On October 2, 2013 the Governor signed into law Assembly Bill 182 (“AB 182”). AB 182 requires that the total debt payments for each bond series be limited to no more than four times the principal amount. Further, capital appreciation bonds (“CABs”) are limited to a maximum term of 25 years. CABs that mature more than 10 years after their date of issuance must be subject to refinancing on the 10th anniversary of the date the bond was issued or earlier. AB 182 also requires that if the proposed bond sale includes CABs, school board members must be presented with specific information about the total overall cost of the bonds, a comparison to the overall cost of current interest bonds, and the reasoning that CABs are recommended. The school board’s resolution authorizing the sale of the CABs must include the financing terms, maturity dates, repayment ratio and estimated change in the assessed value of taxable property within the district. School boards must also make certain findings with respect to current interest bonds with maturities greater than 30 years.
The full text of AB 182 can be found here.