California Code, Government Code - GOV § 6595.3

(a) The authority may issue bonds for the purpose of refunding any bonds, notes, or other securities of the authority then outstanding, including the payment of any redemption premium thereon and any interest accrued, or to accrue, on their earliest or any subsequent date of redemption, purchase, or maturity of these bonds. The authority may issue bonds for the additional purpose of paying all, or any part of, the costs of constructing and acquiring additions, improvements, extensions, or enlargements of any public capital improvement or any portion thereof.

(b) The proceeds of any bonds issued for the purpose of refunding outstanding bonds may be applied to the purchase or retirement at maturity or redemption of those outstanding bonds either on their earliest or any subsequent redemption date or upon the purchase or retirement at the maturity thereof and may, pending this application, be placed in escrow to be applied to the purchase or retirement at maturity or redemption of those outstanding bonds on the date as may be determined by the authority.

(c) Pending this use, the escrowed proceeds may be invested and reinvested in obligations of, or guaranteed by, the United States, or in certificates of deposit or time deposits secured by obligations of, or guaranteed by, the United States, maturing at the time or times appropriate to assure prompt payment, of the principal, interest, and redemption premium, if any, of the outstanding bonds to be refunded. The interest, income, and profits, if any, earned or realized on the investment may also be applied to the payment of the outstanding bonds to be refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of the proceeds and interest, income, and profits, if any, earned or realized on the investments thereof, shall be returned to the authority for use in carrying out the purposes of this article.

(d) The portion of the proceeds of the bonds issued for the additional purpose of paying all, or any part of, the costs of construction and acquiring additions, improvements, extensions, or enlargements of any project may be invested and reinvested in obligations of, or guaranteed by, the United States, or in certificates of deposit or time deposits secured by obligations of, or guaranteed by, the United States, maturing not later than the time or times when these proceeds will be needed for the purpose of paying all or any part of the costs. The interest, income, and profits, if any, earned or realized on this investment may be applied to the payment of all, or any part of, the costs or may be used by the authority in carrying out the purposes of this article.