Bonds or other evidences of indebtedness of, or which are unconditionally guaranteed by the State of Israel, the United States of Mexico, the Commonwealth of Puerto Rico, or any state of the United States other than California, for the payment of both principal and interest of which in United States dollars, the faith and credit of that entity is pledged; in limited obligations; and in the bonds or other evidences of indebtedness of any city, county, political subdivision, public corporation, or district (herein referred to generally as public corporations) of any state of the United States other than California, or of the State of Israel, or of the United States of Mexico, or of the Commonwealth of Puerto Rico, having the power without limit as to rate or amount to levy taxes to pay the principal and interest of those bonds upon all property within its boundaries subject to taxation by that public corporation; subject to the following:

(a) In the case of bonds constituting general obligations of any such state, commonwealth, dominion, or country, the state, commonwealth, dominion, or country has not within 10 years prior to that investment defaulted for a period of more than 90 days in the payment of any part of either principal or interest of any of its debts.

(b) In the case of limited obligations of any such state or commonwealth, (1) that the state or commonwealth has not within 10 years prior to the date of the investment defaulted for a period of more than 90 days in the payment of either principal or interest of any of its debts; (2) the special taxes pledged for the payment of the limited obligations shall have been collected for five fiscal years next preceding any investment and during the five fiscal years shall have averaged at least 11/2 times the debt service requirements, including those for principal, interest, and sinking fund, on all such special obligations existing at the time; and (3) the special taxes for each of those five fiscal years shall have equaled at least the amount of all the debt service requirements on those special obligations.

(c) In the case of bonds or other evidences of indebtedness of any public corporation of any state other than California, or of such commonwealth:

(1) The public corporation has had a corporate existence or been otherwise established and functioning for at least 10 years prior to the time of the investment.

(2) The public corporation has a population of at least 50,000 inhabitants according to the last federal or state census.

(3) The public corporation for a period of at least 10 years prior to the investment has not defaulted in the payment of any part of the principal or interest of any of its debts for a period of more than 90 days.

(4) The net direct debt together with the net overlapping debt of the public corporation does not exceed 10 percent of the assessed valuation of the property subject to taxation by the public corporation according to the last, official equalized assessment roll or list upon the basis of which taxes for debt service are based. For the purposes of this subdivision:

(A) The term “net direct debt” of any public corporation means all indebtedness of every kind after deducting from that indebtedness sinking funds available for the payment thereof, any indebtedness evidenced by tax anticipation notes for the payment of which nondelinquent taxes are pledged, obligations payable only from special assessments, revenue obligations payable only from special revenues pledged for their payment, and the proportion of any indebtedness issued for revenue-producing works, properties, or utilities which have been in operation for at least one year as the amount of the annual net revenue therefrom bears to the amount of the annual debt service requirements of those bonds.

(B) The term “net overlapping debt” of any public corporation means that proportion of the net direct debt, as defined, of any other public corporation (herein called overlapping corporation) which lies wholly or partially within the boundaries of the public corporation as the assessed valuation of the taxable property of the overlapping public corporation lying within the boundaries of the public corporation as shown by the last official equalized county assessment roll bears to the assessed valuation of all taxable property of the overlapping public corporation as shown by the last official equalized county assessment roll.

(Added by Stats. 1988, Ch. 718, Sec. 14.)