§ 11-56-108 — Application of bond proceeds - procedures - limitations

(1) The
proceeds derived from the issuance of refunding bonds under the provisions of this
article, together with other legally available funds, if any, of the public body, shall
either be immediately applied to the payment or redemption and retirement of the
obligations to be refunded and the cost and expense incident to such procedures or
shall be placed in escrow or trust to be applied for the purposes and in the manner
required or permitted under this article as the governing body may determine.

(2) Proceeds of refunding bonds, including proceeds of special obligation
refunding bonds, if any, and other moneys which are placed in escrow or trust,
pursuant to the determination and direction of the governing body, shall be used
and applied for the following purposes and in the following manner, the details of
which shall be set forth in full and at length in the escrow agreement:

(a) For the purpose of paying the principal of, interest on, and prior
redemption premiums, if any, for the obligations refunded only;

(b) For the purpose of paying all or specified portions of the principal of,
interest on, and prior redemption premiums, if any, for the obligations to be
refunded or the refunding bonds or any combination thereof;

(c) For the purpose of paying all of the principal of, interest on, and prior
redemption premiums, if any, for the obligations refunded, and all of the principal
of, interest on, and prior redemption premiums, if any, for all special obligation
refunding bonds issued as a part of the refunding transaction;

(d) In specified portions, for one or more or all of the purposes described in
this subsection (2).

(3) The escrow agreement shall in each case designate and set forth with
regard to the obligations refunded, the refunding bonds, and the special obligation
refunding bonds, if any:

(a) Any amounts of principal, interest, prior redemption premiums, and costs
and expenses of the refunding transaction to be payable from the escrow or trust
account; including, without limiting the generality of the foregoing, the
capitalization of interest on the refunding bonds for such period of time as the
governing body may determine;

(b) Whether each such amount is to be payable:

(I) From funds originally placed in such escrow or trust account; or

(II) From the interest or other income derived from the investment of the
funds originally placed in such escrow or trust account; or

(III) From a specified combination of subparagraphs (I) and (II) of this
paragraph (b), and, if so, in what proportions; or

(IV) From any moneys in such account without specification or restriction;
and

(c) The order and priority, if any, which is to govern the use and application of
all or any part of the funds held in said escrow or trust account to payment of any
such amounts.

(4) The incidental costs and expenses of the refunding transaction may be
paid by the purchaser of the refunding bonds, or by the public body from any
general fund, subject to appropriations therefor and any other limitations on the
use thereof as otherwise provided by law, or from other available revenues of the
public body under the control of the governing body, or from the proceeds of the
refunding bonds, or from the interest or other yield derived from the investment of
any refunding bond proceeds or other moneys placed in the escrow or trust, or from
any other sources legally available therefor, or any combination thereof, as the
governing body may determine.

(5) Any accrued interest and any premium appertaining to a sale of
refunding bonds may be applied to the payment of the interest thereon or the
principal thereof, or to both interest and principal, or may be deposited in a reserve
therefor, or may be used to pay refunded obligations by deposit in the escrow or
trust account, or otherwise, or may be used to defray any incidental costs and
expenses appertaining to the refunding, or any combination thereof, as the
governing body may determine. In the event of any use of such accrued interest or
premium other than for payment of interest on or principal of the refunding bonds,
or as a reserve therefor, the net interest cost figures on the refunding bonds used in
making the computations required in sections 11-56-105 (6) and 11-56-107 (1) shall
be adjusted upward accordingly to reflect the amounts actually to be paid by the
public body.

(6) For the purpose of implementing the provisions of this article, the
governing body shall have the power to enter into escrow agreements and to
establish escrow or trust accounts with any commercial bank having full trust
powers located within the state of Colorado and which is a member of the federal
deposit insurance corporation under protective covenants and agreements whereby
such accounts shall be fully secured as provided by section 11-56-109.

Legislative History

Source: L. 77: Entire article added, p. 589, � 1, effective July 1. L. 83: (3)(a) amended, p. 508, � 2, effective April 22.