Arkansas § 14-234-511 - Allocation of bond proceeds.

§ 14-234-511. Allocation of bond proceeds.

Any specified portion of the proceeds of an issue of bonds authorized under the provisions of this subchapter may be allocated by the respective legislative bodies to any particular project, or to new construction, as distinguished from the purchase of waterworks already constructed. After the 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 respective municipalities in trust for the performance of the purposes specified and none other. 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, or on the suit of any of the bondholders, or on the suit of any person whose property, under the respective ordinances, is to be served by the proposed waterworks system. In making the allocation, the legislative bodies will be controlled by the engineer's estimate of costs referred to in the initial ordinances. In the event of the allocation of proceeds, the bonds themselves may be similarly or correspondingly segregated and allocated to the respective purposes of the issue. Bonds segregated and allocated to one (1) purpose shall, from the standpoint of legality and in all other respects, be deemed to have been issued to finance that purpose and that alone. Notwithstanding the allocation and segregation, all bonds of the entire issue will, unless the initial ordinances or the indenture accompanying the bonds shall provide to the contrary, be secured ratably and equally by the revenues of the entire and aggregate waterworks systems financed by the bond issue. Unless the ordinances 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.