1040.38  USE OF MONEYS; FUNDS.
   From and after June 1, 1963, the revenues of the Municipal water and sewer system are hereby ordered to be set aside, as collected, and deposited in the National Bank of Detroit, Wayne, Michigan, a bank duly qualified to do business in the State, in an account to be designated Water Supply and Sewage Disposal System Receiving Fund (hereinafter referred to as the "Receiving Fund"), and such revenues so deposited are hereby pledged for the purpose of the following funds and shall be transferred from the Receiving Fund periodically in the manner and at the times hereinafter specified:
   (a)   Operation and Maintenance Fund. Out of the revenues in the Receiving Fund there shall be first set aside, monthly, into a separate depositary account designated as the Operation and Maintenance Fund, a sum sufficient to provide for the payment of the next month's current expenses of administration and operation of the Municipal water and sewer system and such current expenses for the maintenance thereof as may be necessary to preserve the same in good repair and working order.
      Council, prior to the commencement 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 five-sevenths of the members of the Council.
   (b)   Bond and Interest Redemption Fund. There shall next be established and maintained a separate depositary account designated as 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 deposit with the bank or trust company where the principal and interest on the bonds herein authorized are currently payable.
      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, monthly, in the Bond and Interest Redemption Fund, a sum proportionately sufficient to provide for the payment of the principal of and interest on all outstanding bonds payable from the revenues of the system, as and when the same become due and payable. Commencing June 1, 1963, the amount so set aside for interest each month shall be not less than one-sixth of the total amount of interest becoming due on such bonds on the next interest payment date, and commencing June 1, 1967, the amount so set aside for principal each month shall be not less than one-twelfth of the total amount of principal becoming due on the next principal payment date. If there is any deficiency in the amount previously required to be set aside, then the amount of such deficiency shall be added to the current requirements.
      There is hereby established in the Bond and Interest Redemption Fund a separate account to be known as the Bond Reserve Account, into which there shall be paid, in equal monthly installments, from the revenues of the system, after provision has been made for the Operation and Maintenance Fund and the Bond and Interest Redemption Fund, the sum of twenty thousand dollars ($20,000) during each of the operating years commencing July 1, 1963, to July 1, 1967, inclusive, so that there has been accumulated in such Bond Reserve Account the sum of one hundred thousand dollars ($100,000) by the end of the operating year commencing July 1, 1967. The moneys from time to time in such Bond Reserve Account shall be used solely for the payment of principal of and interest on such bonds as to which there would otherwise be default.
      If, at any time, it is 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.
      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.
   (c)   Replacement Fund. There shall next be established and maintained a separate depositary account designated as the Replacement Fund, the moneys from time to time on deposit therein to be used solely for the purpose of making major repairs and replacements to the system. There shall be deposited into such Fund, in equal monthly installments, after providing for the current requirements of the Operation and Maintenance Fund and the Bond and Interest Redemption Fund (including the Bond Reserve Account), the sum of five thousand dollars ($5,000) during each of the operating years commencing July 1, 1964, to July 1, 1968, inclusive, so that such Fund shall total twenty-five thousand dollars ($25,000) by the end of the operating year commencing July 1, 1968. 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 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).
   (d)   Improvement Fund. There shall next be established and maintained a separate depositary account designated as the Improvement Fund, the moneys from time to time on deposit therein to be used solely for the purpose of acquiring and constructing additions, extensions and improvements to the system. There shall be deposited into such Fund, monthly, such sum as may be determined by Council, after meeting the priority requirements of the Operation and Maintenance Fund, the Bond and Interest Redemption Fund (including the Bond Reserve Account), the Replacement Fund and the General Obligation Bond and Contract Payment Fund.
   (e)   General Obligation Bond and Contract Payment Fund.  There shall next be established and maintained a separate depositary account designated as the General Obligation Bond and Contract Payment Fund, the moneys from time to time on deposit therein to be used solely for the purpose of paying principal and interest on general obligation bonds of the City heretofore or hereafter issued for the purpose of acquiring and constructing water and sanitary sewer improvements and for the payment of contractual obligations required to be paid by the City pursuant to the provisions of contracts of the City heretofore or hereafter entered into for the purpose of acquiring and constructing water or sewer improvements. There shall be deposited into such Fund, monthly, such sum as may be determined by Council, after meeting the priority requirements of the Operation and Maintenance Fund, the Bond and Interest Redemption Fund (including the Bond Reserve Account) and the Replacement Fund. The moneys in such Fund shall be used solely and only for the payment of principal and interest on general obligation bonds of the City heretofore or hereafter issued for the purpose of acquiring and constructing water and sanitary sewer improvements and for the payment of contractual obligations required to be paid by the City pursuant to the provisions of contracts of the City heretofore or hereafter entered into for the purpose of acquiring and constructing water and sewer improvements.
   (f)   Surplus Moneys. Moneys remaining in the Receiving Fund at the end of any operating year, after full satisfaction of the requirements of the foregoing Funds, may, at the option of Council, be either:
      (1)   Transferred to the Bond and Interest Redemption Fund and used for calling bonds for redemption in the manner herein specified; or
      (2)   Transferred to either the General Obligation Bond and Contract Payment Fund or the Improvement Fund and used for the purposes for which such Funds are established.
(Ord. 7.  Passed 4-9-63.)