N.M. Stat. § 3-59-8
Any bonds issued hereunder and at any time outstanding may at any time and from time to time be refunded by a municipality by the issuance of its refunding bonds in such amounts as the governing body may deem necessary. The amount of such refunding bonds may be the same as, less than or more than the outstanding principal amount of the bonds being refunded, but shall not exceed an amount which, after including amounts legally available from other sources and income to be received from the investment of such refunding bond proceeds and amounts from other legally available sources, is sufficient to pay promptly as the same become due either at normal maturity dates or at prior redemption dates as the governing body may determine, the principal of the bonds so to be refunded, all unpaid accrued and unaccrued interest thereon to the normal maturity dates of such bonds or to selected prior redemption dates thereof, any redemption premiums and any commissions and all estimated costs incidental to the issuance of such bonds and to such refunding as may be determined by the governing body to be necessary or advisable. Any such refunding may be effected whether the bonds to be refunded shall have then matured or shall thereafter mature, either by sale of the refunding bonds and the application of the proceeds thereof for the payment of the bonds to be refunded thereby, or by exchange of the refunding bonds for the bonds to be refunded thereby; provided, that the holders of any bonds so 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 are payable or, if they are called for redemption, prior to the date on which they are by their terms subject to redemption. Any refunding bonds issued under the authority of the Pollution Control Revenue Bond Act shall be payable solely from the revenues out of which other bonds issued under the Pollution Control Revenue Bond Act may be payable or solely from those amounts derived from an escrow as herein provided, including amounts derived from the investment of refunding bond proceeds and other legally available amounts also as herein provided, or from any combination of the foregoing sources, and shall be subject to the provisions contained in the Pollution Control Revenue Bond Act and may be secured in accordance with the provisions of the Pollution Control Revenue Bond Act.
Proceeds of refunding bonds shall either be applied immediately to the retirement of the bonds being refunded or be placed in escrow in a commercial bank or trust company which possesses and is exercising trust powers. Notwithstanding any provision to the contrary in Section 3-59-9 NMSA 1978 or in any other statute, such escrowed proceeds may be invested in short-term securities, long-term securities or both. Except to the extent inconsistent with the express terms of Sections 3-59-1 through 3-59-14 NMSA 1978, the ordinance and other proceedings under which the bonds to be so refunded were issued, including any mortgage or trust indenture given to secure the same, shall govern the establishment of any escrow in connection with such refunding and the investment and reinvestment of any escrowed proceeds.
NMS § 3-59-8