(A) (1) There is created 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, which fund shall be designated the “Sewage Works Sinking Fund” or "Sinking Fund.”
(2) There shall be set aside and deposited in the Sinking Fund, as available, and as hereinafter provided, a sufficient amount of the net revenues of the sewage works to meet the requirements of the Bond and Interest Account and Reserve Account Created in the Sinking Fund. The payment shall continue until the balances in the Bond and Interest Account and the Reserve Account equal the principal of and interest on all of the then outstanding bonds of the sewage works to their final maturity.
(B) (1) Any monies heretofore accumulated to pay principal and interest on the refunded bonds shall be credited to and become a part of the Trust Account under the escrow agreement and shall be applied on the first payments made from the Trust Account. Beginning as of the date of issuance of the refunding bonds, there shall be credited on the last day of each calendar month from the Revenue Fund to the Bond and Interest Account an amount of the net revenues equal to at least one-twelfth of the principal of and at least one-sixth of the interest on all then outstanding bonds payable on the ten next succeeding principal and interest payment dates until the amount of interest and principal payable on the ten next succeeding respective interest and principal payment dates shall have been so credited.
(2) There shall similarly be credited to the account any amount necessary to pay the bank fiscal agency charges for paying interest on outstanding 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 interest and principal on the due dates thereof together with the amount of bank fiscal agency charges.
(C) (1) On the date of delivery of the refunding bonds, funds on hand of the sewage works, refunding bond proceeds or a combination thereof may be deposited into the Reserve Account.
(2) The initial deposit or the balance accumulated in the Reserve Account shall equal but not exceed the least of:
(a) Maximum annual debt service on the refunding bonds;
(b) One hundred twenty-five percent of average annual dept service on the refunding bonds; or
(c) Ten percent of the proceeds of the refunding bonds, plus a minor portion thereof as defined in the Internal Revenue Code of 1986, as existing on the date of issuance of the refunding bonds, which shall be the reserve requirement.
(3) If the initial deposit into the Reserve Account does not equal the reserve requirement or if no deposit is made, an amount of net revenues shall be credited to the Reserve Account on the last day of each calendar month until the balance therein equals the reserve requirement. The monthly deposits shall be equal in amount and sufficient to accumulate the reserve requirement within five years of the date of delivery of the refunding bonds.
(4) The Reserve Account shall constitute the margin for safety and protection against default in the payment of principal of and interest on the refunding bonds, and the monies in the Reserve Account shall be used to pay current principal and interest on the refunding 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 made up from the next available net revenues remaining after credits into the Bond and Interest Account.
(5) Any monies in the Reserve Account in excess of the reserve requirement shall either be transferred to the Sewage Works Improvement Fund or be used for the purchase of outstanding bonds or installments of principal of fully registered refunding bonds.
(`93 Code, § 9-132) (Ord. 95-627, passed - -95)