12A.5 - RESERVE FUNDS.
12A.5 RESERVE FUNDS.
1. An issuer may create and establish one or more special funds,
to be known as bond reserve funds, to secure one or more issues of
bonds. The issuer shall pay into each bond reserve fund any moneys
appropriated and made available by the state for the purpose of that
reserve fund, any proceeds of the sale of bonds to the extent
provided in the authorizing documents, and any other moneys which may
be legally available from any other sources and which the issuer
determines to deposit in the reserve fund. All moneys held in a bond
reserve fund, except as otherwise provided in this chapter, shall be
used solely for the payment of the principal of bonds secured in
whole or in part by the fund or other payments with respect to the
bonds, the purchase or redemption of the bonds, the payment of
interest on the bonds, or the payments of any redemption premium
required to be paid when the bonds are redeemed prior to maturity,
all in accordance with the authorizing documents.
2. Except as otherwise specified in the authorizing documents,
moneys in a bond reserve fund shall not be withdrawn at any time in
an amount that will reduce the amount of the fund to less than the
bond reserve fund requirement established for the fund, except for
the purpose of making payment as described in subsection 1. For the
purposes of this chapter, "bond reserve fund requirement" means,
as of any particular date of computation, the amount of moneys,
provided in the authorizing documents with respect to which the fund
is established. Any income or interest earned by, or incremental to,
a bond reserve fund due to its investment may be transferred to other
funds or accounts as provided in the authorizing documents to the
extent the transfer does not reduce the amount of that bond reserve
fund below its bond reserve fund requirement.
3. The issuer shall not at any time issue bonds, secured in whole
or in part by a bond reserve fund if, upon the issuance of the bonds,
the amount in the bond reserve fund for the bonds will be less than
the bond reserve fund requirement for the fund, unless the issuer at
the time of issuance of the bonds deposits in the fund from the
proceeds of the bonds issued or from other legally available sources
an amount which, together with the amount then in the fund, will not
be less than the bond reserve fund requirement for the fund. Section History: Recent Form
2007 Acts, ch 133, §5; 2008 Acts, ch 1065, §5