(a) The proceeds of all bonds, other than refunding bonds, issued by the corporation, remaining after paying the expenses of their issuance, shall be turned in to the Treasury or shall be deposited into such account or accounts as specified in the resolution of the board of directors whereunder such bonds are authorized to be issued, and shall be subject to be drawn on upon the approval of the Department of Transportation solely for the purpose of constructing, reconstructing, and relocating public roads, bridges and approaches thereto, tunnels, other public roadway improvements, or work incidental or related thereto, in the State of Alabama, including the acquisition of property necessary for such construction, reconstruction, and relocation and incidental and related work. If action is necessary in order to comply with any federal legislation relating to federal aid in construction of roads, the corporation may authorize the Department of Transportation to expend directly any portion of such proceeds for constructing, reconstructing and relocating such roads, bridges and approaches thereto, tunnels, other public roadway improvements, or work incidental or related thereto. The proceeds from the sale of any refunding bonds of the corporation remaining after paying the expenses of their issuance shall be used only for the purpose of refunding the principal of outstanding bonds of the corporation and of paying any premium that may be necessary to be paid in order to redeem or retire the bonds to be refunded.

(b) Proceeds from the sale of any bonds may be invested in permitted investments pending their disposition. As used in this subsection, permitted investments shall mean:

(1) Any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any federal agency to the extent such obligations are unconditionally guaranteed by the United States of America and any certificates or any other evidences of an ownership interest in such obligations of, or unconditionally guaranteed by, the United States of America or in specified portions thereof (which may consist of the principal thereof or the interest thereon).

(2) Bonds, debentures, notes, or other evidences of indebtedness issued by any of the following agencies: Bank for Cooperatives; Federal Intermediate Credit Banks; Federal Financing Bank; Federal Home Loan Banks; Federal Farm Credit Bank; Export-Import Bank of the United States; Federal Land Banks; or Farmers Home Administration or any other agency or corporation which has been or may hereafter be created by or pursuant to an act of the Congress of the United States as an agency or instrumentality thereof.

(3) Bonds, notes, pass through securities, or other evidences of indebtedness of Government National Mortgage Association and participation certificates of Federal Home Loan Mortgage Corporation.

(4) Full faith and credit obligations of any state, provided that at the time of purchase such obligations are rated at least "AA" by Standard and Poor's Ratings Group and at least "Aa" by Moody's Investors Service.

(5) Public housing bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by contracts with the United States of America, or temporary notes, preliminary notes, or project notes issued by public agencies or municipalities, in each case fully secured as to the payment to both principal and interest by a requisition or payment agreement with the United States of America.

(6) Time deposits evidenced by certificates of deposit issued by banks or savings and loan associations which are members of the Federal Deposit Insurance Corporation, provided that, to the extent such time deposits are not covered by federal deposit insurance, such time deposits (including interest thereon) are fully secured by a pledge of obligations described in subdivisions (1), (2), (3), and (5), which at all times have a market value not less than the amount of such bank time deposits required to be so secured and which meet the greater of 100 percent collateralization or the "AA" collateral levels established by Standard and Poor's Ratings Group for structured financings.

(7) Repurchase agreements for obligations of the type specified in subdivisions (1), (2), (3), and (5), provided such repurchase agreements are fully collateralized and secured by such obligations which have a market value at least equal to the purchase price of such repurchase agreements which are held by a depository satisfactory to the State Treasurer in such manner as may be required to provide a perfected security interest in such obligations, and which meet the greater of 100 percent collateralization or the "AA" collateral levels established by Standard and Poor's Ratings Group for structured financings.

(8) Uncollateralized investment agreements with, or certificates of deposit issued by, banks or bank holding companies, the senior long-term securities of which are rated at least "AA" by Standard and Poor's Ratings Group and at least "Aa" by Moody's Investors Service.