(a) When the governing board of a school district or a community college district deems it in the best interests of the district, it may by resolution, upon terms and conditions that it shall prescribe, issue notes, on a negotiated or competitive-bid basis, maturing within a period not to exceed five years, in anticipation of the sale of bonds authorized pursuant to Section 15100 or Section 15340 at the time the notes are issued. The proceeds from the sale of the notes shall be used only for authorized purposes of the bonds or to repay outstanding notes authorized by this section.

(b) All notes issued and any renewal of notes shall be payable at a fixed time not more than five years from the date of the original issuance of the note. If the sale of the bonds does not occur before the maturity of the notes issued in anticipation of the sale, the fiscal officer of the school district or community college district, in order to meet the notes then maturing, shall issue renewal notes for this purpose. The renewal of a note may not be issued after the sale of bonds in anticipation of which the original note was issued and the maturity date of the renewed note shall not be later than five years from the date of the original issuance of the note.

(c) Every note and any renewal of a note shall be payable from the proceeds of the sale of bonds or of any renewal of notes or from other funds of the school district or community college district lawfully available for the purpose of repaying the notes, including state grants. The total amount of the notes or renewals of notes issued and outstanding may not at any time exceed the total amount of the unsold bonds.

(d) (1) Interest on the notes may be payable from proceeds of the sale of bonds in anticipation of which the notes are issued, including any premium received on the sale of those bonds.

(2) Interest on the notes may be paid from a property tax levied for that purpose under the following conditions:

(A) A resolution of the governing board of the school district or community college district authorizes the levying of the tax. The tax for payment of the interest on the notes is a tax authorized by law for payment of the bonds in anticipation of which the notes are issued.

(B) The principal amount of the notes does not exceed the remaining principal amount of authorized but unissued bonds.

(3) The notes may be issued only if the tax rate levied to pay interest on the notes would not cause the school district or community college district to exceed any of the limitations set forth in Section 15268 or 15270, as applicable.

(e) The original issuance of notes and any renewal of notes may be in the form of commercial paper notes. Each issuance of commercial paper notes to repay outstanding notes shall be deemed to be a renewal of notes subject only to the requirements of this section.

(Amended by Stats. 2012, Ch. 715, Sec. 1. (AB 794) Effective January 1, 2013.)