Rhode Island General Laws Title 35. Public Finance § 35-8-26. Refunding bonds

(a) When bonds or notes have been issued as provided in this chapter, the general treasurer shall be authorized and empowered hereby, with the approval of the governor and in accordance with this chapter, to issue, from time to time, refunding bonds or notes of the state to refund any of such outstanding bonds or notes as may be specified from time to time by the governor provided that the outstanding amount of debt on account of any project shall not be increased thereby to an amount in excess of the amount approved for such project by the people.

(b) If the people shall have approved the issuance of refunding bonds or notes, at the election at which the incurring of debt for the respective project or projects was approved or as a separate approval at another time, the proceeds of the refunding bonds or notes, exclusive of any premium or accrued interest thereon, shall upon receipt be applied to retire the bonds or notes being refunded or shall be deposited by the general treasurer with an escrow agent, which may be the paying agent for the bonds being refunded, in trust for application to payment of such bonds or notes at maturity or upon earlier call. Such escrowed amounts shall be invested for the benefit of the owners of the refunded bonds or notes and shall be invested only in direct or guaranteed obligations of the United States of America or the state of Rhode Island. Money held in escrow, together with the earnings thereon, shall be applied to any principal, interest and early redemption premiums, if any, to the owners of the refunded bonds or notes, in accordance with the instructions of the general treasurer included in the terms of the escrow. An amount of bonds or notes being refunded, which is the largest amount of such bonds or notes for which the escrowed deposit will provide sufficient funds to pay all principal, interest and early redemption premiums, if any, when due, will be considered no longer outstanding and not debts of the state for the purpose of determining the amount of debt outstanding for the respective project or projects from and after the deposit of funds into escrow.

(c) If the people have not approved the issuance of refunding bonds or notes as aforesaid, the general treasurer may nevertheless issue refunding bonds or notes as provided herein for the purpose of paying or refunding all or any portion of an issue of bonds or notes then outstanding, including the amount of any redemption premium and costs of issuance related thereto; provided, however, that no such refunding bonds shall be payable over a period longer than the period during which the original bonds or notes so refunded must be paid pursuant to law, and provided further that the present value of the principal and interest payments due on refunding bonds issued under this section shall not exceed the present value of the principal and interest payments to be paid by the state on account of bonds or notes to be refunded.