(a) General rule.--The proceeds of refunding bonds, together with any other moneys made available for the purpose, shall be used solely for the purpose of retiring the bonds being refunded and for the purpose of paying the costs of the refunding.

(b) When obligations no longer deemed outstanding.--Any bonds or notes to be redeemed or paid shall no longer be deemed to be outstanding for the purpose of determining the net debt of the local government unit or for the purposes of any indenture limitations on repledging revenues when the local government unit has irrevocably deposited with a bank or bank and trust company in a sufficient amount:

(1) Moneys.

(2) Noncallable securities of the Federal Government or of the Commonwealth maturing or payable at par at the option of the holders at or prior to the dates needed for disbursement.

(3) Time deposits or certificates of deposit, with a firm rate of interest or stated minimum rate of interest, issued by a bank or bank and trust company and insured or adequately secured as required by section 8224 (relating to deposit and investment of moneys in sinking funds and other funds).

(4) Any combination of the foregoing.

(c) Deposits equal to principal and interest.--Subject to any relevant contrary law or regulation, the amount deposited may be equal to the principal and interest to become due on the bonds or notes being refunded to the date on which the bonds or notes are stated to mature or any lesser amount computed in accordance with the provisions of subsection (d).

(d) Test of sufficiency.--The deposited amount shall be sufficient when it, together with the interest to be earned thereon, will equal the principal, premium and interest to become due on the bonds or notes being refunded to the earlier of the date at which any bonds or notes are stated to mature or have been called for prior redemption, except that the local government unit shall simultaneously have given the bank or bank and trust company instructions and authority, stated to be irrevocable, to publish any notices of redemption remaining to be published.

(e) Irrevocable call for redemption.--When stated to be irrevocable, the instructions and authority to call bonds or notes for redemption shall become irrevocable upon the delivery thereof or upon the deposit of the moneys or securities in a sufficient amount to effect the redemption, whichever occurs later. Until the irrevocability has occurred, a call for redemption may be revoked by notice given in the same manner as the notice of redemption.

Cross References. Section 8250 is referred to in sections 8110, 8246 of this title.