§39-71 Refunding revenue obligations. (a) Whenever the State or any department thereof shall have outstanding any revenue bonds, and the department with the approval of the governor and the director of finance, determines that it will be financially sound and advantageous to the State to refund any outstanding revenue bonds, the department with the approval of the governor but without further authorization of the legislature, shall have the power to provide for the issuance of refunding revenue bonds with which to provide for the payment of the outstanding revenue bonds or any part thereof at or before the maturity or redemption date thereof, with the right to include various series and issues of the outstanding revenue bonds in a single issue of refunding revenue bonds, to pay any redemption premium and interest to accrue and become payable on the outstanding revenue bonds being refunded, and to establish reserves for the refunding revenue bonds and partly to refund outstanding revenue bonds and partly for the construction or acquisition of improvements and additions to and extensions of the undertaking for the construction or acquisition of which the outstanding revenue bonds were issued or, in the case of a loan program, partly to extend the loan program.

(b) The refunding revenue bonds shall be payable solely from and secured by the revenue of the loan program or undertaking, or the user taxes derived with respect to the undertaking, or a combination of both, from which were payable and by which were secured the outstanding revenue bonds to be refunded, and shall be a valid claim only as against the revenue or user taxes, or combination of both. Refunding revenue bonds issued for the purpose of establishing and administering a loan program may also be secured by a pledge of all or a portion of undertakings, mortgages, and other obligations held by the department as security for a loan made under the program. The interest rate or rates of the refunding revenue bonds shall not be limited by the interest rate or rates borne by any of the revenue bonds to be refunded thereby.

The refunding revenue bonds, in the discretion of the department and with the approval of the governor and the director of finance, may be exchanged at par for the revenue bonds which are being refunded or may be sold in the manner provided in this part for revenue bonds, as the department deems to be in the best interest of the State.

The refunding revenue bonds may be issued and delivered at any time prior to the date of maturity or redemption date of the revenue bonds to be refunded that the department deems to be in the best interest of the State. The refunding revenue bonds, except as specifically provided in this section, shall be issued in accordance with the provisions of this part with respect to revenue bonds. Pending the time the proceeds derived from the sale of refunding revenue bonds issued under this part are required for the purposes for which they were issued, the proceeds, upon authorization or approval of the governor, may be invested in obligations of, or obligations unconditionally guaranteed by the United States of America, or in savings accounts, time deposits, or certificates of deposit of any bank or trust company within or without the State, to the extent that such savings accounts, time deposits, or certificates of deposit are collaterally secured by a pledge of obligations of, or obligations unconditionally guaranteed by, the United States of America; or in obligations of any state of the United States of America or any agency, instrumentality, or local government thereof, the provision for payment of the principal and interest which shall have irrevocably been made by deposit of obligations of, or obligations unconditionally guaranteed by the United States of America.

To further secure refunding revenue bonds, or the revenue bonds being refunded, or both, the State may enter into a contract with any bank or trust company, within or without the State, with respect to the safekeeping and application of the proceeds of refunding revenue bonds, and the safekeeping and application of the earnings of investment. All revenue bonds refunded and redeemed by the issue and sale or issue and exchange of refunding revenue bonds shall be canceled.

(c) Nothing in this section shall require the department to elect to redeem or prepay revenue bonds being refunded, or to redeem or prepay revenue bonds being refunded which were issued in the form customarily known as term bonds in accordance with any sinking fund installment schedule specified in any proceedings authorizing the issuance thereof, or in the event the department elects to redeem or prepay any bonds, to redeem or prepay as of any particular date or dates. The determination of the department with respect to the financial soundness and advantage of the issuance and delivery of refunding revenue bonds authorized, when approved by the governor and the director of finance shall be conclusive, but nothing in this section shall require the holders of any outstanding revenue bonds being refunded to accept payment thereof otherwise than as provided in the revenue bonds to be refunded. [L 1988, c 28, pt of §3]