(a) The department may incur indebtedness and issue bonds as evidence thereof, provided that bonds may not be issued in an amount the debt service on which, to the extent payable from the fund, is estimated by the department to exceed the amounts estimated to be available in the fund for their payment.

(b) The department may authorize the issuance of bonds (excluding notes issued in anticipation of the issuance of bonds and retired from the proceeds of those bonds) in an aggregate amount up to the greater of thirteen billion four hundred twenty-three million dollars ($13,423,000,000) or the amount calculated by multiplying by a factor of four the annual revenues generated by the California Procurement Adjustment, as determined by the commission pursuant to Section 360.5 of the Public Utilities Code if the aggregate amount does not exceed thirteen billion four hundred twenty-three million dollars ($13,423,000,000).

(c) This section does not prohibit the department from issuing bonds prior to the effective date of this bill based upon the authorization granted to the department by the provisions of Chapter 4 of the Statutes of 2001–02 First Extraordinary Session.

(d) (1) Refunding bonds for any of the following purposes shall not be included in the calculation of the aggregate amount:

(A) Refunding bonds to obtain a lower interest rate.

(B) Refunding bonds bearing a variable interest rate with bonds bearing interest at a fixed interest rate.

(C) Refunding bonds if any nationally recognized rating agency reduces or withdraws, or proposes to reduce or withdraw, the rating assigned to securities that are secured by bond insurance policies, credit or liquidity facilities issued by the provider of a bond insurance policy, or a credit or liquidity facility securing the bonds being refunded.

(2) All refunding bonds issued by the department under this chapter before January 1, 2010, shall be deemed to have been issued for one or more purposes described in this subdivision and shall not be included in the calculation of the aggregate amount.

(e) In addition, before the issuance of bonds in a public offering, the department shall establish a mechanism to ensure that the bonds will be sold at investment grade ratings and repaid on a timely basis from pledged revenues. This mechanism may include, but is not limited to, an agreement between the department and the commission as described in Section 80110.

(Amended by Stats. 2009, Ch. 154, Sec. 1. (AB 1550) Effective January 1, 2010.)