8880-8887

STREETS AND HIGHWAYS CODE
SECTION 8880-8887




8880.  In any proceedings leading to the issuance of bonds pursuant
to this division, the legislative body 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 10 percent of the total
amount of assessments to be levied under the proceedings.



8881.  Where a special reserve fund is created for a bond issue, the
assessment levied on any parcel for the payment of the bond issue
shall be reduced upon the payment, in whole or in part, of the
assessment pursuant to provisions for either (1) cash payments of
assessments prior to the issuance of the bonds or (2) advance payment
of assessments following the issuance of the bonds.
   The proportional reduction on the 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
bond issue.


8882.  Upon receipt of the bond sale proceeds, the amount so
provided for the special reserve fund pursuant to Section 8880 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 part.




8883.  The money in the special reserve fund shall be available for
transfer into the redemption fund for the bonds pursuant to Part 13
(commencing with Section 8800). 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.



8884.  Whenever an 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
assessment determined pursuant to Section 8881.




8885.  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 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, the excess shall be apportioned to each parcel
upon which the individual assessment remained unpaid at the time the
balance in the 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 ($1,000), the excess may be
transferred to the general fund of the entity conducting the
proceedings.


8886.  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 Government Code, or in any authorized investments pursuant to law
in the case of money resulting from assessments levied for bonds
authorized to be issued after the effective date of the amendments to
this section enacted during the 1981-82 Regular Session of the
Legislature, provided that the maturities thereof shall not be later
than the date on which the money may be required for the redemption
fund pursuant to this part.
   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.



8887.  Notwithstanding any other provision in this part, for the
purposes of (1) assuring that the bonds to be issued will not become
arbitrage bonds as defined in the Internal Revenue Code of 1954
(Title 26 of the United States Code) and regulations promulgated
thereunder by the Department of Treasury, and (2) providing for
reduction of the amount of money in the special reserve fund during
the term of the bonds, the legislative body may, by resolution
adopted prior to the issuance of bonds under this division, provide
that money in the special reserve fund, including investment income,
shall be used, in the amounts and at the times as the legislative
body may determine, for either or both of the following:
   (a) Credit upon the assessment in the manner provided in Section
10427.1.
   (b) Transfer to the redemption fund for advance retirement of the
bonds pursuant to this division.
   The resolution may specify the terms and conditions, as the
legislative body may determine to be reasonable, with respect to its
authorization of either or both of the uses.