Arkansas Code
Subchapter 2 - Operation of Systems by Municipalities
§ 14-235-222. Allocation of funds from bonds and revenues

(a)
(1)
(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, or vice versa.
(B)
(i) After such 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.
(ii) The diversion of the funds to any other purpose may be enjoined on the suit of the trustee under the indenture securing the bonds, or 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.

(2) In making the allocation, the council will be controlled by the engineer's estimate of cost referred to in the initial ordinance.

(b)
(1)
(A) In the event of such allocation or proceeds, the bonds themselves may be similarly and correspondingly segregated and allocated to the respective purposes of the issue.
(B) Bonds segregated and allocated to one purpose, from the standpoint of legality and in all other respects, shall be deemed to have been issued to finance such purpose, and that alone.

(2)
(A) Notwithstanding such allocation and segregation, all bonds of the entire issue, unless the initial ordinance and the indenture securing the bonds shall provide to the contrary, will be secured ratably and equally by the revenues of the entire and aggregate works financed by the bond issue.
(B) Unless the ordinance and indenture shall so specifically provide, the allocation of bond proceeds or segregation of bonds mentioned will never have the effect of allocating the revenues from any particular portion of the authorized works exclusively to any particular bonds.