(a) Any specified portion of the proceeds of an issue of bonds authorized under this subchapter may be allocated by the municipal council to any particular project or to new construction as distinguished from the purchase of works already constructed.
(b)
(1) After allocation, the designated portion of the proceeds of the bond issue shall be kept separate and apart from the remaining proceeds and shall be held by the municipality in trust for the performance of the purposes specified, and none other.
(2) The diversion of funds to any other purpose may be enjoined on the suit of the trustee under the indenture, if any, accompanying the bonds, on the suit of any of the bondholders, or on the suit of any person whose property, under the ordinance of the council, is to be served by the proposed works.
(c) In making the allocation, the municipal council will be controlled by the engineer's estimate of cost referred to in the initial ordinance.
(d)
(1) In the event of allocation of proceeds, the bonds themselves may be similarly and correspondingly segregated and allocated to the respective purposes of the issue.
(2) Bonds segregated and allocated to one (1) purpose, from the standpoint of legality and in all other respects, shall be deemed to have been issued to finance that purpose, and that alone.
(3) Notwithstanding the allocation and segregation, and unless the initial ordinance or the indenture accompanying the bonds shall provide to the contrary, all bonds of the entire issue will be secured ratably and equally by the revenues of the entire and aggregate works financed by the bond issue.
(4) Unless the ordinance or indenture shall so specifically provide, the allocation of bond proceeds or segregation of bonds will never have the effect of allocating the revenues from any particular portion of the authorized works exclusively to any particular bond or bonds.
Structure Arkansas Code
Subtitle 14 - Solid Waste Disposal, Waterworks, And Sewers Generally
Chapter 234 - Waterworks and Water Supply
Subchapter 2 - Purchase and Construction
§ 14-234-203. Authority of municipalities
§ 14-234-204. Authority of cities and towns — Use of revenues
§ 14-234-205. Ordinance for issuance of bonds — Contents
§ 14-234-207. Bonds — Amount — Negotiability — Execution — Sale
§ 14-234-208. Lien in favor of bondholders — Enforcement — Appointment of receiver upon default
§ 14-234-209. Accounts — Audit — Treasurer as custodian of fund — Fund separated from city funds
§ 14-234-210. Allocation of specific portion of issue of bonds to particular project
§ 14-234-211. Acceleration of maturities — Priorities between bond issues — Execution of indenture
§ 14-234-212. Issuance of bonds to construct improvements
§ 14-234-213. Exchange of unpaid water revenue certificates for refunding bonds
§ 14-234-214. Rates — Disposition of surplus funds