Sec. 1207.062. ESCROW AGREEMENT. (a) An issuer may enter into an escrow or similar agreement with a person described by Section 1207.061(a) with respect to the safekeeping, investment, administration, and disposition of a deposit made under Section 1207.061.

(b) A deposit under Section 1207.061 may be invested only in:

(1) direct noncallable obligations of the United States, including obligations that are unconditionally guaranteed by the United States;

(2) noncallable obligations of an agency or instrumentality of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent; and

(3) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent.

(c) A deposit under Section 1207.061 may be invested only in obligations that mature and bear interest payable at times and in amounts sufficient to provide for the scheduled payment or redemption of the obligation to be refunded. The obligations may be in book-entry form.

(d) An issuer shall enter into an agreement under Subsection (a) if an obligation to be refunded is scheduled to be paid or redeemed on a date later than the next scheduled interest payment date on the obligation.

(e) Notwithstanding Subsection (b), a deposit under an escrow agreement entered into under Subsection (a) before September 1, 1999, may not be invested in an investment described by Subsection (b)(2) or (3).

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1, 1999. Amended by Acts 1999, 76th Leg., ch. 1064, Sec. 11, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 769, Sec. 6, eff. Sept. 1, 2001.