• A proposed rule drafted by the California Department of Corporations would affect the offering of debt securities (e.g., notes and bonds) by churches in California. The proposed rule applies only to applications by churches for a permit to sell debt securities in “limited offerings” (securities offerings made only to members, contributors, participants, or family members of such individuals). Among other things, the proposed rule specifies that if any portion of the proceeds from the sale of securities will be used for construction, a “detailed plan of construction and a statement of estimated cost shall be set forth” in the church’s application. Further, the cost estimate must be “substantiated by a qualified independent contractor” and the applicant must demonstrate that the proceeds from the securities will be “sufficient to complete the project.” The church is also required to submit a resolution of its governing board requiring that “all monies received from the sale of securities be deposited in a trust account available only for expenditures on account of the project for which the indebtedness is to be incurred.” Rule 260.140.72.

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