A. The board of supervisors, on behalf of the county, the governing body of a city or town or similar municipal corporation and a school district governing board may issue refunding bonds to refund the bonded indebtedness of such county, school district, city or town or other similar municipal corporation when it is expedient to do so.

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B. The board of supervisors or other governing body desiring to issue refunding bonds shall adopt and include in its minutes a resolution stating:

1. The facts and determination of the necessity or advisability of refunding such bonded indebtedness, including an estimate of the present value of the debt service savings, net of all costs associated with the refunding bonds, that will occur.

2. The amount of bonds to be issued, the date of such bonds and the denominations.

3. The rate of interest and the maturity date.

4. The place of payment, within or without the state, of the principal and interest.

C. The amount of net premium associated with a refunding bond issue may be used only for one or more of the following:

1. To fund the escrow account to pay the bonds to be refunded.

2. To pay the costs incurred in issuing the refunding bonds.

3. As a deposit in a debt service fund and used to pay interest on the bonds.

D. If the net premium associated with a refunding bond issue is used to fund the escrow account to pay the bonds to be refunded and the principal amount of the refunding bonds is less than the principal amount of the bonds being refunded, the difference between such principal amounts reduces the available aggregate indebtedness capacity of the political subdivision under the constitution and statutes of this state in an equal amount, provided that the difference in the amounts may not exceed the aggregate available indebtedness capacity of the political subdivision. The difference in principal amount will not cause any increase or decrease in the principal amount authorized pursuant to any bond election. Any net premium used as provided in this subsection shall be amortized for all debt limitation purposes on a pro rata basis each year by multiplying the net premium used by a percentage equal to the percentage of the total principal amount of the bond issue that matures in that year.

E. For the purposes of this section, "net premium" means the difference between the par amount of the bond issue and the bond issue price determined pursuant to United States treasury regulations.