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<ns0:Id>20250SB__143899INT</ns0:Id>
<ns0:VersionNum>99</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-03-11</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>SB</ns0:MeasureType>
<ns0:MeasureNum>1438</ns0:MeasureNum>
<ns0:MeasureState>INT</ns0:MeasureState>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Committee on Local Government (Senators Durazo (Chair), Arreguín, Ashby, Cervantes, Choi, Laird, and Seyarto)</ns0:AuthorText>
<ns0:Authors>
<ns0:Committee>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Committee on Local Government</ns0:Name>
<ns0:Members>Senators Durazo (Chair), Arreguín, Ashby, Cervantes, Choi, Laird, and Seyarto</ns0:Members>
</ns0:Committee>
</ns0:Authors>
<ns0:Title> An act to amend Sections 53600, 53630, 53631, 53635.2, 53641, and 53651 of, to amend and renumber Sections 53600.5, 53600.6, 53601, and 53601.8 of, and to repeal Sections 53600.3, 53601, 53601.1, 53601.2, 53601.5, 53601.6, 53602, 53603, 53604, 53605, 53606, 53607, 53608, 53609, 53610, 53630.5, and 53635 of, the Government Code, relating to local government. </ns0:Title>
<ns0:RelatingClause>local government</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Local government: investments and deposits.</ns0:Subject>
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<ns0:DigestText>
<html:p>Existing law regulates the investment of public funds by local agencies, as defined. Existing law authorizes the legislative body of a local agency, as specified, that has money in a sinking fund or in its treasury not required for immediate needs to invest the money as it deems wise or expedient in certain securities and financial instruments. Among other things, existing law authorizes investment in commercial paper issued by entities meeting one of 2 sets of specified requirements and in United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by specified development banks if certain conditions are met. Existing law prohibits investment in securities that could result in zero-interest accrual unless issued by the United States government in the event, for the duration, of a period of negative market interest rates. Existing law
removes that exception on January 1, 2031.</html:p>
<html:p>This bill would revise and recast the provisions regulating investment of public funds by local agencies, including, among other things, additionally authorizing investment in commercial paper issued by an entity organized as a federally or state-chartered bank or a federally or state-licensed branch of a foreign bank and in senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the Inter-American Investment Corporation. The bill would remove the January 1, 2031, sunset date for investments in United States-issued securities in a period of negative market interest rates, thereby extending that exception indefinitely.</html:p>
<html:p>Existing law imposes various limits on local government investment in commercial paper. Specifically, existing law imposes a separate maximum percent investment limit for local agencies that are a county, city and county, the City of Los
Angeles, or other local agency that pools investments with other local agencies that do not share the same governing body. Existing law sets those limits at 40% of total investments, with no more than 10% in commercial paper from any one issuer. For the remaining local agencies, and until January 1, 2031, existing law imposes a maximum of 25% for local agencies with less than $100,000,000 in total investment assets and at 40% for those agencies with $100,000,000 or more in investment assets. Beginning January 1, 2031, the limit is reduced to 25% for those local agencies with $100,000,000 or more in investment assets.</html:p>
<html:p>This bill would revise and recast these provisions and would remove the January 1, 2031, reduction in the maximum investment for the above-described local agencies with $100,000,000 or more in investment assets.</html:p>
<html:p>Existing law makes the treasurer of a local agency responsible for the safekeeping of money and
authorizes them to enter into a contract with a depository, as specified. Existing law requires the depository and the depository agent to secure the deposits in eligible securities. Existing law defines eligible securities for this purpose to include, among other things, letters of credit issued by the Federal Home Loan Bank of San Francisco, as specified.</html:p>
<html:p>This bill would make various nonsubstantive changes to those provisions and, for a county, city and county, or local agency that pools money in deposits or investments with other agencies, would additionally authorize an eligible bank headquartered outside of the state to submit letters of credit drawn on its regional federal home loan bank.</html:p>
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<ns0:DigestKey>
<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>NO</ns0:FiscalCommittee>
<ns0:LocalProgram>NO</ns0:LocalProgram>
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<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_8D2F2303-80EA-4501-85A2-41B304671FBA">
<ns0:Num>SECTION 1.</ns0:Num>
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Section 53600 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Num>53600.</ns0:Num>
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<html:p>For purposes of this article, the following definitions apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Corporation” includes a limited liability company.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Counterparty” means the other party to the transaction.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Local agency” means county, city, city and county, including a chartered city or county, school district, community college district, public district, county board of education, county superintendent of schools, or any public or municipal corporation.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Repurchase agreement” means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third-party custodial agreement. The transfer of underlying securities to the counterparty bank’s customer book-entry account may be used for book-entry delivery.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“Reverse repurchase agreement” means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Securities,” for purposes of repurchase, means securities of the same issuer, description, issue date, and maturity.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
“Securities lending agreement” means an agreement under which a local agency agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Significant banking relationship” means any of the following activities of a bank:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Involvement in the creation,
sale, purchase, or retirement of a local agency’s bonds, warrants, notes, or other evidence of indebtedness.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Financing of a local agency’s activities.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Acceptance of a local agency’s securities or funds as deposits.
</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 53600.3 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 53600.5 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended and renumbered to read:
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<ns0:Num>53602.</ns0:Num>
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<ns0:Content>
<html:p>When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a local agency shall comply with all of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The
primary objective of a trustee shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet the liquidity needs of the depositor. The third objective shall be to achieve a return on the funds under its control.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Except as provided in subdivision (a) of Section 27000.3, all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated
needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A local agency purchasing or obtaining any securities prescribed in this article, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of the securities to the local agency, including those purchased for the agency by financial advisers, consultants, or managers using the agency’s funds, by book entry, physical delivery, or by third-party custodial agreement.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The transfer of securities to the counterparty
bank’s customer book entry account may be used for book-entry delivery. A counterparty bank’s trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Where this article specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
An investment’s term or remaining maturity shall be measured from the settlement date to final maturity. A security purchased in accordance with this section shall not have a forward settlement date exceeding 45 days from the time of investment.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall
be made in any security, other than a security underlying a repurchase or reverse repurchase agreement or securities lending agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months prior to the investment.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the moneys are prohibited from investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or a person with investment decisionmaking authority in the administrative office manager’s office, budget
office, auditor-controller’s office, or treasurer’s office of the local agency also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The base value of the local agency’s pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements, securities lending agreements, or other similar borrowing methods.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The spread is the difference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The purchase
by a local agency of any investment authorized pursuant to Section 53601 or 53601.1, not purchased directly from the issuer, shall be purchased either from an institution licensed by the state as a broker-dealer, as defined in Section 25004 of the Corporations Code, or from a member of a federally regulated securities exchange, from a national or state-chartered bank, from a savings association or federal association, as defined by Section 5102 of the Financial Code, or from a brokerage firm designated as a primary government dealer by the Federal Reserve Bank.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A local agency shall not invest any funds pursuant to this article or pursuant to Article 2 (commencing with Section 53630) in inverse floaters, range notes, or mortgage-derived, interest-only strips.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Except as provided in subparagraph (B), a local agency shall not
invest any funds pursuant to this article or pursuant to Article 2 (commencing with Section 53630) in any security that could result in zero-interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their maturity dates. The limitation in this subdivision shall not apply to local agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.) that are authorized for investment pursuant to subdivision (l) of Section 53601.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notwithstanding the prohibition in subparagraph (A), a local agency may invest in securities issued by, or backed by, the United States government that could result in zero- or negative-interest accrual if held to maturity, in the event of, and for the duration of, a period of negative market interest rates. A local agency may hold these instruments until their maturity
dates.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
The legislative body shall invest only in notes, bonds, bills, certificates of indebtedness, warrants, or registered warrants which are legal investments for savings banks in the state, provided that the board of supervisors of a county may, by a four-fifths vote thereof, invest in notes, warrants, or other evidences of indebtedness of public districts wholly or partly within the county, whether or not such notes, warrants, or other evidences of indebtedness are legal investments for savings banks.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
The legislative body may make the investment by direct purchase of any issue of eligible securities at their original sale or after they have been issued.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
The legislative body may sell, or exchange for other eligible securities, and reinvest the proceeds of, the securities purchased.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
From time to time, the legislative body shall sell the securities so that the proceeds may be applied to the purposes for which the original purchase money was placed in the sinking fund or the treasury of the local agency.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
The bonds purchased, which were issued by the purchaser, may be canceled either in satisfaction or sinking fund obligations or otherwise. When canceled, they are no longer outstanding, unless in its discretion the legislative body holds them uncanceled. While held uncanceled, the bonds may be resold.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
The authority of the legislative body to invest or to reinvest funds of a local agency, or to sell or exchange securities so purchased, may be delegated for a one-year period by the legislative body to the treasurer of the local agency, who shall thereafter assume full responsibility for
those transactions until the delegation of authority is revoked or expires, and shall make a monthly report of those transactions to the legislative body. Subject to review, the legislative body may renew the delegation of authority pursuant to this section each year.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
The legislative body of a local agency may deposit for safekeeping with a federal or state association, as defined by Section 5102 of the Financial Code, a trust company or a state or national bank located within this state or with the Federal Reserve Bank of San Francisco or any branch thereof within this state, or with any Federal Reserve Bank or with any state or national bank located in any city designated as a reserve city by the Board of Governors of the Federal Reserve System, the bonds, notes, bills, debentures, obligations, certificates of indebtedness, warrants, or other evidences of indebtedness in which the money of the local agency is invested pursuant to this
article or pursuant to other legislative authority. The local agency shall take from such financial institution a receipt for securities so deposited. The authority of the legislative body to deposit for safekeeping may be delegated by the legislative body to the treasurer of the local agency. The treasurer shall not be responsible for securities delivered to and receipted for by a financial institution until they are withdrawn from the financial institution by the treasurer.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Notwithstanding the provisions of this chapter or any provision of this code, funds held by a local agency pursuant to a written agreement between the agency and employees of the agency to defer a portion of the compensation otherwise receivable by the agency’s employees and pursuant to a plan for such deferral as adopted by the governing body of the agency may be invested in the types of investments set forth in Sections 53601 and 53602 of
this code, and may additionally be invested in corporate stocks, bonds, and securities, mutual funds, savings and loan accounts, credit union accounts, life insurance policies, annuities, mortgages, deeds of trust, or other security interests in real or personal property. Nothing herein shall be construed to permit any type of investment prohibited by the Constitution.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Deferred compensation funds are public pension or retirement funds for the purposes of Section 17 of Article XVI of the Constitution.
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 53600.6 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended and renumbered to read:
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<ns0:Num>53601.</ns0:Num>
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<html:p>The Legislature hereby finds that the solvency and creditworthiness of each individual local agency can impact the solvency and creditworthiness of the state and other local agencies within the state. Therefore, to protect the solvency and creditworthiness of the state and all of its political subdivisions, the Legislature hereby declares that the deposit and investment of public funds by local officials and local agencies is an issue of statewide concern.</html:p>
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<ns0:BillSection id="id_30287588-5D04-4817-A9E4-06040015CD3E">
<ns0:Num>SEC. 5.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED_AND_RENUMBERED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53601.'%5D)" ns3:label="fractionType: LAW_SECTION||version: Amended (as amended by Stats. 2023, Ch. 187, Sec. 5) by Stats. 2025, Ch. 323, Sec. 1. [id_8c3f52f3-cfac-11f0-bfde-adfc216d767c]">
Section 53601 of the
<ns0:DocName>Government Code</ns0:DocName>
, as amended by Section 1 of Chapter 323 of the Statutes of 2025, is amended and renumbered to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_4036FBB6-9215-49F1-B313-28838479B236">
<ns0:Num>53603.</ns0:Num>
<ns0:LawSectionVersion id="id_6D5880AB-6E6E-4B49-A85B-8B1D5ADB97D2">
<ns0:Content>
<html:p>The legislative body of a local agency having moneys in a sinking fund or moneys in its treasury not required for the immediate needs of the local agency may invest any portion of the moneys that it deems wise or expedient in
the following investments:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Registered treasury notes or bonds of any of the other 49
states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Bankers’ acceptances otherwise known as bills of exchange or time drafts that are drawn on and accepted by a commercial bank. Purchases of bankers’ acceptances shall not exceed 180 days’ maturity or 40 percent of the agency’s moneys that may be invested pursuant to this section. However, no more than 30 percent of the agency’s moneys may be invested in the bankers’ acceptances of any one commercial bank pursuant to this section.
</html:p>
<html:p>This subdivision does not preclude a municipal utility district from investing moneys in its treasury in a manner authorized by the Municipal Utility District Act (Division 6 (commencing with Section 11501) of the Public Utilities Code).</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Commercial paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization (NRSRO).
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Eligible commercial paper shall have a maximum maturity of 397 days or less.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Except as provided in paragraph (3), local agencies that have less than one hundred million dollars ($100,000,000) of investment assets under management may invest no more than 25 percent of their moneys in eligible commercial paper and local agencies that have one hundred million dollars ($100,000,000) or more of investment assets under management may invest no more than 40 percent of their moneys in eligible commercial paper.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
This paragraph shall apply to a local agency that is a county, a city and county, the City of
Los Angeles, or a local agency that pools money in deposits or investments with other local agencies, including local agencies that have the same governing body. However, paragraph (2) shall apply to all local agencies that pool money in deposits or investments exclusively with local agencies that have the same governing body.
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A local agency subject to this paragraph, other than a county or a city and county, may invest no more than 10 percent of its total investment assets in the commercial paper and the medium-term notes of any single issuer.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
No more than 40 percent of the local agency’s money may be invested in eligible commercial paper.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
No more than 10 percent of the total assets of the
investments held by a local agency may be invested in any one issuer’s commercial paper.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
A local agency subject to this paragraph may invest in commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
This paragraph shall be interpreted in a manner that recognizes the distinct characteristics of investment pools and the distinct administrative burdens on managing and investing funds on a pooled basis pursuant to Article 6 (commencing with Section 27130) of Chapter 5 of Part 3 of Division 2 of Title 3.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The
entity that issues the commercial paper shall meet all of the following conditions in either subparagraph (A) or (B):
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The entity meets the following criteria:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Is organized and operating in the United States as a general corporation.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Has total assets in excess of five hundred million dollars ($500,000,000).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The entity meets the following criteria:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Is organized within the United States as a federally or state-chartered bank or a federally or state-licensed branch of a foreign bank,
special purpose corporation, trust, or limited liability company.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Has programwide credit enhancements including, but not limited to, overcollateralization, letters of credit, or a surety bond.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Has commercial paper that is rated “A-1” or higher, or the equivalent, by an NRSRO.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a
federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposit do not come within Article 2 (commencing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Investments in repurchase agreements or reverse repurchase agreements or securities lending agreements of securities authorized by this section, as long as the agreements are subject to this subdivision, including the delivery requirements specified in this section.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Investments in repurchase agreements may be made, on an investment authorized in this
section, when the term of the agreement does not exceed one year. The market value of securities that underlie a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Reverse repurchase agreements or securities lending agreements may be utilized only when all of the following conditions are met:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The security to be sold using a reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The total of all reverse repurchase agreements and securities lending agreements on investments owned by the local agency does not exceed 20 percent of the base value of the portfolio.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty using a reverse repurchase agreement or securities lending agreement shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse
repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Investments in reverse repurchase agreements, securities lending agreements, or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security may be made only upon prior approval of the governing body of the local agency and shall be made only with primary dealers of the Federal Reserve Bank of New York or with a nationally
or state-chartered bank that has or has had a significant banking relationship with a local agency.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Medium-term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this
subdivision shall be rated in a rating category of “A” or its equivalent or better by an NRSRO. Purchases of medium-term notes shall not include other instruments authorized by this section and shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section. A local agency, other than a county or a city and a county, may invest no more than 10 percent of its total investment assets in the commercial paper and the medium-term notes of any single issuer.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and that comply with the investment restrictions of this article and Article 2 (commencing with Section 53630). However, notwithstanding these restrictions, a counterparty to a reverse repurchase agreement or securities
lending agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company’s board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement or securities lending agreement may be 100 percent of the sales price if the securities are marked to market daily.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Shares of beneficial interest issued by diversified management companies that are money market funds registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.).
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
If investment is in shares issued pursuant to paragraph (1), the company shall have met either of the following criteria:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Attained the highest ranking or the highest letter and numerical rating
provided by not less than two NRSROs.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Retained an investment adviser registered or exempt from registration with the United States Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and with assets under management in excess of five hundred million dollars ($500,000,000).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
If investment is in shares issued pursuant to paragraph (2), the company shall have met either of the following criteria:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Retained an investment adviser registered or exempt from registration with the
United States Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000).
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include commission that the companies may charge and shall not exceed 20 percent of the agency’s moneys that may be invested pursuant to this section. However, no more than 10 percent of the agency’s funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1).
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to
(r), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The adviser is registered or exempt from registration with the United States Securities and Exchange Commission.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (q), inclusive.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The adviser has assets under management in excess of five hundred million dollars ($500,000,000).
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
Moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank that is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For securities eligible for investment under this subdivision not issued or guaranteed by an agency or issuer identified in subdivision (b) or (f), the following limitations apply:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The security shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and have a maximum remaining maturity of five years or less.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Purchase of securities authorized by this
paragraph shall not exceed 20 percent of the agency’s surplus moneys that may be invested pursuant to this section.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, Inter-American Development Bank, or Inter-American Investment Corporation, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
Commercial paper, debt securities, or other obligations of a public
bank, as defined in Section 57600.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
Financial futures or financial option contracts in any of the investment categories enumerated in this section.
</html:p>
<html:p>
(t)
<html:span class="EnSpace"/>
Proposition 1A receivables sold pursuant to Section 53999. A purchaser of Proposition 1A receivables pursuant to this section shall not offer them for sale pursuant to Section 6588.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_C9E71516-A369-4127-90E0-02927E479264">
<ns0:Num>SEC. 6.</ns0:Num>
<ns0:ActionLine action="IS_REPEALED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53601.'%5D)" ns3:label="fractionType: LAW_SECTION||version: Amended (as amended by Stats. 2023, Ch. 187, Sec. 6) by Stats. 2025, Ch. 323, Sec. 2. [id_9577b4c5-cfac-11f0-bfde-adfc216d767c]">
Section 53601 of the
<ns0:DocName>Government Code</ns0:DocName>
, as amended by Section 2 of Chapter 323 of the Statutes of 2025, is repealed.
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<ns0:Fragment/>
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<ns0:BillSection id="id_DA395BDB-4896-45A4-AA5C-1DE358E5EF09">
<ns0:Num>SEC. 7.</ns0:Num>
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Section 53601.1 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:Fragment/>
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<ns0:BillSection id="id_4326872C-F12A-464E-A3AC-1F0529B73A84">
<ns0:Num>SEC. 8.</ns0:Num>
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Section 53601.2 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_8D708011-6EF7-4331-B67E-9DEBB5FCA345">
<ns0:Num>SEC. 9.</ns0:Num>
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Section 53601.5 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:Fragment/>
</ns0:BillSection>
<ns0:BillSection id="id_7F5D0E30-4818-47DF-8323-CCAE236A6552">
<ns0:Num>SEC. 10.</ns0:Num>
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Section 53601.6 of the
<ns0:DocName>Government Code</ns0:DocName>
, as amended by Section 3 of Chapter 323 of the Statutes of 2025, is repealed.
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<ns0:BillSection id="id_9A3CDBE4-E92D-4ED3-A05A-ADD6A1EB2FCB">
<ns0:Num>SEC. 11.</ns0:Num>
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Section 53601.6 of the
<ns0:DocName>Government Code</ns0:DocName>
, as amended by Section 4 of Chapter 323 of the Statutes of 2025, is repealed.
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<ns0:Num>SEC. 12.</ns0:Num>
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Section 53601.8 of the
<ns0:DocName>Government Code</ns0:DocName>
, as amended by Section 1 of Chapter 239 of the Statutes of 2024, is amended and renumbered to read:
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<ns0:LawSection id="id_8CCB4D0D-83A9-4811-BAA8-1796317CB479">
<ns0:Num>53604.</ns0:Num>
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<ns0:Content>
<html:p>Notwithstanding any other provision of this code, a local agency that has the authority under law to invest funds, at its discretion, may invest a portion of its surplus funds in deposits at a commercial bank, savings bank, savings and loan association, or credit union that uses a private sector entity that assists in the placement of deposits. The following conditions shall apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The local agency shall choose a nationally or state-chartered commercial bank, savings bank, savings and loan association, or credit union in this state to invest the funds, which shall be known as the
“selected” depository institution.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The selected depository institution may use a private sector entity to help place local agency deposits with one or more commercial banks, savings banks, savings and loan associations, or credit unions that are located in the United States and are within the network used by the private sector entity for this purpose.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The selected depository institution shall request that the local agency inform it of depository institutions at which the local agency has other deposits, and the selected depository institution shall provide that information to the private sector entity.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Any private sector entity used by a selected depository institution to help place its local agency deposits shall maintain policies and procedures requiring all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The full amount of each deposit placed pursuant to subdivision (b) and the interest that may accrue on each such deposit shall at all times be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Every depository institution where funds are placed shall be capitalized at a level that is sufficient, and be otherwise eligible, to receive such deposits pursuant to regulations of the Federal Deposit Insurance Corporation or the National Credit Union Administration, as applicable.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
At the time of the local agency’s investment with a selected depository institution and no less than monthly thereafter, the private sector entity shall ensure that the local agency is provided with an inventory of all depository institutions in which deposits have been placed on the local
agency’s behalf, that are within the private sector entity’s network.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Within its network, the private sector entity shall ensure that it does not place additional deposits from a particular local agency with any depository institution identified pursuant to subdivision (c) as holding that local agency’s deposits if those additional deposits would result in that local agency’s total amount on deposit at that depository institution exceeding the Federal Deposit Insurance Corporation or the National Credit Union Administration insurance limit.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
If a selected depository uses two or more private sector entities to assist in the placement of a local agency’s deposits, the selected depository shall ensure that it does not place additional deposits from a particular local agency with a depository institution if those additional deposits would result in that local agency’s total
amount on deposit at that depository institution exceeding the Federal Deposit Insurance Corporation or the National Credit Union Administration insurance limit.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The selected depository institution shall serve as a custodian for each such deposit.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
On the same date that the local agency’s funds are placed pursuant to subdivision (b) by the private sector entity, the selected depository institution shall receive an amount of insured deposits from other financial institutions that, in total, are equal to, or greater than, the full amount of the principal that the local agency initially deposited through the selected depository institution pursuant to subdivision (b).
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Notwithstanding subdivisions (a) to (g), inclusive, a credit union shall not act as a selected depository institution under this section
unless both of the following conditions are satisfied:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The credit union offers federal depository insurance through the National Credit Union Administration.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The credit union is in possession of written guidance or other written communication from the National Credit Union Administration authorizing participation of federally insured credit unions in one or more deposit placement services and affirming that the moneys held by those credit unions while participating in a deposit placement service will at all times be insured by the federal government.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
It is the intent of the Legislature that this section shall not restrict competition among private sector entities that provide placement services pursuant to this section.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
The deposits
placed pursuant to this section shall be subject to Section 53638 and shall not, in total, exceed 50 percent of the agency’s funds that may be invested for this purpose.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
On or before January 1, 2030, the California Debt and Investment Advisory Commission shall submit a report to the appropriate policy committees of the Legislature on the deposit of surplus funds pursuant to this section by local agencies. The report shall include, but is not limited to, the following information:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
An overview of local agency surplus funds invested in depository institutions that use private-entity placement services pursuant to this section, including information regarding the number of agencies that have deposited more than 30 percent of their surplus funds in depository institutions that use private-entity placement services and whether any local agencies have
deposited funds in more than one depository institution pursuant to this section.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A recommendation for a limitation, if any, on the share of deposits that a local agency can invest in depository institutions that use private-entity placement services pursuant to this section for consideration by the Legislature.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
This section shall remain in effect only until January 1, 2031, and as of that date is repealed.
</html:p>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_C72F87E1-93E7-4249-AE39-3231C2A0B5E5">
<ns0:Num>SEC. 13.</ns0:Num>
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Section 53601.8 of the
<ns0:DocName>Government Code</ns0:DocName>
, as amended by Section 2 of Chapter 239 of the Statutes of 2024, is amended and renumbered to read:
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<ns0:Fragment>
<ns0:LawSection id="id_76FEBE54-F966-4935-858D-CB3A7EFA16D4">
<ns0:Num>53604.</ns0:Num>
<ns0:LawSectionVersion id="id_F8A97F38-8014-4414-AEE0-6951E78CBEEF">
<ns0:Content>
<html:p>Notwithstanding any other provision of this code, a local agency that has the authority under law to invest funds, at its discretion, may invest a portion of its surplus funds in deposits at a commercial bank, savings bank, savings and loan association, or credit union that uses a private sector entity that assists in the placement of deposits. The following conditions shall apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The local agency shall choose a nationally or state-chartered commercial bank, savings bank, savings and loan association, or credit union in this state to invest the funds, which shall be known as the
“selected” depository institution.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The selected depository institution may use a private sector entity to help place local agency deposits with one or more commercial banks, savings banks, savings and loan associations, or credit unions that are located in the United States and are within the network used by the private sector entity for this purpose.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The selected depository institution shall request that the local agency inform it of depository institutions at which the local agency has other deposits, and the selected depository institution shall provide that information to the private sector entity.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Any private sector entity used by a selected depository institution to help place its local agency deposits shall maintain policies and procedures requiring all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The full amount of each deposit placed pursuant to subdivision (b) and the interest that may accrue on each such deposit shall at all times be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Every depository institution where funds are placed shall be capitalized at a level that is sufficient, and be otherwise eligible, to receive such deposits pursuant to regulations of the Federal Deposit Insurance Corporation or the National Credit Union Administration, as applicable.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
At the time of the local agency’s investment with a selected depository institution and no less than monthly thereafter, the private sector entity shall ensure that the local agency is provided with an inventory of all depository institutions in which deposits have been placed on the local
agency’s behalf, that are within the private sector entity’s network.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Within its network, the private sector entity shall ensure that it does not place additional deposits from a particular local agency with any depository institution identified pursuant to subdivision (c) as holding that local agency’s deposits if those additional deposits would result in that local agency’s total amount on deposit at that depository institution exceeding the Federal Deposit Insurance Corporation or the National Credit Union Administration insurance limit.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
If a selected depository uses two or more private sector entities to assist in the placement of a local agency’s deposits, the selected depository shall ensure that it does not place additional deposits from a particular local agency with a depository institution if those additional deposits would result in that local agency’s total
amount on deposit at that depository institution exceeding the Federal Deposit Insurance Corporation or the National Credit Union Administration insurance limit.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The selected depository institution shall serve as a custodian for each such deposit.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
On the same date that the local agency’s funds are placed pursuant to subdivision (b) by the private sector entity, the selected depository institution shall receive an amount of insured deposits from other financial institutions that, in total, are equal to, or greater than, the full amount of the principal that the local agency initially deposited through the selected depository institution pursuant to subdivision (b).
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Notwithstanding subdivisions (a) to (g), inclusive, a credit union shall not act as a selected depository institution under this section unless
both of the following conditions are satisfied:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The credit union offers federal depository insurance through the National Credit Union Administration.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The credit union is in possession of written guidance or other written communication from the National Credit Union Administration authorizing participation of federally insured credit unions in one or more deposit placement services and affirming that the moneys held by those credit unions while participating in a deposit placement service will at all times be insured by the federal government.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
It is the intent of the Legislature that this section shall not restrict competition among private sector entities that provide placement services pursuant to this section.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
The deposits placed
pursuant to this section shall be subject to Section 53638 and shall not, in total, exceed 30 percent of the agency’s funds that may be invested for this purpose.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
</html:p>
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<ns0:BillSection id="id_2E5815ED-E3A2-45CF-A499-8B3D51FFFC92">
<ns0:Num>SEC. 14.</ns0:Num>
<ns0:ActionLine action="IS_REPEALED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53602.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53602 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_04748A03-D717-494D-BAAB-D8DB37E5F963">
<ns0:Num>SEC. 15.</ns0:Num>
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Section 53603 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_F4A0A83B-B18D-408B-AAAA-5B4777095657">
<ns0:Num>SEC. 16.</ns0:Num>
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Section 53604 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_261E7DC0-33E3-4CE7-967A-AF984603A49F">
<ns0:Num>SEC. 17.</ns0:Num>
<ns0:ActionLine action="IS_REPEALED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53605.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53605 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_48D3D01A-B4DC-4D10-B235-FFCE3463099E">
<ns0:Num>SEC. 18.</ns0:Num>
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Section 53606 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_B99D5F73-FA2E-4BD4-98DD-AC8474113B02">
<ns0:Num>SEC. 19.</ns0:Num>
<ns0:ActionLine action="IS_REPEALED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53607.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53607 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_C1E5BF08-730C-4D0A-BEAE-99A3355E8F78">
<ns0:Num>SEC. 20.</ns0:Num>
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Section 53608 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_63638140-DADC-4F9E-A24B-25234EA62E6C">
<ns0:Num>SEC. 21.</ns0:Num>
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Section 53609 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:Fragment/>
</ns0:BillSection>
<ns0:BillSection id="id_40ED1D5B-0D6A-43FD-B57C-2073A77CB1E4">
<ns0:Num>SEC. 22.</ns0:Num>
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Section 53610 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
</ns0:ActionLine>
<ns0:Fragment/>
</ns0:BillSection>
<ns0:BillSection id="id_ECB16E2C-0267-4678-BBD2-83C4D2512B08">
<ns0:Num>SEC. 23.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53630.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53630 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_8AF6B32C-EAD2-4AA7-8AA1-58EA4094DC72">
<ns0:Num>53630.</ns0:Num>
<ns0:LawSectionVersion id="id_8C9DF2BA-7D90-4EAA-9822-A6D53D9132FA">
<ns0:Content>
<html:p>As used in this article:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Local agency” means county, city, city and county, including a chartered city or county, a community college district, or other public agency or corporation in this state.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Treasurer” means treasurer of the local agency.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Depository” means a state or national bank, savings association or federal association, a state or federal credit union, or a federally insured industrial loan company, in this state in which the moneys of a local agency are deposited.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Agent of depository” means a trust company or trust department of a state or national bank located in
this state, including the trust department of a depository where authorized, and the Federal Home Loan Bank of San Francisco, which is authorized to act as an agent of depository for the purposes of this article pursuant to Section 53657.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Security” means any of the eligible securities or obligations listed in Section 53651.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“Pooled securities” means eligible securities held by an agent of depository for a depository and securing deposits of one or more local agencies.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Administrator” means the Administrator of Local Agency Security of the State of California.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
“Savings association or federal association” means a savings association, savings and loan association, or savings bank as defined by Section 5102 of the Financial Code.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Federally insured industrial loan company” means an industrial loan company licensed under Division 7 (commencing with Section 18000) of the Financial Code, the investment certificates of which are insured by the Federal Deposit Insurance Corporation.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
“Corporation” includes a limited liability company.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The definitions in Section 1670 of, and Chapter 1 (commencing with Section 99) of Division 1 of, the Financial Code apply to this subdivision.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For purposes of being a depository of moneys belonging to or being in the custody of a local agency, the phrases “state or national bank located in this state,” “state or national bank,” “state
or national bank in this state,” and “state or national banks in the state” include, without limitation, any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A California branch office of a foreign (other state) state bank that the bank is authorized to maintain under the law of its domicile and federal law.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A California branch office of a foreign (other state) national bank that the bank is authorized to maintain under federal law.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A California branch office of a foreign (other nation) bank that the bank is licensed to maintain under Article 3 (commencing with Section 1800) of Chapter 20 of Division 1.1 of the Financial Code.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
A California federal branch of a foreign (other nation) bank that the bank is authorized to maintain under federal law.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_9881A83D-8CFA-47DF-BFF0-EAE6B5BCE2F3">
<ns0:Num>SEC. 24.</ns0:Num>
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Section 53630.5 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
</ns0:ActionLine>
<ns0:Fragment/>
</ns0:BillSection>
<ns0:BillSection id="id_3A0185DC-E86D-4B27-A0DD-6062273C8848">
<ns0:Num>SEC. 25.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53631.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53631 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_D1662EB8-3EAE-4D52-B96F-EAB934C844A6">
<ns0:Num>53631.</ns0:Num>
<ns0:LawSectionVersion id="id_96DB3E24-3C23-4089-A790-1EC550DAFC8B">
<ns0:Content>
<html:p>Under those conditions as the treasurer of a local agency fixes with the approval of the legislative body, the treasurer may establish accounts at banks within or without the state and deposit money in those accounts to the extent necessary to pay the principal and interest of bonds to pay any warrant that has been presented for payment, or to fund any electronic disbursement of funds from the treasury of the local agency. This article does not apply to deposits for those purposes.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_9A7EB0FA-8D61-4CFB-9192-08482278E1DA">
<ns0:Num>SEC. 26.</ns0:Num>
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Section 53635 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
</ns0:ActionLine>
<ns0:Fragment/>
</ns0:BillSection>
<ns0:BillSection id="id_F2E92B49-F151-43C2-AA0F-315D65227CE7">
<ns0:Num>SEC. 27.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53635.2.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53635.2 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_BDBD0454-BD23-44B5-A4A9-6C130191BCD4">
<ns0:Num>53635.2.</ns0:Num>
<ns0:LawSectionVersion id="id_43BDD1DE-54A7-4197-ACDF-3FA2292DD309">
<ns0:Content>
<html:p>As far as possible, all money belonging to, or in the custody of, a local agency, including money paid to the treasurer or other official to pay the principal, interest, or penalties of bonds, shall be deposited for safekeeping in state or national banks, public banks, savings associations, federal associations, credit unions, or federally insured industrial loan companies in this state selected by the treasurer or other official having legal custody of the money; or may be invested in the investments set forth in Section 53603. To be eligible to receive local agency money, a bank, savings association, federal association, or federally insured industrial
loan company shall have received an overall rating of not less than “satisfactory” in its most recent evaluation by the appropriate federal financial supervisory agency of its record of meeting the credit needs of California’s communities, including low- and moderate-income neighborhoods, pursuant to Section 2906 of Title 12 of the United States Code. Subdivisions (j) and (k) of Section 53602 shall apply to all investments that are acquired pursuant to this section.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_6258187A-7593-461D-8DC4-4B52C2BF588E">
<ns0:Num>SEC. 28.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53641.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53641 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_D08AB432-AE06-43B0-90B1-246AB05DFCB1">
<ns0:Num>53641.</ns0:Num>
<ns0:LawSectionVersion id="id_DF713B01-5DBC-4B65-B6F4-D525A9108F8D">
<ns0:Content>
<html:p>When money is deposited in a depository, the treasurer or other authorized official shall take and preserve a receipt, certificate of deposit, or other evidence of the deposit as they require.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_65227D23-16D6-4F95-A4DA-92D9047A7DF5">
<ns0:Num>SEC. 29.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'53651.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 53651 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_837561D6-B511-4F0B-AC8E-338EED5DA46B">
<ns0:Num>53651.</ns0:Num>
<ns0:LawSectionVersion id="id_959DADDB-1E64-4B94-AAAA-B0D5DF22BA7E">
<ns0:Content>
<html:p>Eligible securities are any of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
United States Treasury notes, bonds, bills or certificates of indebtedness, or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans, so long as the loans are obligations for which the faith and credit of the United States are pledged for the payment of principal and interest.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Notes or bonds or any obligations of a local public agency (as defined in the United States Housing Act of 1949) or any obligations of a public housing agency (as defined in the United States Housing Act of 1937) for which the faith and credit of the United
States are pledged for the payment of principal and interest.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Bonds of this state or of any local agency or district of the State of California having the power, without limit as to rate or amount, to levy taxes or assessments to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation or assessment by the local agency or district, and in addition, limited obligation bonds pursuant to Article 4 (commencing with Section 50665) of Chapter 3 of Division 1, senior obligation bonds pursuant to Article 5 (commencing with Section 53387) of Chapter 2.7, and revenue bonds and other obligations payable solely out of the revenues from a revenue-producing property owned, controlled or operated by the state, local agency or district or by a department, board, agency or authority thereof.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Bonds of any public housing agency (as defined in
the United States Housing Act of 1937, as amended) as are secured by a pledge of annual contributions under an annual contribution contract between the public housing agency and the Public Housing Administration if such contract shall contain the covenant by the Public Housing Administration which is authorized by subsection (b) of Section 22 of the United States Housing Act of 1937, as amended, and if the maximum sum and the maximum period specified in the contract pursuant to that subsection 22(b) shall not be less than the annual amount and the period for payment which are requisite to provide for the payment when due of all installments of principal and interest on the obligations.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Registered warrants of this state.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by the United States Postal Service, federal
land banks or federal intermediate credit banks established under the Federal Farm Loan Act, as amended, debentures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933, as amended, consolidated obligations of the federal home loan banks established under the Federal Home Loan Bank Act, bonds, debentures and other obligations of the Federal National Mortgage Association or of the Government National Mortgage Association established under the National Housing Act, as amended, bonds of any federal home loan bank established under that act, bonds, debentures and other obligations of the Federal Home Loan Mortgage Corporation established under the Emergency Home Finance Act of 1970, and obligations of the Tennessee Valley Authority.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Notes, tax anticipation warrants or other evidence of indebtedness issued pursuant to Article 7 (commencing with Section
53820), Article 7.5 (commencing with Section 53840) or Article 7.6 (commencing with Section 53850) of this Chapter 4.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
State of California notes.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Bonds, notes, certificates of indebtedness, warrants or other obligations issued by: (1) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or any local agency thereof having the power to levy taxes, without limit as to rate or amount, to pay the principal and interest of such obligations, or (2) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or a department, board, agency or authority thereof except bonds which provide for or are issued pursuant to a law which may contemplate a subsequent legislative appropriation as an assurance of the continued operation and solvency of the department, board, agency or authority but which does not constitute a valid
and binding obligation for which the full faith and credit of such state or the Commonwealth of Puerto Rico are pledged, which are payable solely out of the revenues from a revenue-producing source owned, controlled or operated thereby; provided the obligations issued by an entity described in (1), above, are rated in one of the three highest grades, and such obligations issued by an entity described in (2), above, are rated in one of the two highest grades by a nationally recognized investment service organization that has been engaged regularly in rating state and municipal issues for a period of not less than five years.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, Inter-American Development Bank, the Government Development Bank of Puerto Rico, the Asian Development Bank, the International Finance Corporation, or the African Development Bank.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Participation certificates of the Export-Import Bank of the United States.
</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
Bonds and notes of the California Housing Finance Agency issued pursuant to Chapter 7 (commencing with Section 51350) of Part 3 of Division 31 of the Health and Safety Code.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
Promissory notes secured by first mortgages and first trust deeds which comply with Section 53651.2.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
Any bonds, notes, warrants, or other evidences of indebtedness of a nonprofit corporation issued to finance the construction of a school building or school buildings pursuant to a lease or agreement with a school district entered into in compliance with the provisions of Section 39315 or 81345 of the Education Code, and also any bonds, notes, warrants or other evidences of indebtedness
issued to refinance those bonds, notes, warrants, or other evidences of indebtedness as specified in Section 39317 of the Education Code.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
Any municipal securities, as defined by Section 3(a)(29) of the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec. 78, as amended), which are issued by this state or any local agency thereof.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
With the consent of the treasurer, letters of credit issued by the Federal Home Loan Bank of San Francisco which comply with Section 53651.6.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For local
agencies described in paragraph (3) of subdivision (h) of Section 53603, an eligible bank that has been selected by the treasurer for the safekeeping of money belonging to, or in the custody of, the local agency, and that has its headquarters located outside of the state, may submit letters of credit that are drawn on its regional federal home loan bank as security, subject to the terms set forth in Section 53651.6.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
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