Bond Finance & Investment
The only information on this website that is posted with the intention of reaching the investing public, including the Department’s bondholders, rating analysts, financial advisors, or any other members of the investment community, is located on the Bond and Investor Information web pages, access to which requires review of and consent to the conditions contained in this Disclaimer.
Bond Finance Division Objectives
The Division's primary goal is to implement a financing plan to provide mortgage loan funds, reduce unnecessary operational costs and monitor compliance with contractual covenants with respect to bonds.
Mission Statement:
The Mission of the Bond Finance Division is to provide a base of financial resources for the CalVet program, monitor compliance with contractual covenants with respect to bonds and monitor that the CalVet mortgage home loan program is able to meet the current and future needs of the veterans.
Background:
The Bond Finance Division has been established for over ten years and consists of a Chief, Staff Manager, four staff and an office technician. The Division manages the $2 billion debt portfolio of the Farm and Home Loan Program. The Division is also responsible for generating proceeds by conducting both taxable and tax-exempt bond sales, to provide funds for Farm and Home loans to veterans. In addition, the Division is responsible for cash flow management and the investment of unused cash.
Department Bonds
The Department began making low interest rate farm and home financing available to veterans after World War I, following the enactment by the Legislature of the Veterans Farm and Home Purchase Act of 1921. In 1943, the Legislature enacted the 1943 Act, which modified the Program to meet new needs of veterans. The 1943 Act was superseded by the Veterans Farm and Home Purchase Act of 1974 (the “1974 Act”), which again modified the Program. The 1943 Act established the 1943 Fund in the State Treasury, which is the principal source of funds utilized by the Program.
The Bond Finance and Investment Division (“Bond Finance”) is primarily responsible for administering the Department's outstanding debt programs. Under the Department’s Farm and Home Purchase Program (the “Program”), the Department acquires residential property, selected by eligible veteran, to be sold to such eligible veterans under contracts of purchase between the Department and such veterans (“Contracts of Purchase”). Such acquisitions are financed principally with the proceeds of bonds and commercial paper, including State of California Veterans General Obligation Bonds (“Veterans G.O. Bonds”) and Department of Veterans Affairs of the State of California Home Purchase Revenue Bonds (“Revenue Bonds”). The Department's ability to utilize tax-exempt municipal bonds generally produces below-market interest rate funds. An investor’s interest income from municipal bonds generally is exempt from federal, state, and local taxes. Interest rates on “tax-exempt” municipal bonds, therefore, generally are lower than interest rates on comparable “taxable” bonds sold to investors at the same time. This spread between tax-exempt and taxable bond interest rates creates the interest rate subsidy that typically produces the below market mortgage interest rates provided to the veterans.
The Department's authority to issue bonds is derived from its enabling legislation. The tax exemption of Department bonds is permitted under the provisions of the Internal Revenue Code. On an annual basis, the Department may issue only a limited amount of tax-exempt Veterans G.O. Bonds due to Internal Revenue Code imposed maximums and State Voter imposed limitations. The Department's capacity to issue Department of Veterans Affairs of the State of California Home Purchase Revenue Bonds (“Revenue Bonds”) for veterans is subject to the California Debt Allocation Committee’s rulings for State tax-exempt bond volume cap and is also subject to a state law maximum on outstanding Revenue Bonds.
Revenue Bonds
Revenue Bonds (which include all Bonds issued pursuant to Resolution RB-1), are special obligations of the Department payable solely from, and equally and ratably secured with other Revenue Bonds by a pledge of, (i) an undivided interest in the assets of the Veterans’ Farm and Home Building Fund of 1943 (the “1943 Fund”) other than proceeds of Veterans G.O. Bonds and any amounts in any Rebate Account (which account holds monies that are subject to rebate to the United States pursuant to federal tax law), (ii) the Bond Reserve Account and (iii) the Loan Loss Account. The undivided interest in the assets of the 1943 Fund is secondary and subordinate to any interest or right in the 1943 Fund of the people of the State and of the holders of Veterans G.O. Bonds. The Department has no taxing power. Neither the faith and credit nor the taxing power of the State or any political subdivision thereof is pledged to the payment of the principal of or the interest on the Revenue Bonds.
Veterans G.O. Bonds
The Veterans G.O. Bonds are general obligations of the State. The issuance is authorized by Bond Acts approved by the voters of the State of California and by resolutions of the Veterans Finance Committee of 1943. The Veterans G.O. Bonds are authorized by specific Bond Acts, to provide funds, or to refinance obligations that were issued to provide funds, for the financing of Contracts of Purchase.
Bond & Investor Information
Financial and Operating Data Relating to Bonds
The Bond and Investor Information Web pages provide information about Veterans G. O. Bonds and Veterans Revenue Bonds, which involve different sources of payment and security, are different obligations (if any) of the Department, and have different limitations on such bonds. In addition, redemption provisions may differ within any series of bonds. You should refer to the official statement for any particular bonds for additional information.
Please take a few minutes to read the following Terms of Use and indicate your acknowledgment before accessing the rest of the Bond and Investor Information section. You may be tempted to click through the Terms of Use, but they are essential to understanding the Bond and Investor Information presented on this Web site.
Terms of Use
1. Not an Offer to Sell/Buy Securities: The information provided in this Web site does not constitute an offer to sell or buy securities or the solicitation of an offer to sell or buy securities and should not be relied upon to provide specific offering information in connection with any issuance, sale, resale, or remarketing of bonds, notes, or other obligations.
2. Dates of Documents: Any financial document contained in the Bond and Investor Information section of this Web site is marked with a Dated Date and speaks only as of that Dated Date, which may be prior to the date it is posted on this Web site. You are cautioned not to assume that any information has been updated beyond the Dated Date unless a document expressly states that it constitutes an update of a specific portion of a document. No inference should be made that the operations of the State and/or the Department and/or other economic conditions have remained the same since the Dated Date. The Department expressly disclaims any duty to provide an update of any document contained in the Bond and Investor Information Web pages.
3. Information is Subject to Change Without Notice and May Not Be Updated: The Department is under no obligation to update any information included in this Web site. The information and expressions of opinion herein are subject to change without notice and the posting of information on this Web site does not imply that there has been no change in the affairs of the Department.
4. Estimates or Other Forward-Looking Statements: The documents contained in the Bond and Investor Information Web pages may make “forward-looking statements” by using forward-looking words such as “may,” “will,” “should,” “expects,” “believes,” “anticipates,” “estimates,” or others. You are cautioned that forward-looking statements are subject to a variety of uncertainties that could cause actual results to differ from the projected results. Because we cannot predict all factors that may affect future decisions, actions, events, policy decisions, or financial circumstances, what actually happens may be different than what is included in forward-looking statements.
5. Links to Other Web sites: Links to other Web sites have been avoided in the Bond and Investor Information Web pages. Rather, we may provide addresses of other Web sites to allow you independent access to other organizations whose expertise may be of value as an educational or reference tool. If you access one of these Web sites, remember that the Department has not participated in the preparation, compilation, or selection of information on any other Web site, and assumes no responsibility or liability for the views, content, or accuracy of any other Web site.
6. Investment Decisions: The Bond and Investor Information Web pages are not intended to replace any information or consultation provided by a professional financial advisor. Other than the specific information presented in the Bond and Investor Information Web pages, no other information on our Web site is intended to be the basis of or should be relied upon in making an investment decision.
7. Unauthorized Use Not Permitted: This is the official Web site of the Department. The Department disclaims all responsibility for any copies, modifications, and reproductions of this Web site or the information it contains that are not produced by the Department. All users of the Bond and Investor Information Web pages of the Department’s Web site remain subject to the general Terms of Use and Disclaimers of the Department’s Web site.
8. Other Information May Be Available: The Bond and Investor Information Web pages are provided for the user’s convenience, but they may not provide all information that may be of interest to investors. There may be other documents containing relevant information regarding the Department which may be available from other sources.
[Unless otherwise indicated, this website is current as of December 1, 2008.]
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