49:2B-18. Bonds secured by amounts in trust

18.a. Any refunding bonds and any coupons appertaining thereto shall no longer be deemed to be outstanding, shall no longer constitute a direct obligation of the State of New Jersey and the faith and credit of the State shall no longer be pledged to the payment of the principal of and interest on those bonds, and those bonds shall be secured solely by and payable solely from moneys and government securities deposited in trust with the State Treasurer, to be held separate and apart from all other funds of the State, or in trust with one or more trustees or escrow agents, which trustees or escrow agents shall be trust companies or national or State banks having powers of a trust company, located either within or without the State, whenever there shall be deposited in trust with the State Treasurer or with the trustees or escrow agents either moneys or government securities (including government securities issued or held in book-entry form on the books of the Department of the Treasury of the United States) the principal of and interest on which when due will provide money which, together with moneys, if any, deposited with the State Treasurer or with the trustees or escrow agents at the same time, shall be sufficient to pay when due the principal of, redemption premium, if any, and interest due and to become due on those bonds on or prior to the redemption date or maturity date of those bonds, as the case may be; except that government securities shall not be subject to redemption prior to their maturity other than at the option of the holder thereof; and except that those moneys and government securities shall be deposited with the State Treasurer or with one or more trustees or escrow agents as provided in the resolution of the issuing officials authorizing the issuance of the refunding bonds for which the deposit is made.

b. The State of New Jersey hereby covenants with the holders of any refunding bonds for which government securities or moneys shall have been deposited in trust with the State Treasurer or with the trustees or escrow agents as provided in subsection a. of this section that, except as provided in subsection c. of this section, neither the government securities nor moneys so deposited with the State Treasurer or with the trustees or escrow agents as provided in subsection a. of this section that, except as provided in subsection c. of this section, neither the government securities nor moneys so deposited with the State Treasurer or with the trustees or escrow agents shall be withdrawn or used by the State for any purpose other than, and shall be held in trust for, the payment of the principal of, redemption premium, if any, and interest to become due on those bonds; except that any cash received from the principal or interest payments on government securities deposited with the State Treasurer or with trustees or escrow agents: (1) to the extent that cash will not be required at any time for that purpose, shall be paid over to the State as received by the State Treasurer or by the trustees or escrow agents, free and clear of any trust, lien, pledge or assignment securing those bonds, and (2) to the extent that cash will be required for that 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, redemption premium, if any, and interest to become due on hose bonds on and prior to the redemption date or maturity date of those bonds, as the case may be, and interest earned from those reinvestments shall be paid over to the State, as received by the State Treasurer or by the trustees or escrow agents, free and clear of any trust, lien or pledge securing those bonds.

c. Notwithstanding anything to the contrary contained in this section: (1) the State Treasurer or trustees or escrow agents shall, if so directed by the issuing officials, apply moneys on deposit with the State Treasurer or with those trustees or escrow agents pursuant to the provisions of this section and redeem or sell government securities so deposited with the State Treasurer or with those trustees or escrow agents and apply the proceeds thereof to (a) the purchase of the refunding bonds which were refinanced by the deposit with the State Treasurer or with the trustees or escrow agents of those moneys and government securities and immediately thereafter cancel all refunding bonds so purchased, or (b) the purchase of different government securities, if the moneys and government securities on deposit with the State Treasurer or with the trustees or escrow agents after the purchase and cancellation of the refunding bonds or the purchase of different government securities shall be sufficient to pay when due the principal of, redemption premium, if any, and interest on all other refunding bonds in respect of which the moneys and government securities were deposited with the State Treasurer or with the trustees or escrow agents on or prior to the redemption date or maturity date of the refunding bonds, as the case may be; and (2) if on any date, as a result of any purchases and cancellations of refunding bonds or any purchases of different government securities as provided in this subsection, the total amount of moneys and government securities remaining on deposit with the State Treasurer or with the trustees or escrow agents is in excess of the total amount which would have been required to be deposited with the State Treasurer or with the trustees or escrow agents on the date in respect of the remaining refunding bonds for which that deposit was made in order to pay when due the principal of, redemption premium, if any, and interest on those remaining refunding bonds, the State Treasurer or the trustees or escrow agents shall, if so directed by the issuing officials, pay the amount of that excess to the State free and clear of any trust, lien, pledge or assignment securing those refunding bonds.

L.1985, c.74, s.18.