1. There is hereby created and established a Capital Improvements Fund for the city which shall not be subject to fiscal operations.
2. The proceeds of said Fund, together with any interest and increments thereto, may, at the discretion of the City Council, be used for the following purposes only:
a. To meet principal and interest requirements on general obligation bonds;
b. When general obligation bond requirements are met, to make cash expenditures for capital improvements or equipment for street, electric, water, storm drainage or sewer purposes; or
c. Where transfers from said Fund or any part thereof to a Sinking Fund or other appropriate municipal or trust funds are necessary to accomplish such purposes, the City Council is authorized to make such transfer of funds.