Ala. Code § 33-2-188
The proceeds of refunding bonds shall be applied, together with any other moneys legally available therefor to the payment of the expenses authorized by this article and to the payment of the principal of, premium, if any, and interest due and to become due on any outstanding bonds to be refunded thereby and, if so required by order of the director, shall be deposited by the department, with one or more trustees or escrow agents, which trustees or escrow agents shall be trust companies or national or state banks, located either within or without the state, having powers of a trust company, in an interest account to pay interest on refunding bonds, and in a reserve account to further secure the payment of the principal of, premium, if any, and interest on any refunding bonds. Proceeds of refunding bonds may also be applied to repay the department's lease obligations with respect to the industrial board project and to pay the costs of any surety bond or bonds that the department may cause to be deposited in a reserve account to further secure the payment of principal of, premium, if any, and interest on any refunding bonds. To the extent not required for the immediate payment of outstanding bonds or for deposit into an interest account or a reserve account, or for the payment of the expenses and costs authorized by this section, proceeds of refunding bonds together with any other moneys legally available therefor, shall be deposited in trust, on such terms as the director shall approve, with one or more trustees or escrow agents, which trustees or escrow agents shall be trust companies or national or state banks, located either within or without the state, having powers of a trust company. Any such proceeds or moneys deposited in trust with one or more trustees or escrow agents shall be applied solely to the payment when due of the principal of, premium, if any, and interest due and to become due on the outstanding bonds to be refunded thereby on or prior to the redemption date or maturity date thereof, as the case may be. Any such proceeds or moneys so deposited with one or more trustees or escrow agents, may be invested in government securities; provided, such government securities shall not be subject to redemption prior to their maturity other than at the option of the holder thereof. Except as provided in the immediately succeeding sentence, neither the government securities nor moneys so deposited with one or more trustees or escrow agents shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of, premium, if any, and interest on such outstanding bonds to be refunded thereby; provided that any cash received from such principal or interest payments on such government securities deposited with one or more trustees or escrow agents, (1) to the extent such cash will not be required at any time for such purpose, shall be paid over by said trustees or escrow agents to the department, as received, and (2) to the extent such cash will be required for such purpose at a later date, shall, to the extent practicable and legally permissible, be reinvested in government securities maturing at times and in amounts sufficient to pay when due the principal of, premium, if any, and interest on such outstanding bonds on and prior to such redemption date or maturity date thereof, as the case may be, and interest earned from such reinvestments to the extent not required for the payment of such outstanding bonds shall be paid over by said trustees or escrow agents to the department, as received. Notwithstanding anything to the contrary contained herein, (1) moneys on deposit pursuant to the provisions of this section may be applied and government securities so deposited may be redeemed and sold and the proceeds thereof applied to (i) the purchase of the outstanding bonds which were refunded by the deposit with the trustee or escrow agent of such moneys and government securities and immediately thereafter all outstanding bonds so purchased shall be cancelled, or (ii) the purchase of different government securities; provided, however, that the moneys and government securities on deposit with one or more trustees or escrow agents after such purchase and cancellation of such outstanding bonds or such purchase of different government securities shall be sufficient to pay when due the principal of, premium, if any, and interest on all other outstanding bonds in respect of which such moneys and government securities were deposited on or prior to the redemption date or maturity date thereof, as the case may be; and (2) in the event that on any date, as a result of any purchases and cancellations of outstanding bonds or any purchases of different government securities as provided in this sentence, the total amount of moneys and government securities remaining on deposit with the trustee or escrow agent, is in excess of the total amount which would have been required to be deposited with the trustee or escrow agent on such date in respect of the remaining outstanding bonds for which such deposit was made in order to pay when due the principal of, premium, if any, and interest on such remaining outstanding bonds, the trustee or escrow agent shall, if so directed by the director, pay the amount of such excess to the department.
All applications of proceeds of refunding bonds or other moneys as provided in this section, including without limitation the investment thereof and the sale of any related government securities, shall be at the direction of the director.
Notwithstanding any law to the contrary, moneys of the department may be used from time to time as provided by any authorizing order of the director to replenish withdrawals from any reserve account created pursuant to this section.
In order to enhance the marketability of docks facilities revenue bonds and refunding bonds, since the pledge herein authorized of docks facilities revenues is subordinate to the pledges heretofore made for certain of the outstanding bonds, the department is authorized, in any order of the director relating to any refunding bonds, to covenant with the holders of any docks facilities revenue bonds or any refunding bonds that the proceeds of any refunding bonds and any other moneys deposited in trust as provided in this section for the payment when due of any outstanding bonds refunded thereby, shall not be withdrawn or used for any purpose other than as provided in this section and in such order of the director.
Ala. Code § 33-2-188 (1975)