Refunding authorization; terms.

A. Whenever the board of directors for any intercommunity water or natural gas supply association determines, by resolution adopted by an affirmative vote of two- thirds of the entire membership of the board of directors of the association at a regular or special meeting called for that purpose, that it is in the best interest of the association to issue revenue bonds for the purpose of refinancing, refunding and payment of outstanding revenue bonds of the association, the board of directors may issue and sell or issue and exchange refunding revenue bonds for the purpose of refinancing, refunding and paying all or any part of the outstanding revenue bonds of the association. B. The association may pledge irrevocably, for the payment of interest and principal on refunding bonds, the appropriate pledged revenues which may be pledged to an original issue of bonds as provided in Section 3-28-10 NMSA 1978. C. In addition to pledging net income derived from the operations of the association for the payment of the refunding bonds, the association may grant by resolution a mortgage on the properties of the association to the bondholder or a trustee for the benefit and security of the holders of the refunding bonds. D. The terms of refunding bonds issued by the association shall be in accordance with the provisions of Section 3-28-11 NMSA 1978 to the extent not inconsistent with the provisions of this section. E. The valid adoption, issuance and sale of refunding bonds by any intercommunity water or natural gas supply association shall in no way be adversely or otherwise legally affected by the area of the state in which the association is presently rendering utility service. F. The proceeds derived from the issuance of any refunding bonds shall be either immediately applied to the payment or redemption and retirement of the bonds to be refunded and the costs and expenses incident to issuance of the refunding bonds, redemption and payment of the bonds refunded and procedures relating thereto, including but not necessarily limited to establishment of a bond reserve fund, or shall immediately be placed in escrow to be applied to the payment of said bonds upon their presentation therefor and to the aforesaid costs and expenses. Any money remaining after providing for the payment of the refunded bonds and any expenses and costs incident therewith shall be used to pay maturing principal and interest on the refunding bonds. Any such escrowed proceeds and any other funds contributed to the refunding by the association, pending such use, may be invested or, if necessary, reinvested only in direct obligations of the United States, or obligations guaranteed by the United States, maturing at such time or times as to ensure the prompt payment of the bonds refunded, the interest accruing thereon and any prior redemption premium in connection therewith. Such escrowed proceeds and investments, together with any interest or other income to be derived from such investments, shall be in an amount that shall be sufficient to pay the bonds refunded as they become due at their respective maturities or as they are called for redemption and payment on prior redemption dates, as to principal, interest, any prior redemption premium due and any charges of the escrow agent payable therefrom. The board of directors of the association shall have the power to enter into escrow agreements and to establish escrow accounts with any commercial bank or trust company within or without the state that possesses and is exercising trust powers and that is a member of the federal deposit insurance corporation.