2.4.1 Application of Proceeds

Bond documents generally provide for the application of the proceeds of the sale of the bonds or other debt securities. Proceeds may be held by the bond trustee and deposited in accounts established by the bond documents, transferred to the public agency or, in the case of a refunding, transferred to the trustee for the refunded obligations. Amounts to be held in a reserve fund are almost always held by the bond trustee. The amounts to be used to pay project costs or issuance costs are usually held by the trustee and disbursed upon a requisition by the public agency. Sometimes, however, those amounts are transferred to the public agency borrower and held by the public agency pending expenditure.