A. The refunding bonds shall be secured and payable from the special assessments levied to pay the bonds being refunded. On issuance of refunding bonds, the remaining unpaid installments of such special assessments shall be recalculated and modified so that the amounts to be collected equal the amounts needed to repay the refunding bonds. Section 48-594 does not apply to the recalculation and modification of the assessments authorized by this section. All provisions of articles 2 and 3 of this chapter regarding the collection, payment and enforcement of the assessments for the bonds being refunded and the validity and priority of the lien of the assessments for the bonds being refunded remain in full force and effect. Except as modified pursuant to this section, the assessments survive the payment or defeasance of the bonds being refunded and shall remain in full force and effect, securing the refunding bonds until the payment in full of the refunding bonds.

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B. The refunding bonds are payable only out of a special fund to be collected from such special assessments. The special fund is set apart for the payment of the refunding bonds and cannot be used for any other purpose. All sums collected from such special assessments shall be placed in the special fund and shall be used for no other purpose than payment of the principal of and interest on the refunding bonds.

C. The special assessments from which the refunding bonds are to be paid are the same first liens on the property assessed for the bonds being refunded, subject only to the lien for general taxes and prior special assessments. For the assessment or reassessment, collection and payment of the special assessments, the full faith and diligence of the city or town are irrevocably pledged.