Sec. 1201.042. USE OF CERTAIN PROCEEDS. (a) An issuer may use the proceeds of a public security issued to finance the acquisition, construction, or improvement of a project or facility to:

(1) pay interest on the public security while the project or facility is being acquired, constructed, or improved and for the year after it is acquired, constructed, or improved;

(2) operate and maintain the project or facility during the estimated period of acquisition, construction, or improvement of the project or facility and for one year after it is acquired, constructed, or improved;

(3) finance other funds relating to the public security, including debt service reserve and contingency; and

(4) pay the cost or expense of the issuance of the public security.

(b) To the extent and in the manner provided in a public security authorization, until the proceeds from a public security described by Subsection (a) are needed the proceeds may be:

(1) placed on time deposit; or

(2) invested in an obligation authorized for the investment of money of the issuer.

(c) Proceeds from the sale of a public security issued to finance the acquisition, construction, equipping, or furnishing of a project or facility may be used to reimburse the issuer for a cost that is:

(1) attributable to the project or facility; and

(2) paid or incurred before the date of the public security's issuance.

(d) An issuer may spend a premium received by the issuer as part of the purchase price of public securities sold at a public or private sale:

(1) to provide for payment of debt service on the public securities sold;

(2) to contribute to an escrow established to provide for payment of debt service on obligations being refunded through the sale of the public securities;

(3) to pay the cost or expense of issuing the public securities; or

(4) to pay any other cost related to the purpose for which the public securities were issued, as specified in the public security authorization.

(e) Subsection (d)(4) does not authorize an issuer to spend money in an amount that exceeds limitations provided by other law or by the public security authorization.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1, 1999. Amended by Acts 2003, 78th Leg., ch. 270, Sec. 1, eff. June 18, 2003.