a. Sewage Works Sinking Fund. There is continued a sinking fund for the payment of the principal of and interest on revenue bonds which by their terms are payable from the Net Revenues of the sewage works, and the payment of any fiscal agency charges in connection with the payment of bonds and interest, which fund shall be designated the Sewage Works Sinking Fund (the “Sinking Fund”). There shall be set aside and deposited in the Sinking Fund, as available, and as provided below, a sufficient amount of the Net Revenues of the sewage works to meet the requirements of the bond and Interest Account and of the Reserve Account hereby continued in the Sinking Fund. Such payments shall continue until the balance in the Bond and Interest Account, plus the balance in the Reserve Account described below, equals the amount needed to redeem all of the then outstanding bonds.
b. Bond and Interest Account. There shall be transferred, on the last day of each calendar month, from the Revenue Fund and credited to the Bond and Interest Account an amount of the Net Revenues equal to (i) one-sixth (1/6) of the interest on all then outstanding bonds payable from Net Revenues on the next succeeding interest payment date and (ii) one-sixth (1/6) of the principal on all outstanding bonds payable on the next succeeding principal payment date, until the amount of interest and principal payable on the next succeeding interest and principal payment dates shall have been so credited. There shall similarly be credited to the Account any amount necessary to pay the bank fiscal agency charges for paying principal and interest on the bonds as the same become payable. The Town shall, from the sums deposited in the Sinking Fund and credited to the Bond and Interest Account, remit promptly to the registered owner or to the bank fiscal agency sufficient monies to pay the principal and interest on their due dates together with the amount of bank fiscal agency charges.
c. Reserve Account. Beginning with the first month after any series of Bonds are delivered, the Town shall deposit on the last day of each calendar month an amount of Net Revenues into the Reserve Account until the balance therein equals but does not exceed the least of (i) the maximum annual debt service on the Bonds and 1989 Bonds, (ii) one hundred twenty-five (125%) percent of average annual debt service on the Bonds and 1989 Bonds, or (iii) ten (10%) percent of the proceeds of the Bonds and 1989 Bonds, plus a minor portion thereof as defined in the Internal Revenue Code of 1986 (the “Reserve Requirement”). The monthly deposits of Net Revenues shall be equal in amount and sufficient to accumulate the Reserve Requirements within five (5) years of the date of delivery of any series of Bonds. For purpose of federal tax law, the Reserve Account shall be allocated between the 1989 Bonds and each series of Bonds issued hereunder according to their original face amounts.
The Reserve Account shall constitute a margin for safety and protection against default in the payment of principal and interest on outstanding bonds, and the monies in the Reserve Account shall be used to pay current principal and interest on outstanding 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 Reserve Account shall be promptly made up from the next available Net Revenues remaining after credits into the Bond and Interest Account. If monies in the Reserve Account are transferred to the Bond and Interest Account to pay principal and interest on outstanding bonds, then this depletion of the balance in the Reserve Account shall be made up from the next available Net Revenues after the credits into the bond and Interest Account. Any monies in the Reserve Account in excess of the Reserve Requirement may, in the discretion of the Town Council, be transferred to the Sewage Works Improvement Fund or be used for the purchase of outstanding bonds or installments of principal of duly registered bonds at a price not exceeding par and accrued interest. (Ord. No. 92-27, § 11, 9-8-92)