§ 41-10-469 — Use of Proceeds of Refunding Bonds

The proceeds of refunding bonds shall be applied, together with any other moneys legally available therefor, to the payment of the expenses authorized by this article and to the payment of the principal of, premium, if any, and interest due and to become due on any outstanding bonds to be refunded thereby and, if so required by resolution of the authority, shall be deposited in the State Treasury in an interest account to pay interest on refunding bonds, and in the State Treasury in a reserve account to further secure the payment of the principal of, premium, if any, and interest on any refunding bonds. The expenses authorized by this article shall include, in addition to expenses authorized by other sections hereof, all expenses that the board of directors may deem necessary or advantageous in connection with the sale and issuance of such refunding bonds, including without limitation, the expenses of selling and issuing such refunding bonds (including any discount reflected in the purchase price thereof paid to the authority), fees and disbursements of attorneys, accountants, fiscal agents, financial advisors and other consultants, fees and disbursements of trustees, escrow agents, registrars, paying agents, transfer agents, depositories for safekeeping, authenticating agents, agents for the delivery and payment of bonds, fees and commissions of bond insurers and credit enhancers, printing costs and other customary bond issuance expenses. To the extent not required for the immediate payment of outstanding bonds or for deposit into an interest account or a reserve account, proceeds of refunding bonds together with any other moneys legally available therefor, shall be deposited with the State Treasurer, in trust, to be held separate and apart from all other funds of the state, or, with the approval of the State Treasurer, shall be deposited in trust, on such terms as the State Treasurer shall approve, with one or more trustees or escrow agents, which trustees or escrow agents shall be trust companies or national or state banks, located either within or without the state, having powers of a trust company. Any such proceeds or moneys deposited in trust with the State Treasurer or with one or more trustees or escrow agents shall be applied solely to the payment when due of the principal of, premium, if any, and interest due and to become due on the outstanding bonds on or prior to the redemption date or maturity date thereof, as the case may be. Any such proceeds or moneys so held by the State Treasurer or deposited with one or more trustees or escrow agents, may be invested in government securities; provided, such government securities shall not be subject to redemption prior to their maturity other than at the option of the holder thereof. Except as provided in the immediately succeeding sentence, neither the government securities nor moneys so deposited with the State Treasurer, or with one or more trustees or escrow agents, shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of, redemption premium, if any, and interest on such outstanding bonds to be refunded thereby; provided that any cash received from such principal or interest payments on such government securities deposited with the State Treasurer, or with one or more trustees or escrow agents, (a) to the extent such cash will not be required at any time for such purpose, shall be retained by, or paid over to the State Treasurer, as the case may be, for deposit to the account of the authority, and (b) to the extent such cash will be required for such purpose at a later date, shall, to the extent practicable and legally permissible, be reinvested in government securities maturing at times and in amounts sufficient to pay when due the principal of, premium, if any, and interest on such outstanding bonds on and prior to such redemption date or maturity date thereof, as the case may be, and interest earned from such reinvestments to the extent not required for the payment of such outstanding bonds shall be retained by, or paid over to the State Treasurer, as the case may be, for deposit to the account of the authority. Notwithstanding anything to the contrary contained herein: (a) moneys on deposit pursuant to the provisions of this section may be applied and government securities so deposited may be redeemed and sold and the proceeds thereof applied to (i) the purchase of the outstanding bonds which were refunded by the deposit with the State Treasurer or with one or more trustees or escrow agents of such moneys and government securities and immediately thereafter all outstanding bonds so purchased shall be cancelled, or (ii) the purchase of different government securities; provided, however, that the moneys and government securities on deposit with the State Treasurer or with one or more trustees or escrow agents after such purchase and cancellation of such outstanding bonds or such purchase of different government securities shall be sufficient to pay when due the principal of, premium, if any, and interest on all other outstanding bonds in respect of which such moneys and government securities were deposited on or prior to the redemption date or maturity date thereof, as the case may be; and (b) in the event that on any date, as a result of any purchases and cancellations of outstanding bonds or any purchases of different government securities as provided in this sentence, the total amount of moneys and government securities remaining on deposit with the State Treasurer or with one or more trustees or escrow agents, is in excess of the total amount which would have been required to be deposited with the State Treasurer or trustee or escrow agent on such date in respect of the remaining outstanding bonds for which such deposit was made in order to pay when due the principal of, premium, if any, and interest on such remaining outstanding bonds, the State Treasurer shall deposit the amount of such excess in the account of the authority, or the trustee or escrow agent shall, upon the direction of the State Treasurer, pay the amount of such excess to the State Treasurer for deposit to the account of the authority.
The State Treasurer, acting in the capacity of trustee, may name one or more trust companies, national banks, or state banks, located either within or without the state, to act as the State Treasurer’s depository for any funds escrowed pursuant to the provisions of this section.
All applications of proceeds of refunding bonds or other moneys deposited in trust for the payment of outstanding bonds as provided in this section, including without limitation the investment thereof and the sale of any related government securities, shall be at the direction of the authority, but subject to the prior approval of the State Treasurer. Any such approval of the State Treasurer may be given at any time, including without limitation at the time of the adoption by the board of directors of any resolution relating to any bonds and, once given, such approval shall be irrevocable.
Moneys on deposit in any reserve account created pursuant to the provisions of this section shall be invested by the State Treasurer at the direction of the authority in permitted investments which mature at such time or times as the authority shall direct. Interest income earned from such investments shall be deposited as received by the State Treasurer in the account of the authority.

Legislative History

(Acts 1990, No. 90-602, p. 1079, §20.)