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55A - RESO - GAS TAX BONDS
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55A - RESO - GAS TAX BONDS
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Last modified
10/30/2019 12:55:49 PM
Creation date
10/30/2019 11:40:51 AM
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City Clerk
Doc Type
Agenda Packet
Agency
Finance & Management Services
Item #
55A
Date
11/5/2019
Destruction Year
2024
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Limitations on Remedies Available to Bondowners <br />The rights and obligations under the Bonds and the hidenture may be subject to the following: the United <br />States Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws <br />relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity <br />principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United <br />States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary <br />exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California <br />and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy <br />proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners <br />of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently <br />may entail risks of delay, limitation or modification of their rights. <br />Diversion of Gas Tax Revenues <br />Section 6 of Article XIX of the California Constitution permits the State to loan to the State General Fund <br />the revenues derived from taxes imposed on gasoline and diesel fuels within the State (collectively, the "Gas Tax <br />Revenues") if (a) any amount loaned is to be repaid in full during the same fiscal year in which the loan was made, <br />except that repayment may be delayed until a date not more than 30 days after the date of enactment of the State <br />budget bill for the subsequent fiscal year, or (b) any amount loaned is to be repaid in full within three fiscal years <br />from the date on which the loan was made and one of the following has occurred: (1) the Governor has proclaimed <br />a state of emergency and declares that the emergency will result in a significant negative fiscal impact to the State <br />General Fund, or (2) the aggregate amount of State General Fund revenues for the current fiscal year, as projected <br />by the Governor in a report to the State Legislature in May of the current fiscal year, is less than the aggregate <br />amount of State General Fund revenues for the previous fiscal year, adjusted for the change in the cost of living <br />and the change in population, as specified in the budget submitted by the Governor in the current fiscal year. A <br />loan made to the General Fund as described in this paragraph could have an adverse impact on the amount or <br />availability of Gas Tax Revenues. <br />While the State has, in the past, loaned Gas Tax Revenues to the State General Fund, such amounts have <br />been loaned from the State portion of such Gas Tax Revenues, and not from amounts paid to local governments, <br />and the City has received its full payment of applicable Gas Tax Revenues in each of the last 20 years. <br />Notwithstanding the foregoing, on February 16, 2008, then Governor Arnold Schwarzenegger signed a six -bill <br />budget package designed to reduce expenses in the State's fiscal year 2007-08. One of the bills enacted into law <br />was Assembly Bill No. 7 ("ABX3 7"), which provided, as it pertained to local agencies, that gas tax revenues <br />collected during the months of March, April, May, June, and July of 2008, and otherwise transferrable to local <br />agencies pursuant to Section 2104, Section 2105, Section 2106, and Section 2107, would be suspended and would <br />instead be transferred to respective local agencies along with the August 2008 Gas Tax Revenues in September <br />2008. <br />ABX3 7 also permitted each of the local agencies, for cash management purposes during this five -month <br />suspension period, to use any cash received pursuant to Proposition 1B (the Highway Safety, Traffic Reduction, <br />Air Quality, and Port Security Bond Act of 2006 (Chapter 12.49 of Division 1 of Title 2 of the California <br />Government Code)) for the same purposes for which the gas tax revenues are authorized under Article XIX of the <br />California Constitution; provided that such cash is replaced after the suspended Gas Tax Revenues were received <br />by the local agency in September 2008. <br />funds. <br />There is no guarantee that during the life of the Bonds the State will not enact another bill diverting such <br />5515 <br />102 <br />
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