(a) The revenues of the system are ordered to be set aside, as collected, and deposited in a bank duly qualified to do business in the State, in an account to be designated the Water and Sewer Fund, and such revenues so deposited are pledged for the purpose of the funds set forth in this section. (Emergency Manager Order No. 3. Ordered 10-10-14.)
(b) Out of the revenues in the Receiving Fund, there shall be first set aside, during each quarter, into a separate depository account designated the Operation and Maintenance Fund, a sum sufficient to provide for the payment of the next succeeding quarter's current expenses of administration and operation of the system and such current expenses for the maintenance thereof as may be necessary to preserve the same in good repair and working order.
(c) Council, prior to the beginning of each operating year, shall adopt a budget covering the foregoing expenses for each year, and such total expenses shall not exceed the total amount specified in such budget except by a vote of two-thirds of the members of Council.
(d) There shall next be established and maintained a separate depository account designated the Bond and Interest Redemption Fund, which shall be used solely for the purpose of paying the principal of and interest on the bonds hereby authorized. The moneys in the Bond and Interest Redemption Fund (including the Bond Reserve Account hereinafter established) shall be kept on hand with the bank or trust company where the principal and interest on the bonds herein authorized are currently payable.
(e) 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 proportionally sufficient to provide for the payment of the principal and interest upon all outstanding bonds payable from the revenues of the system, as and when the same become due and payable. The amount so set aside in each quarter during the first six months of each operating year shall be not less than one-half of the total amount of interest maturing on the following July 1, and during the last six months of each operating year shall not be less than one-half of the total amount of interest maturing on the following January 1. The amount so set aside for principal on the bonds herein authorized in each quarter during each operating year shall be not less than one-fourth of the amount of principal maturing on the July 1 immediately following such operating year. If there is any deficiency in the amount previously set aside, then the amount of such deficiency shall be added to the current requirement.
(f) If there is established in the Bond and Interest Redemption Fund, a separate account, to be designated as the Bond Reserve Account, there shall be paid into such Bond Reserve Account, quarterly, all of the revenues of the system after the required payments have been made for the Operation and Maintenance Fund and the Bond and Interest Redemption Fund, until such time as there have been accumulated in such Bond Reserve Account the sum of twelve thousand dollars ($12,000). Such Bond Reserve Account shall be established in the full amount herein required not later than the close of the operating year commencing July 1, 1953. Moneys in such Bond Reserve Account shall be used solely for the payment of the principal and interest on bonds as to which there would otherwise be default.
(g) If, at any time, it shall be necessary to use moneys in the Bond Reserve Account for such payment, then the moneys so used shall be replaced from the net revenues first received thereafter which are not required by this chapter to be used for operation and maintenance or for current principal and interest requirements. However, such Bond Reserve Account shall not be regarded as moneys otherwise appropriated or pledged for the purpose of determining the sufficiency of funds available for redemption of callable bonds.
(h) 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 such 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.
(i) There shall next be established and maintained a separate depository account known as the Replacement Fund. Moneys on deposit therein shall from time to time be used solely for the purpose of making major repairs and replacements to the system for which funds in the Operation and Maintenance fund are not available or sufficient. There shall be deposited into such account, quarterly, out of the revenues in the Receiving Fund, all of the revenues of the system after provision has been made for the Operation and Maintenance Fund and the Bond and Interest Redemption Fund (including the Bond Reserve Account) until such time as there has been accumulated in such Replacement Fund the sum of five thousand dollars ($5,000). If, at any time, it is necessary to use moneys in such Fund for such purpose, the moneys so used shall be replaced from the net revenues in the Receiving Fund, which net revenues are not required by this chapter to be used for the Operation and Maintenance Fund or the Bond and Interest Redemption Fund (including the Bond Reserve Account).
(j) There shall next be established and maintained a separate depository account to be designated the Improvement Fund. Out of the revenues remaining in the Receiving Fund after meeting the requirements of the Operation and Maintenance Fund, the Bond and Interest Redemption Fund (including the Bond Reserve Account) and the Replacement Fund, there shall be deposited into the Improvement Fund, in any month, such sum as Council may deem advisable, to be used for improvements, enlargements, extensions or repairs to the system.
(k) Moneys remaining in the Receiving Fund at the end of any operating year, after full satisfaction of the requirements of the foregoing funds, shall be transferred to a separate depository account to be designated the Surplus Fund. Moneys from time to time on hand in the Surplus Fund may, at the option of Council, be transferred to the Bond and Interest Redemption Fund and used for the purpose of calling bonds, or prior to the first call date only, for the purpose of purchasing bonds of this issue on the open market at the best price obtainable, but not in excess of the maximum call price permitted by law, or may be transferred to the Improvement Fund. However, if there is any deficit in the Operation and Maintenance Fund, the Bond and Interest Redemption Fund (including the Bond Reserve Account) or the Replacement Fund on account of defaults in setting aside therein the amounts hereinbefore required, then transfers shall be made from the Surplus Fund to such Funds in the priority and order named, to the extent of such deficits.
(1979 Code Sec. 14.20.060)