omission of any officer or the City in proceedings under this chapter or any other defect in the proceedings shall not invalidate such proceedings or the bonds issued pursuant to this chapter.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.503 Full authority.

This chapter shall be the full authority for the issuance of bonds by the City for the purposes specified in this chapter.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.504 Additional authority.

This chapter shall be deemed to provide a complete, additional, and alternative method for doing the things authorized thereby and shall be regarded as supplemental and additional to the powers conferred by other laws. The issuance of bonds under the provisions of this chapter need not comply with the requirements of any other law applicable to the issuance of bonds. The purposes authorized by this chapter may be effectuated and bonds may be issued for any such purposes under this chapter notwithstanding that any other law may provide for such purposes or for the issuance of bonds for like purposes and without regard to the requirements, restrictions, limitations, or other provisions contained in any other law.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.505 Chapter provisions controlling.

To the extent the provisions of this chapter are inconsistent with the provisions of any general statute or special act, or part thereof, the provisions of this chapter shall be deemed controlling.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)

3-9.506 Severability.

If any provision of this chapter or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect any other provision or application of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable. The Council hereby declares that it would have adopted and passed this chapter, and each article, section, subsection, sentence, clause, phrase, or word of this chapter, irrespective of the fact that any one or more of the other articles, sections, subsections, sentences, clauses, phrases, or words of this chapter be declared invalid or unconstitutional.

(§ 1, Ord. 535-81 C-M, eff. September 24, 1981)