(a)  An agency may purchase its bonds as follows:

(1)  At a price not more than the sum of their principal amount and accrued interest plus (if the bonds purchased are callable at a premium) an amount not to exceed the premium that would be applicable if the bonds were purchased on the next following call date.

(2)  At a higher price if a majority of the members of the agency determine, based upon substantial evidence, that under then prevailing conditions the purchase would be of financial advantage to the agency. Prior to purchasing bonds pursuant to this paragraph, the agency shall adopt a resolution designating paragraph (1), (2), or (3) of subdivision (b) as the financial advantage accruing to the agency from the bond purchase or specifying in detail any alternative basis for the agency’s finding of financial advantage. Unless the legislative body has designated itself as the redevelopment agency, the agency shall additionally obtain the approval of the legislative body for repurchase of agency bonds under this subdivision and, if applicable, under Section 33640.

A resolution of the legislative body approving repurchase of agency bonds under this subdivision shall be operative only for the period specified in the resolution of the legislative body, not to exceed five years. However, the authorization may be renewed by an appropriate resolution of the legislative body and the expiration of the legislative body’s resolution shall in no way impair the obligation of bonds previously issued by the agency to refund bonds purchased under this subdivision.

(b)  “Financial advantage,” as used in subdivision (a), includes, but is not limited to, each of the following:

(1)  A reduction in the aggregate debt service on the agency’s outstanding bonds.

(2)  The creation of opportunities to more efficiently leverage revenues of the agency.

(3)  Cancellation of agency bonds subject to adverse provisions of, or tax consequences under, the laws of the United States.

(c)  Any bond purchases made pursuant to this section shall be (1) identified in the agency’s annual fiscal year report required by Section 33080.1 for the fiscal year in which the purchase was made and (2) reflected in the agency’s statement of indebtedness filed pursuant to Section 33675.

(d)   Within two weeks following a purchase of bonds pursuant to paragraph (2) of subdivision (a), the redevelopment agency shall transmit to the California Debt Advisory Commission a copy of the agency’s resolution specifying the financial advantage to the agency in making the purchase, together with a covering letter that includes all of the following information respecting the bonds purchased:

(1)  The date of the agency’s resolution authorizing the bonds, the date of issuance of the bonds, and any other information necessary to identify the particular issuance or series of bonds.

(2)  The terms of redemption to which the bonds were originally subject.

(3)  The denominations and interest rates of the bonds purchased.

(4)  The purchase price.

(e)  All bonds purchased pursuant to this section shall be canceled.

(Amended by Stats. 1987, Ch. 365, Sec. 1.)