(a) Any bonds issued by the Department of Agriculture and Industries pursuant to this article may from time to time thereafter be refunded by the issuance of refunding bonds of the Department of Agriculture and Industries; provided, however, that 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 issuance expenses, shall not be greater than 97 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. Such refunding bonds may be sold and issued from time to time, at either public or private sale, and on such other terms and conditions as the commissioner, with approval of the Board of Agriculture and Industries, shall determine to be advantageous and shall adopt and provide for in its proceedings for the sale and issuance of such refunding bonds. Any such refunding bonds may be issued whether the bonds to be refunded shall have then matured or shall thereafter mature, and such refunding may be effected either by sale of the refunding bonds and the application of the proceeds thereof to the payment or redemption of the bonds so refunded or by exchange of the refunding bonds for those to be refunded thereby.
(b) The proceeds derived from any sale of refunding bonds remaining after payment of the expenses of their issuance shall be applied in accordance with the proceedings of the Board of Agriculture and Industries under which such refunding bonds are issued. Pending the application of the proceeds to the purchase, redemption, or payment of such outstanding bonds, such proceeds may be invested in permitted investments pursuant to a trust agreement providing for the future application of such proceeds to the purchase, redemption, or payment of such outstanding bonds. Bonds refunded prior to their maturity with the proceeds of refunding bonds shall be deemed not outstanding if the Board of Agriculture and Industries, in the proceedings under which such refunding bonds are issued, establishes a trust fund consisting of cash or government securities, or both, sufficient to pay in accordance with the provisions of such trust fund when due, the entire principal of and interest and premium, if any, on the bonds to be refunded; provided that such government securities shall not be subject to redemption prior to their maturities other than at the option of the holder thereof.