(a) An authority may at any time and from time to time sell and issue its refunding bonds for the purpose of refunding the principal of and interest on any then outstanding bonds of the authority, whether or not the bonds shall have matured or be redeemable at the option of the authority at the time of the refunding, and for the payment of any expenses incurred in connection with the refunding and any premium or other sum necessary to be paid to redeem or retire the bonds to be refunded. No refunding bonds shall be issued unless the present value of all debt service on the refunding bonds (computed with a discount rate equal to the true interest rate of the refunding bonds and taking into account all underwriting discount and other issuance expenses) shall not be greater than 95 percent of the present value of all debt service on the bonds to be refunded (computed using the same discount rate and taking into account the underwriting discount and other issuance expenses originally applicable to such bonds) determined as if such bonds to be refunded were paid and retired in accordance with the schedule of maturities (considering mandatory redemption as a scheduled maturity) provided at the time of their issuance. Provided further that the average maturity of the refunding bonds, as measured from the date of issuance of such refunding bonds, shall not exceed by more than three years the average maturity of the bonds to be refunded, as also measured from such date of issuance, with the average maturity of any principal amount of bonds to be determined by multiplying the principal of each maturity by the number of years (including any fractional part of a year) intervening between such date of issuance and each such maturity, taking the sum of all such products, and then dividing such sum by the aggregate principal amount of bonds for which the average maturity is to be determined. Such refunding bonds shall be subrogated and entitled to all priorities, rights, and pledges to which the bonds refunded thereby were entitled. Notwithstanding the foregoing, the principal amount of bonds that the authority may at any time issue for refunding purposes shall not exceed the sum of the following:
(1) The outstanding principal or face amount of the bonds refunded thereby.
(2) The unpaid interest accrued or to accrue thereon to their respective maturities or, in the event the bonds to be refunded, or any part thereof, are to be retired prior to their respective maturities, the interest accrued or to accrue thereon to the date or dates on which they are to be retired.
(3) Any premium or other sum necessary to be paid in order to redeem or retire the bonds to be refunded, but only if the bonds are in fact to be redeemed or retired prior to their respective maturities.
(4) The expenses estimated to be incurred in connection with the refunding. The authority may also sell and issue its bonds at any time for the combined purpose of refunding any of its bonds and of obtaining funds for any other purposes for which it is authorized by this article to sell and issue bonds, in which event the provisions of this article relating to refunding bonds shall apply only to those bonds issued for refunding purposes.
(b) The principal proceeds derived by the authority from the sale of any refunding bonds shall be used only for the payment of the principal, interest, and premium, if any, on the bonds being refunded and for payment of the expenses referred to in the preceding subdivision (4) of subsection (a) of this section. Notwithstanding the foregoing, if in the judgment of the board the action is necessary or desirable to effect an advantageous refunding, a portion of the proceeds may be used for payment of principal of and interest on the refunding bonds themselves and the remainder of the proceeds for payment of the bonds being refunded and for the aforementioned expenses.
(c) The refunding may be effected either by sale of refunding bonds and the application of the proceeds thereof as provided in subsection (b) of this section, or by exchange of the refunding bonds for the bonds to be refunded thereby, or by any combination thereof. Notwithstanding the foregoing, the holders of any bonds to be refunded shall not be compelled without their consent to surrender their bonds for payment or exchange prior to the date on which they may be paid or redeemed by call of the authority under their respective provisions. All provisions of this article pertaining to bonds of the authority that are not inconsistent with this section shall, to the extent applicable, also apply to refunding bonds issued by the authority and to bonds issued by the authority for both refunding and other purposes.