Cal. Sts. & High. Code § 10705

A city may increase the principal amount of bonds issued under this division by an amount sufficient to fund a program pursuant to this chapter. The proceeds of bonds issued for this purpose shall be placed in the deferral fund created pursuant to Section 10704, and may be used for no other purpose than financing deferrals. The proceeds may be invested in interest-bearing securities of the federal government with maturities occurring on or before the maturity of the bonds issued pursuant to this section. Any investment of those bond proceeds shall comply with federal arbitrage rules (26 U.S.C. Sec. 103 and the rules adopted pursuant thereto).