Cal. Health & Saf. Code § 34372
An authority may provide for the issuance of bonds of the authority for the purpose of refunding any bonds of the authority then outstanding, including the payment of any redemption premiums thereof and any interest accrued or to accrue to the earliest or subsequent date of redemption, purchase, or maturity of such bonds, and, if deemed advisable by the authority, for the additional purpose of paying all or any part of the cost of additional construction.
The proceeds of bonds issued pursuant to this section may, in the discretion of the authority, be applied to the purchase or retirement at maturity or redemption of outstanding bonds, either at their earliest or any subsequent redemption date or upon the purchase or retirement at the maturity thereof and, pending such application, that portion of the proceeds allocated for such purpose may 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. Pending use for purchase, retirement at maturity, or redemption of outstanding bonds, any proceeds held in such an escrow may be invested and reinvested as provided in the resolution authorizing the issuance of the refunding bonds. Any interest or other increment earned or realized on any such investment may also be applied to the payment of the outstanding bonds to be refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of such proceeds and any interest or increment earned or realized from the investment thereof may be returned to the authority to be used by it for any lawful purpose under this chapter. That portion of the proceeds of any bonds issued pursuant to this section which is designated for the purpose of paying all or any part of the cost of additional construction may be invested and reinvested in obligations of, or guaranteed by, the United States of America or in certificates of deposit or time deposits secured by obligations of, or guaranteed by, the United States of America, maturing not later than the time or times which such proceeds will be needed for the purpose of paying all or any part of such costs.
All bonds issued pursuant to this section shall be subject to the provisions of this chapter in the same manner and to the same extent as other bonds issued pursuant to this chapter.
Ca. Health and Saf. Code § 34372