§39-16  Refunding bonds authorized. (a)  The director of finance, with the approval of the governor but withoutfurther authorization of the legislature, from time to time, may issue generalobligation refunding bonds of the State to pay or provide for the payment ofall or any part of the then outstanding bonds of the State or bonds issued byany department, board, agency, instrumentality, commission, or publiccorporation of the State, at or before their maturity or redemption date, andmay include various series and issues of those outstanding bonds in a singleissue of refunding bonds, and may include refunding bonds and bonds otherwiseto be issued pursuant to this part in a single issue of bonds.

The interest rate or rates of the refundingbonds shall not be limited by the interest rate or rates borne by any of thebonds to be refunded thereby.

The refunding bonds may be issued and deliveredat or at any time before the maturity or redemption date of the bonds to berefunded that the director of finance, with the approval of the governor,determines to be in the best interest of the State.  The refunding bonds shallbe issued in accordance with the provisions of this part with respect to bondsand all provisions of this part shall be applicable to refunding bonds.

Proceeds of the sale of the refunding bondsshall be applied solely to the payment of the principal of, and redemptionpremium, if any, and interest on the bonds to be refunded under the provisionsof this part and to the payment of all costs of issuance of refunding bonds andinterest accrued on refunding bonds to the date of delivery thereof and paymenttherefor.

Pending the time the proceeds derived from thesale of refunding bonds issued pursuant to this section are required for thepurposes for which they were issued, the director of finance, uponauthorization or approval of the governor, may invest the proceeds inobligations of, or obligations unconditionally guaranteed by, the United Statesof America, or in savings accounts, time deposits, or certificates of depositof any bank or trust company within or without the State, to the extent thatthe savings accounts, time deposits, or certificates of deposits arecollaterally secured by a pledge of obligations of, or obligations unconditionallyguaranteed by, the United States of America, or in obligations of any state ofthe United States of America or any agency, instrumentality, or localgovernment thereof, the provision for payment of the principal of and intereston which shall have irrevocably been made by deposit of obligations of, orobligations unconditionally guaranteed by, the United States of America.  Tofurther secure those refunding bonds the State, through the director offinance, may enter into a contract with any bank or trust company, within orwithout the State, with respect to the safekeeping and application of theearnings of the investment.  All bonds so refunded and redeemed by the issueand sale of refunding bonds shall be canceled.

(b)  The bonds which may be refunded pursuantto this section include bonds issued pursuant to this part, bonds payable orsecured in whole or in part from the general fund of the State, bonds payableor secured in whole or in part by any taxes or by the taxing power of theState, and bonds which must be included when determining the power of thelegislature to authorize the issuance of bonds and other evidences ofindebtedness of the State.  Nothing in this section shall require or be deemedto require the director of finance to elect to redeem or prepay bonds beingrefunded, or, if the director of finance elects to redeem or prepay any bonds,to redeem or prepay as of any particular date or dates.

However, without express authorization by thelegislature, no bonds shall be issued pursuant to this part to refund bonds,notes, or other instruments of indebtedness payable solely from and securedsolely by the revenues, or user taxes, of a public undertaking, improvement, orsystem, unless the bonds to be refunded were issued prior to November 5,1968, and are payable from both the revenues and the user taxes of theundertaking, improvement, or system for which they were issued.  In the eventof the issuance of bonds pursuant to this part to refund bonds payable solelyfrom and secured solely by the revenues or user taxes, or combination of both,of a public undertaking, improvement, or system, reimbursement shall be made tothe general fund from those revenues or taxes, or combination thereof, for thepayment of all of the principal of and interest on the refunding bonds.

(c)  Notwithstanding any other law to thecontrary, for purposes of the statements required to be prepared by part IV ofchapter 39, the director of finance may determine the manner of allotting thedebt service on the general obligation refunding bonds among the purposes forwhich the proceeds of the bonds being refunded were allotted. [L 1988, c 28, ptof §3]