Revenues of the system shall be set aside, as collected and deposited in a separate depositary account in Frankenmuth State Bank, Birch Run Branch, Birch Run, Michigan, a bank duly qualified to do business in Michigan, in an account to be designated Water Supply System Receiving Fund (hereinafter, for brevity, referred to as the Receiving Fund), and the revenues so deposited are pledged for the purpose of the following funds and shall be transferred from the Receiving Fund periodically in the manner and at the times hereinafter specified.
(A) Operation and Maintenance Fund. Out of the revenues in the Receiving Fund there shall be first set aside, quarterly, into a separate depositary account designated Operation and Maintenance Fund, a sum sufficient to provide for the payment of the next quarter's current expenses of administration and operation of the system and the current expenses for the maintenance thereof as may be necessary to preserve the same in good repair and working order. The Village Council, prior to the commencement of each operating year, shall adopt a budget covering the foregoing expenses for each year, and the total expenses shall not exceed the total amount specified in the budget, except by a vote of 4/5 of the members of the Village Council.
(B) Bond and Interest Redemption Fund. There shall next be established and maintained a separate depositary account, designated as the Bond and Interest Redemption Fund, the monies on deposit therein from time to time to be used solely for the purpose of paying the principal of and interest upon the bonds hereby authorized. The monies in the Bond and Interest Redemption Fund (including the Bond Reserve Account hereinafter established) shall be kept on deposit with the bank or trust company where the principal and interest on the bonds herein authorized are currently payable. Out of the revenues remaining in the Receiving Fund after provision has been made for expenses of operation and maintenance of the system, there shall next be set aside, quarterly, in the Bond and Interest Redemption Fund, a sum proportionately sufficient to provide for the payment of the principal of and interest upon all outstanding bonds payable from the revenues of the system, as and when the same become due and payable. Commencing April 1, 1963, the amount so set aside for interest each quarter during the first six months of each operating year shall not be less than 1/2 of the total amount of interest maturing on the following October 1, and each quarter during the last six months of each operating period shall be not less than 1/2 of the total amount of interest maturing on the following April 1. The amount so set aside for principal during each quarter commencing April 1, 1963, shall be not less than 1/4 of the amount of principal maturing on the following April 1. If there shall be any deficiency in the amount previously required to be set aside, then the amount of the deficiency shall be added to the current requirements. There is hereby established in the Bond and Interest Redemption Fund a separate account to be known as the Bond Reserve Account into which there shall be paid, in equal quarterly installments from the revenues of the system after provision has been made for the Operation and Maintenance Fund and the Bond and Interest Redemption Fund, the sum of $2,000 during each of the operating years beginning April 1, 1963, and April 1, 1964, and the sum of $3,000 during each of the operating years beginning April 1, 1965, and April 1, 1966, so that there shall be accumulated in the Bond Reserve Account the sum of $10,000. The Bond Reserve Account shall be accumulated in its full amount not later than the close of the operating year commencing April 1, 1966. The monies in the Bond Reserve Account shall be used solely for the payment of the principal and interest on the bonds as to which there would otherwise be default. If at any time it shall be necessary to use monies in the Bond Reserve Account for the payment, then the monies so used shall be replaced from the net revenues first received thereafter which are not required by this subchapter to be used for operation and maintenance or for current principal and interest requirements; provided, however, that the Bond Reserve Account shall not be regarded as monies otherwise appropriated or pledged for the purpose of determining the sufficiency of funds available for redemption for callable bonds. No further payments need be made into the Bond and Interest Redemption Fund after enough of the bonds have been retired so that the amount then held in the fund (including the Bond Reserve Account) is equal to the entire amount of principal and interest which will be payable at the time of maturity of all the bonds then remaining outstanding.
(C) Replacement Fund. There shall next be established and maintained a separate depositary account designated as the Replacement Fund, which shall be used solely for the purpose of making major repairs and replacements to the system. There shall be deposited in the account, in equal quarterly installments, after providing for all requirements of the Operation and Maintenance Fund and the Bond and Interest Redemption Fund (including the Bond Reserve Account), the sum of $1,000 during the operating year beginning April 1, 1964, and the sum of $2,000 during each of the operating years beginning April 1, 1965, and April 1, 1966, so that the fund shall total $5,000. If, at any time it shall be necessary to use monies in the fund for the purpose, the monies so used shall be replaced from the net revenues in the Receiving Fund which are not required by this subchapter to be used for the Operation and Maintenance Fund or the Bond and Interest Redemption Fund (including the Bond Reserve Account).
(D) Improvement Fund. There shall next be established and maintained an Improvement Fund for the purpose of making improvements, extensions and enlargements to the system. There shall be deposited into the fund each quarter after providing for all of the foregoing requirements, the sum as the Village Council shall determine.
(E) Surplus monies. Monies remaining in the Receiving Fund at the end of any operating year, after full satisfaction of the requirements of the foregoing funds, may, at the option of the Village Council, be transferred to the Bond and Interest Redemption Fund and used for the purpose of calling bonds for redemption in the manner herein specified, or transferred to the Improvement Fund or used to pay principal and interest on General Obligations Bonds of the village issued for water purposes; provided, however, that if there should be any deficit in the Operation and Maintenance Fund, Bond and Interest Redemption Fund (including the Bond Reserve Account) or the Replacement Fund on account of default in setting aside therein the amounts hereinbefore required, then transfers shall be made from the monies remaining in the Receiving Fund at the end of any operating year to the funds in the priority and order named, to the extent of the deficits.
(1992 Code, § 80.012) (Ord. 1-62, passed - - 1962)