(1) An authority may provide for the issuance of obligations for the purpose of refunding any of its obligations then outstanding, including the payment of any redemption premium thereon and any interest accrued or to accrue to the earliest or any subsequent date of redemption, purchase, or maturity of such obligations.
(2) The proceeds of any such obligations issued for the purpose of refunding outstanding obligations may, in the discretion of the authority, be applied to the purchase or retirement at maturity or redemption of such outstanding obligations either on their earliest or any subsequent redemption date or upon the purchase or at the maturity thereof and may, pending such application, be placed in escrow to be applied to such purchase or retirement at maturity or redemption on such date as may be determined by the authority.
(3) Any such escrowed proceeds, pending such use, may be invested and reinvested in direct obligations of the United States of America or in certificates of deposit or time deposits of financial institutions secured as to principal by such direct obligations, which direct obligations, certificates of deposit, or time deposits mature at such time as shall be appropriate to assure the prompt payment, as to principal, interest, and redemption premium, if any, of the outstanding obligations to be so refunded. The interest, income, and profits, if any, earned or realized on any such investment may also be applied to the payment of the outstanding obligations to be so refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of such proceeds and interest, income, and profits, if any, earned or realized on the investments thereof shall be returned to the authority for use in any lawful manner.
(4) All such refunding bonds shall be subject to this act in the same manner and to the same extent as other revenue bonds issued pursuant to this act.