BILL NUMBER: AB 2080ENROLLED BILL TEXT PASSED THE SENATE AUGUST 11, 2010 PASSED THE ASSEMBLY MAY 6, 2010 AMENDED IN ASSEMBLY MARCH 18, 2010 INTRODUCED BY Assembly Member Hernandez FEBRUARY 18, 2010 An act to amend Sections 6585, 6588, 6588.7, 6590, 6591, 6592, and 6599.3 of the Government Code, relating to joint powers authorities. LEGISLATIVE COUNSEL'S DIGEST AB 2080, Hernandez. Joint powers authorities: government receivables. Existing law authorizes joint powers authorities to, among other things, issue bonds and loan the proceeds to local agencies to finance specified types of projects and programs. Existing law also authorizes a joint powers authority to purchase, with the proceeds of its bonds or its revenue, a local agency's right to payment of moneys due or to become due to a local agency in connection with specified provisions of law, which rights of payment are defined as VLF receivables and Proposition 1A receivables. Existing law permits a joint powers authority to pledge, assign, resell, or otherwise transfer these receivables for the purpose of securing bonds issued to finance the purchase price of the receivables, subject to specified criteria. Existing law limits the aggregate amount of all bonds issued in connection with Proposition 1A receivables and permits a joint powers authority to charge a fee to a local agency from which it purchases a Proposition 1A receivable. This bill would authorize a joint powers authority to purchase, with the proceeds of its bonds or its revenue, a local agency's right to payment of moneys due or to become due to a local agency from the federal government in connection with direct subsidy payments related to Buy America Bonds, which would be defined as government receivables. The bill would authorize local agencies to make these sales. The bill would permit the authority to pledge the government receivables to the payment of bonds issued by the authority or to resell them to public or private purchasers at public or negotiated sale, in whole or in part, separately or together with other government receivables. The bill would also make various conforming changes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 6585 of the Government Code is amended to read: 6585. The definitions in this section shall govern the construction and interpretation of this article. (a) (1) Except as provided in paragraphs (2) and (3), "authority" means an entity created pursuant to Article 1 (commencing with Section 6500). (2) In the case of an authority issuing bonds pursuant to this chapter in which VLF receivables, as defined in subdivision (j), are pledged to the payment of the bonds, other than VLF receivables so pledged for a county of the first class, an authority shall consist of not less than 100 local agencies. (3) In the case of an authority issuing bonds pursuant to this chapter in which Proposition 1A receivables, as defined in subdivision (g), are pledged to the payment of the bonds, an authority shall consist of not less than 250 local agencies. (b) "Bond purchase agreement" means a contractual agreement executed between the authority and the local agency whereby the authority agrees to purchase bonds of the local agency. (c) "Bonds" means all of the following: (1) Bonds, including, but not limited to, assessment bonds, redevelopment agency bonds, government issued mortgage bonds, and industrial development bonds. (2) Notes, including bond, revenue, tax, or grant anticipation notes. (3) Commercial paper, floating rate and variable maturity securities, and any other evidences of indebtedness. (4) Certificates of participation or lease-purchase agreements. (d) "Cost," as applied to a public capital improvement or portion thereof financed under this part, means all of the following: (1) All or any part of the cost of construction, renovation, and acquisition of all lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and interests acquired or used for a public capital improvement. (2) The cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any lands to which the buildings or structures may be moved; the cost of all machinery and equipment. (3) Finance charges. (4) Interest prior to, during, and for a period after, completion of that construction, as determined by the authority. (5) Provisions for working capital, reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations, and improvements. (6) The cost of architectural, engineering, financial and legal services, plans, specifications, estimates, and administrative expenses. (7) Other expenses necessary or incident to determining the feasibility of constructing any project or incident to the construction or acquisition or financing of any public capital improvement. (e) "Government receivable" means any payment or right to payment for moneys due, or to become due, to a local agency from the federal government in the form of direct subsidy payments under Section 6431 of Title 26 of the United States Code, with respect to Build America Bonds. "Government receivable" also means any residual interests retained or received by the local agency in connection with the sale of governmental receivables. (f) "Legislative body" means the governing body of a local agency. (g) "Local agency" means a party to the agreement creating the authority, or an agency or subdivision of that party, sponsoring a project of public capital improvements, or any city, county, city and county, authority, district, or public corporation of this state. (h) "Proposition 1A receivable" means the right to payment of moneys due or to become due to a local agency, pursuant to clause (iii) of subparagraph (B) of paragraph (1) of subdivision (a) of Section 25.5 of Article XIII of the California Constitution and Section 100.06 of the Revenue and Taxation Code. (i) "Public capital improvements" means one or more projects specified in Section 6546. (j) "Revenue" means income and receipts of the authority from any of the following: (1) A bond purchase agreement. (2) Bonds acquired by the authority. (3) Loans installment sale agreements, and other revenue-producing agreements entered into by the authority. (4) Projects financed by the authority. (5) Grants and other sources of income. (6) VLF receivables purchased pursuant to Section 6588.5. (7) Proposition 1A receivables purchased pursuant to Section 6588.6. (8) Government receivables purchased pursuant to Section 6588.7. (9) Interest or other income from any investment of any money in any fund or account established for the payment of principal or interest or premiums on bonds. (k) "VLF receivable" means the right to payment of moneys due or to become due to a local agency out of funds payable in connection with vehicle license fees to a local agency pursuant to Section 10754.11 of the Revenue and Taxation Code. (l) "Working capital" means money to be used by, or on behalf of, a local agency for any purpose for which a local agency may borrow money pursuant to Section 53852, or for any purpose for which a VLF receivable, a Proposition 1A receivable, or a government receivable sold to an authority could have been used by the local agency. SEC. 2. Section 6588 of the Government Code is amended to read: 6588. In addition to other powers specified in an agreement pursuant to Article 1 (commencing with Section 6500) and Article 2 (commencing with Section 6540), the authority may do any or all of the following: (a) Adopt bylaws for the regulation of its affairs and the conduct of its business. (b) Sue and be sued in its own name. (c) Issue bonds, including, at the option of the authority, bonds bearing interest, to pay the cost of any public capital improvement, working capital, or liability or other insurance program. In addition, for any purpose for which an authority may execute and deliver or cause to be executed and delivered certificates of participation in a lease or installment sale agreement with any public or private entity, the authority, at its option, may issue or cause to be issued bonds, rather than certificates of participation, and enter into a loan agreement with the public or private entity. (d) Engage the services of private consultants to render professional and technical assistance and advice in carrying out the purposes of this article. (e) As provided by applicable law, employ and compensate bond counsel, financial consultants, and other advisers determined necessary by the authority in connection with the issuance and sale of any bonds. (f) Contract for engineering, architectural, accounting, or other services determined necessary by the authority for the successful development of a public capital improvement. (g) Pay the reasonable costs of consulting engineers, architects, accountants, and construction, land-use, recreation, and environmental experts employed by any sponsor or participant if the authority determines those services are necessary for the successful development of public capital improvements. (h) Take title to, and sell by installment sale or otherwise, lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands that are located within the state that the authority determines are necessary or convenient for the financing of public capital improvements, or any portion thereof. (i) Receive and accept from any source, loans, contributions, or grants, in either money, property, labor, or other things of value, for, or in aid of, the construction financing, or refinancing of public capital improvement, or any portion thereof or for the financing of working capital or insurance programs, or for the payment of the principal of and interest on bonds if the proceeds of those bonds are used for one or more of the purposes specified in this section. (j) Make secured or unsecured loans to any local agency in connection with the financing of capital improvement projects, working capital or insurance programs in accordance with an agreement between the authority and the local agency. However, no loan shall exceed the total cost of the public capital improvements, working capital or insurance needs of the local agency as determined by the local agency and by the authority. (k) Make secured or unsecured loans to any local agency in accordance with an agreement between the authority and the local agency to refinance indebtedness incurred by the local agency in connection with public capital improvements undertaken and completed. (l) Mortgage all or any portion of its interest in public capital improvements and the property on which any project is located, whether owned or thereafter acquired, including the granting of a security interest in any property, tangible or intangible. (m) Assign or pledge all or any portion of its interests in mortgages, deeds of trust, indentures of mortgage or trust, or similar instruments, notes, and security interests in property, tangible or intangible, of a local agency to which the authority has made loans, and the revenues therefrom, including payment or income from any interest owned or held by the authority, for the benefit of the holders of bonds issued to finance public capital improvements. The pledge of moneys, revenues, accounts, contract rights, or rights to payment of any kind made by or to the authority pursuant to the authority granted in this part shall be valid and binding from the time the pledge is made for the benefit of the pledgees and successors thereto, against all parties irrespective of whether the parties have notice of the claim. (n) Lease the public capital improvements being financed to a local agency, upon terms and conditions that the authority deems proper; charge and collect rents therefor; terminate any lease upon the failure of the lessee to comply with any of the obligations of the lease; include in any lease provisions that the lessee shall have options to renew the lease for a period or periods, and at rents as determined by the authority; purchase or sell by an installment agreement or otherwise any or all of the public capital improvements; or, upon payment of all the indebtedness incurred by the authority for the financing or refinancing of the public capital improvements, the authority may convey any or all of the project to the lessee or lessees. (o) Charge and apportion to local agencies that benefit from its services the administrative costs and expenses incurred in the exercise of the powers authorized by this article. These fees shall be set at a rate sufficient to recover, but not exceed, the authority' s costs of issuance and administration. The fee charged to each local obligation acquired by the pool shall not exceed that obligation's proportionate share of those costs. The level of these fees shall be disclosed to the California Debt and Investment Advisory Commission pursuant to Section 6599.1. (p) Issue, obtain, or aid in obtaining, from any department or agency of the United States or of the state, or any private company, any insurance or guarantee to, or for, the payment or repayment of interest or principal, or both, or any part thereof, on any loan, lease, or obligation or any instrument evidencing or securing the same, made or entered into pursuant to this article. (q) Notwithstanding any other provision of this article, enter into any agreement, contract, or any other instrument with respect to any insurance or guarantee; accept payment in the manner and form as provided therein in the event of default by a local agency; and assign any insurance or guarantee that acts as security for the authority's bonds. (r) Enter into any agreement or contract, execute any instrument, and perform any act or thing necessary, convenient, or desirable to carry out any power authorized by this article. (s) Invest any moneys held in reserve or sinking funds, or any moneys not required for immediate use or disbursement, in obligations that are authorized by law for the investment of trust funds. (t) At the request of affected local agencies, combine and pledge revenues to public capital improvements for repayment of one or more series of bonds issued pursuant to this article. (u) Delegate to any of its individual parties or other responsible individuals the power to act on its behalf subject to its general direction, guidelines, and oversight. (v) Purchase, with the proceeds of its bonds or its revenue, bonds issued by any local agency at public or negotiated sale. Bonds purchased pursuant to this subdivision may be held by the authority or sold to public or private purchasers at public or negotiated sale, in whole or in part, separately or together with other bonds issued by the authority. (w) Purchase, with the proceeds of its bonds or its revenue, VLF receivables sold to the authority pursuant to Section 6588.5. VLF receivables so purchased may be pledged to the payment of bonds issued by the authority or may be resold to public or private purchasers at public or negotiated sale, in whole or in part, separately or together with other VLF receivables purchased by the authority. (x) (1) Purchase, with the proceeds of its bonds or its revenue, Proposition 1A receivables pursuant to Section 6588.6. Proposition 1A receivables so purchased may be pledged to the payment of bonds issued by the authority or may be resold to public or private purchasers at public or negotiated sales, in whole or in part, separately or together with other Proposition 1A receivables purchased by the authority. (2) (A) All entities subject to a reduction of ad valorem property tax revenues required under Section 100.06 of the Revenue and Taxation Code pursuant to the suspension set forth in Section 100.05 of the Revenue and Taxation Code shall be afforded the opportunity to sell their Proposition 1A receivables to the authority. (B) If these entities offer Proposition 1A receivables to the authority for purchase and duly authorize the sale of the Proposition 1A receivable pursuant to documentation approved by the authority, the authority shall purchase all Proposition 1A receivables so offered to the extent it can sell bonds therefor. If the authority does not purchase all Proposition 1A receivables offered, it shall purchase a pro rata share of each entity's offered Proposition 1A receivables. (C) The authority may establish a deadline, no earlier than November 3, 2009, by which these entities shall offer their Proposition 1A receivables for sale to the authority and complete the application required by the authority. (3) For purposes of meeting costs incurred in performing its duties relative to the purchase and sale of Proposition 1A receivables, the authority shall be authorized to charge a fee to each entity from which it purchases a Proposition 1A receivable. The fee shall be computed based on the percentage value of the Proposition 1A receivable purchased from each entity, in relation to the value of all Proposition 1A receivables purchased by the authority. The amount of the fee shall be paid from the proceeds of the bonds and shall be included in the principal amount of the bonds. (4) Terms and conditions of any and all fees and expenses charged by the authority, or those it contracts with, and the terms and conditions of sales of Proposition 1A receivables and bonds issued pursuant to this subdivision, including the terms of optional early redemption provisions, if any, shall be approved by the Treasurer and the Director of Finance, who shall not unreasonably withhold their approval. The aggregate principal amount of all bonds issued pursuant to this subdivision shall not exceed two billion two hundred fifty million dollars ($2,250,000,000), and the rate of interest paid on those bonds shall not exceed 8 percent per annum. The authority shall exercise its best efforts to obtain the lowest cost financing possible. Any and all premium obtained shall be used for either of the following: (A) Applied to pay the costs of issuance of the bonds. (B) Deposited in a trust account that is pledged to bondholders and used solely for the payment of interest on, or for repayment of, the bonds. (5) (A) In connection with any financing backed by Proposition 1A receivables, the Treasurer may retain financial advisers, legal counsel, and other consultants to assist in performing the duties required by this chapter and related to that financing. (B) Notwithstanding any other provision of law, none of the following shall apply to any agreements entered into by the Treasurer pursuant to subparagraph (A) in connection with any Proposition 1A financing: (i) Section 11040 of the Government Code. (ii) Section 10295 of the Public Contract Code. (iii) Article 3 (commencing with Section 10300) and Article 4 (commencing with Section 10335) of, Chapter 2 of Part 2 of Division 2 of the Public Contract Code, except for the authority of the Department of Finance under Section 10336 of the Public Contract Code to direct a state agency to transmit to it a contract for review, and except for Section 10348.5 of the Public Contract Code. (C) Any costs incurred by the Treasurer in connection with any Proposition 1A financing shall be reimbursed out of the proceeds of the financing. (y) Purchase, with the proceeds of its bonds or its revenue, any government receivables sold to the authority pursuant to Section 6588.7. Government receivables so purchased may be pledged to the payment of bonds issued by the authority or may be resold to public or private purchasers at public or negotiated sale, in whole or in part, separately or together with other government receivables purchased by the authority. (z) Set any other terms and conditions on any purchase or sale pursuant to this section as it deems by resolution to be necessary, appropriate, and in the public interest, in furtherance of the purposes of this article. SEC. 3. Section 6588.7 is added to the Government Code, to read: 6588.7. (a) An authority may purchase, with the proceeds of its bonds or its revenue, government receivables from one or more local agencies. The authority may pledge, assign, resell or otherwise transfer or hypothecate any government receivables for the purpose of securing bonds issued to finance the purchase price of the government receivables. (b) Notwithstanding any other provision of law, local agencies may sell government receivables to an authority, at one time or from time to time, and enter into one or more sales agreements with an authority as, and on, the terms the local agency deems appropriate. The sales agreement may include covenants of, and binding on, the local agency necessary to establish and maintain the security of bonds issued by the authority for the purpose of purchasing the government receivables and, if applicable, the exclusion from gross income of interest on the bonds for federal income tax purposes. Any transfer of some or all of a government receivable by a local agency to an authority under this article that the governing documents state is a sale shall be treated as an absolute sale and transfer of the property so transferred to the authority and not as a pledge or grant of a security interest by the local agency to secure a borrowing. The characterization of the transfer of any government receivable as an absolute sale and transfer by the local agency shall not be negated or adversely affected by any of the following. (1) The fact that only a portion of the government receivable is transferred. (2) By the local agency's acquisition of an ownership interest in any residual interest or a subordinate interest in the government receivable. (3) By any characterization of the authority or its bonds for purposes of accounting, taxation, or securities regulation. (4) By any other factor. (c) On and after the effective date of each transfer of a government receivable under this article that the governing documents state is a sale, the local agency shall have no right, title, or interest in or to the government receivable transferred, and the government receivable so transferred shall be property of the authority and not of the local agency, and shall be owned, received, held, and disbursed only by the authority or any trustee or agent of the authority appointed by the authority. Any sale of some or all of any government receivable shall automatically be perfected without the need for physical delivery, recordation, filing, or further act, and the provisions of Division 9 of the Commercial Code and Sections 954.5 to 955.1, inclusive, of the Civil Code shall not apply to the sale. None of the government receivables sold by the local agency pursuant to this article shall be subject to garnishment, levy, execution, attachment, or other process, writ, including, but not limited to, a writ of mandate, or remedy in connection with the assertion or enforcement of any debt, claim, settlement, or judgment against the local agency. On or before the effective date of any sale of a government receivable, the local agency shall notify the payer of the government receivable that the government receivable has been sold to the authority and irrevocably instruct the payer that, as of the effective date, payments on the government receivable so sold are to be made directly to the authority or any trustee or agent appointed by the authority. Any government receivable sold by a local agency but received by that local agency shall be held by it in trust solely for the benefit of the authority to which the government receivable was sold and transferred to the authority or any trustee or agent appointed by the authority as soon as possible. SEC. 4. Section 6590 of the Government Code is amended to read: 6590. The authority may, from time to time, issue its bonds in the principal amount as the authority determines necessary to provide sufficient funds for its purposes, which may include, but shall not be limited to, providing funds for bond purchase agreements, payment of the purchase price of VLF receivables, payment of the purchase price of Proposition 1A receivables, payment of the purchase price of government receivables, payment of interest on bonds of the authority, establishment of reserves to secure the bonds, and other expenditures of the authority incident to issuance of the bonds. The authority may also issue bonds for the purpose of making loans to local agencies, to the extent those local agencies are authorized by law to borrow moneys, or to purchase VLF receivables from local agencies as provided in Section 6588.5, to purchase Proposition 1A receivables as provided in Section 6588.6, or to purchase government receivables from local agencies as provided in Section 6588.7, and the loan or sale proceeds shall be used by the local agencies to pay for public capital improvements, working capital, or insurance programs. The aggregate principal amount of all bonds issued pursuant to this section that are backed by Proposition 1A receivables shall not exceed two billion two hundred fifty million dollars ($2,250,000,000), and that issuance shall be approved by the Department of Finance and the Treasurer. In the case of any authority in existence on January 1, 1988, no loans shall be made to local agencies for working capital or insurance, unless that purpose is first approved by resolution of the governing body of the authority by unanimous vote of all members of the governing body. SEC. 5. Section 6591 of the Government Code is amended to read: 6591. (a) The authority is authorized from time to time to issue bonds to provide funds to achieve its purposes. (b) Bonds may be authorized to finance any of the following: (1) A single public capital improvement, working capital, purchase of VLF receivables, purchase of Proposition 1A receivables, purchase of government receivables, or insurance program for a single local agency. (2) A series of public capital improvements, working capital, purchases of VLF receivables, purchase of Proposition 1A receivables, purchase of government receivables, or insurance program for a single local agency. (3) A single public capital improvement, working capital, purchases of Proposition 1A receivables, or purchases of VLF receivables, purchase of government receivables, or insurance program for two or more local agencies. (4) A series of public capital improvements, working capital, purchases of VLF receivables, purchases of Proposition 1A receivables, purchase of government receivables, or insurance programs for two or more local agencies. (c) Bonds issued for the purpose of financing working capital shall be used to make loans to local agencies for any of the purposes for which a local agency may borrow money pursuant to Section 53852. The loans shall be repaid in accordance with the terms of Section 53854. (d) Except as otherwise expressly provided by the authority, every issue of its bonds shall be general obligations of the authority payable from any revenues or moneys of the authority available therefor and not otherwise pledged. These revenues or moneys may include the proceeds of additional bonds, subject only to any agreements with the holders of particular bonds pledging any particular revenues or moneys. Notwithstanding that the bonds may be payable from a special fund, these bonds shall be deemed to be negotiable instruments for all purposes, subject only to the bond registration provisions. (e) (1) The bonds may be issued as serial bonds or as term bonds, or the authority may issue bonds of both types. The bonds shall be authorized by resolution of the authority and shall, as provided by the resolution or indenture pursuant to which the bonds are issued, meet all of the following conditions: (A) Bear the date of issuance. (B) Bear the time of maturity, not exceeding 50 years from their date of issuance. (C) Bear the rate of interest, either fixed or variable, and, if variable, not in excess of the maximum rate of interest specified therein. (D) Be payable as to principal and interest at the time or times provided. (E) Be in the denominations and in the form provided. (F) Carry the registration privileges provided. (G) Be executed in the manner provided. (H) Be payable in lawful money of the United States at the place or places provided within or without the state. (I) Be subject to the terms of redemption provided. (2) Notwithstanding paragraph (1), the bonds backed by Proposition 1A receivables shall have a maturity date no later than August 1, 2013. (3) For bonds backed by Proposition 1A receivables, both of the following shall apply: (A) The option to call shall be exercised upon receipt by the authority of a timely written notification from the Director of Finance, but no earlier than 30 days after delivery by the director of a written notice of the intent to do so to the Joint Legislative Budget Committee. (B) The bonds may bear interest payable on periodic interest payment dates or may accrue interest to their maturity date or any combination thereof, subject to the approval of the Department of Finance and the State Treasurer pursuant to subdivision (x) of Section 6588. (f) The bonds shall be sold by the authority at the time and in the manner set out in the authority's resolution. The sale may be a public or private sale, and for price or prices, and on terms and conditions as the authority determines proper, after giving due consideration to the recommendations of any local agency to be assisted from the proceeds of the bonds. Pending preparation of the definitive bonds, the authority may issue interim receipts, certificates, or temporary bonds which shall be exchanged for definitive bonds. For bonds backed by Proposition 1A receivables, the authority shall use its best efforts to obtain the lowest overall cost of the bonds, and shall certify that it so used its best efforts. The authority shall, in consultation with the Treasurer and Department of Finance, structure the sale of the bonds backed by Proposition 1A receivables and shall include those terms and conditions approved by the Treasurer and the Department of Finance. (g) In the case of bonds issued by an authority, on or after January 1, 1995, for the purpose of purchasing bonds of a local agency, all of the bonds of the local agency shall be purchased by the authority from the proceeds of the authority bonds within 90 days of the date of issuance of the authority bonds. Nothing in this subdivision shall be construed to preclude an authority from issuing parity bonds at any time. SEC. 6. Section 6592 of the Government Code is amended to read: 6592. Any resolution authorizing any bonds or any issue of bonds may contain the following provisions, which shall be a part of the contract with the holders of the bonds to be authorized: (a) Provisions pledging the full faith and credit of the authority, or pledging all or any part of the revenues of any public capital improvements, or any revenue-producing contract or contracts made by the authority with any local agency, any VLF receivables purchased pursuant to Section 6588.5, any Proposition 1A receivables purchased pursuant to Section 6588.6, any government receivables purchased pursuant to Section 6588.7, or any other moneys of the authority, to secure the payment of the bonds, and of any special account, subject to those agreements with bondholders as may then exist. (b) Provisions setting out the rentals, fees, purchase payments, loan repayments, and other charges, and the amounts to be raised in each year thereby, and the use and disposition of the revenues. (c) Provisions setting aside reserves or sinking funds, and the regulation and disposition thereof. (d) Limitations on the right of the authority or its agent to restrict and regulate the use of the public capital improvements to be financed out of the proceeds of the bonds or any particular issue of bonds. (e) Limitations on the purpose to which the proceeds of sale of any issue of bonds may be applied, and pledging the proceeds to secure the payment of the bonds or any issue of the bonds. (f) Limitations on the issuance of additional bonds, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding bonds. (g) The procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds and the holders thereof that are required to give consent thereto, and the manner in which the consent may be given. (h) Limitations on expenditures for operating, administrative, or other expenses of the authority. (i) Definitions of acts or omissions to act which constitute a default in the duties of the authority to holders of its obligations, and providing the rights and remedies of the holders in the event of a default. (j) The mortgaging of any public capital improvements and the site thereof for the purpose of securing the bondholders. (k) The mortgaging of land, improvements, or other assets owned by a local agency for the purpose of securing the bondholders. (l) Procedures for the selection of public capital improvements to be financed with the proceeds of the bonds authorized by the resolution, if the bonds are to be sold in advance of designating the public capital improvements and the local agency to receive the financing. SEC. 7. Section 6599.3 of the Government Code is amended to read: 6599.3. Notwithstanding any other provision of law, an action may be brought under Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure, to determine the validity of any bonds issued under this article to finance the purchase of bonds for local agencies, the financing of public capital improvements, the purchase of VLF receivables pursuant to Section 6588.5, Proposition 1A receivables pursuant to Section 6588.6, or government receivables pursuant to Section 6588.7, and any contracts of sale of VLF receivables, Proposition 1A receivables, or government receivables entered into by any local agency, and any related documents. If an action is commenced, the action shall be brought in the jurisdiction in which the authority maintains its principal office and is not required to be brought in the jurisdiction or jurisdictions of any of the local agencies. However, publication of summons, as provided in Section 861 of the Code of Civil Procedure, shall be made in the county in which the authority maintains its principal office and in each county in which any local agency that has sold bonds to the authority, for which a public capital improvement is being financed or that has entered into a sales agreement for a VLF receivable or a Proposition 1A receivable or government receivable where the authority is located.