A. Transportation bonds issued pursuant to the provisions of Section 67-3-72 N.M. Stat. Ann. that are outstanding may be refunded at any time by the state transportation commission upon:

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and (1)     the adoption of a resolution providing for the issuance of refunding bonds;

(2)     the issuance of the refunding bonds in an amount the commission determines is necessary to refund:

(a) the principal of the transportation bonds;

(b) all unpaid accrued and unaccrued interest on transportation bonds to the normal maturity date or to selected prior redemption dates of the bonds;

(c) any redemption premiums; and

(d) all estimated costs, including any commission cost, incidental to the issuance of the refunding bonds, as may be determined by the commission.

B. The principal amount of the refunding bonds may be equal to, less than or greater than the principal amount of the bonds so refunded.

C. A refunding may be effected, whether the bonds to be refunded have then matured or thereafter mature, either by sale of the refunding bonds and the application of the proceeds thereof for the payment of the bonds to be refunded or by exchange of the refunding bonds for the bonds to be refunded; provided that the bonds to be refunded shall not be canceled without the consent of the holders to surrender their bonds for payment or exchange prior to the date on which they are payable or if they are called for redemption prior to the date on which they are by their terms subject to redemption.

D. The refunding bonds issued pursuant to this section shall be payable solely from the revenues out of which transportation bonds may be payable or solely from those amounts derived from an escrow as provided in this section, including amounts derived from the investment of refunding bond proceeds and other legally available amounts also provided in this section or from any combination of those sources.

E. Proceeds of refunding bonds shall either be applied immediately to the retirement of the bonds being refunded or be placed in escrow in a commercial bank or trust company that possesses and exercises trust powers. The escrowed proceeds may be invested in short-term securities, long-term securities or both.