§ 40-36-13 — Exchange or sale of refunding bonds

Refunding bonds may be sold or exchanged in installments at different times, or an entire
issue or series may be sold or exchanged at one time. Any issue or series of refunding bonds
may be exchanged in part or sold in part in installments at different times or at one time, and
such bonds may be sold or exchanged at any time on, before, or after the maturity of any of the
outstanding notes, bonds, certificates, or other obligations to be refinanced thereby. If the
governing body shall determine to:
1. Exchange any refunding bonds, such bonds may be exchanged privately for, and in
payment and discharge of, any of the outstanding notes, bonds, or other obligations of
the municipality issued to finance or to aid in financing the acquisition, construction,
improvement, or refinancing of an enterprise. The refunding bonds may be exchanged
for a like or a greater principal amount of such notes, bonds, or other obligations of the
municipality. The principal amount of the refunding bonds, however, may exceed the
principal amount of outstanding notes, bonds, or other obligations for which they are
exchanged only to the extent necessary or advisable, in the discretion of the governing
body, to fund interest in arrears or about to become due. The holder or holders of such
outstanding notes, bonds, or other obligations need not pay accrued interest on the
refunding bonds to be delivered in exchange therefor if, and to the same extent that,
interest is due or accrued and unpaid on such outstanding notes, bonds, or other
obligations to be surrendered.
2. Sell any refunding bonds, such bonds shall be sold at not less than ninety-eight
percent of par at public or private sale in such manner and upon such terms as the
governing body shall deem for the best interests of the municipality.
3. Exchange or sell any refunding bonds more than six months in advance of the date on
which the bonds being refunded mature or are redeemable in accordance with their
terms to reduce the debt service costs, extend or adjust maturities in relation to the
revenues pledged for payment of the bonds, permit the more advantageous sale of

additional bonds, or any other purpose deemed necessary or desirable by the
governing body, then the proceeds of the refunding bonds, including any premium and
accrued interest, shall be deposited in escrow with a suitable bank or trust company,
having its principal place of business within or without the state, and shall be invested
in such amount and in securities maturing on such dates and bearing interest at such
rates as shall be required to provide funds sufficient to pay when due the interest to
accrue on each bond refunded to its maturity or, if it is prepayable and called for
redemption, to an earlier prior date upon which it may be called for redemption, and to
pay and redeem the principal amount of each such bond at maturity or, if prepayable
and called for redemption, at the earlier redemption date, and any premium required
for redemption on such date, or in the case of a crossover refunding, must be invested
in securities irrevocably appropriated to the payment of principal and interest on the
refunding bonds until the date the proceeds are applied to the payment or redemption
of the bonds to be refunded. The governing body's resolution authorizing the refunding
bonds shall irrevocably appropriate for these purposes the escrow fund and all
investments thereof, which shall be held in safekeeping by the escrow agent, and all
income therefrom, and may provide for the call for redemption of all prepayable bonds
in accordance with their terms. The securities to be purchased with the escrow fund
shall be limited to general obligations of the United States, securities whose principal
and interest payments are guaranteed by the United States, and securities issued by
the following United States government agencies: banks for cooperatives, federal
home loan banks, federal intermediate credit banks, federal land banks, and the
federal national mortgage association. Such securities shall be purchased
simultaneously with the delivery of the refunding bonds. Moneys on hand in the sinking
fund maintained for the payment of the outstanding bonds, and not immediately
needed for the payment of interest or principal due, or other legally available funds of
the municipality may likewise be deposited in the escrow fund and invested in the
same manner as the proceeds of the new bonds, to the extent consistent with the
provisions of resolutions authorizing the outstanding bonds.