There is hereby continued, within the Sinking Fund, the Debt Service Reserve Account (“Debt Service Reserve Account”). On the date of delivery of the Bonds, the town may deposit funds on hand, Bond proceeds, unless the Bonds are sold to the SRF Program, or a combination thereof, into the Debt Service Reserve Account up to an amount which shall cause the balance therein to equal but not exceed the hereinafter defined Reserve Requirement. The Reserve Requirement means a balance which shall equal but not exceed an amount equal to the maximum annual debt service on the 1991 Bonds and the Bonds, which is herein defined as the initial reserve requirement, and which amount will be decreased on the second day of each October to the maximum annual debt service on the then outstanding 1991 Bonds and Bonds in the then present or any succeeding year (“Reserve Requirement”); provided, if the Bonds are sold to the SRF Program, that the town shall give 15-days written notice to the State before transferring funds out of the Reserve Account. Further, in the event any revenue bonds are hereafter issued which are payable from the Net Revenues of the waterworks on a parity with the 1991 Bonds and Bonds (“Parity Bonds”), such Reserve Requirement shall be equal to the combined maximum annual debt service on the 1991 Bonds, Bonds and such Parity Bonds; provided, however, that in the event at the time of issuance of any Parity Bonds it is determined by nationally recognized bond counsel that maintenance of a reserve at an amount equal to combined maximum annual debt service would preclude the interest on such Parity Bonds from being excludable from gross income for federal income tax purposes, then the town may issue such Parity Bonds by an authorizing ordinance which shall provide that in lieu of being secured by or payable from the Reserve Account herein continued, such Parity Bonds will be secured by and payable from a separate reserve account therein created with a reserve requirement fixed at the maximum amount then determined as not precluding the interest on such Parity Bonds from being excludable from gross income for federal income tax purposes. The Reserve Requirement under this ordinance is in addition to any amounts to be maintained in the Debt Service Reserve Account under the ordinances authorizing the Outstanding Bonds. If no initial deposit is made or if the balance in the Debt Service Reserve Account does not equal the Reserve Requirement, a sum of Net Revenues of the waterworks shall be deposited into the Debt Service Reserve Account on the last day of each calendar month until the balance in the Debt Service Reserve Account equals but does not exceed the Reserve Requirement. The monthly deposits of Net Revenues shall be equal in amount and sufficient to accumulate the Reserve Requirement within five years of the date of delivery of the Bonds. The Debt Service Reserve Account shall constitute the margin for safety and protection against default in the payment of principal of and interest on the 1991 Bonds, the Bonds and any Parity Bonds, and the monies in the Debt Service Reserve Account shall be used to pay current principal and interest on the 1991 Bonds, the Bonds and any Parity Bonds to the extent that monies in the Bond and Interest Account are insufficient for that purpose. Any deficiency in the balance maintained in the Debt Service Reserve Account shall be made up from the next available Net Revenues remaining after credits into the Bond and Interest Account. Any monies in the Debt Service Reserve Account in excess of the Reserve Requirement shall either be transferred to the Waterworks Improvement Fund or be used for the redemption or purchase of outstanding bonds or installments of principal of fully registered bonds at a price not exceeding par and accrued interest.
(Ord. 22-2001, passed 11-19-01)