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• <br /> • <br /> Section 5. ESTABLISHMENT OF SPECIAL FUNDS. For <br /> administering the proceeds of the sale of bonds and payment of <br /> interest and principal on the bonds, there are hereby established <br /> five funds to be known as the improvement fund, the redemption fund, <br /> the special reserve fund, the investment earnings fund and the <br /> arbitrage rebate fund, respectively, for Sewer Assessment District <br /> No. 11. <br /> Section 5. 1. IMPROVEMENT FUND. Except as provided in <br /> Section 5.3, proceeds of sale of the bonds, together with all <br /> amounts paid on the assessments prior to bond issuance, shall be <br /> deposited in the improvement fund to be maintained by the City <br /> Treasurer. Disbursements from the improvement fund shall be made by <br /> the City Treasurer in accordance with the budget of estimated costs <br /> and expenses set forth in the amended engineer's report heretofore <br /> approved by the City Council, which report and budget are subject to <br /> modification by the City Council from time to time as prescribed by <br /> the Act. <br /> Section 5.2 . REDEMPTION FUND. The redemption fund shall be <br /> maintained by the City Treasurer. All payments of principal and <br /> interest installments on the assessments, together with penalties, <br /> if any, shall be deposited in the redemption fund, which shall be a <br /> trust fund for the benefit of the bondholders. Payment of the bonds <br /> at maturity, or at redemption prior to maturity, and all interest on <br /> the bonds shall. be made from the redemption fund. , <br /> Section 5.3 . SPECIAL RESERVE FUND. The special reserve fund <br /> shall be maintained by the City Treasurer. There shall be deposited <br /> into the special reserve fund the amount of $11,210.96 (the "Reserve <br /> Requirement") from the proceeds of the sale of bonds. <br /> A. During the term of the bonds, the amount in the special <br /> reserve fund shall be available for transfer into the redemption <br /> fund in accordance with Section 8808 of the Streets and Highways <br /> Code. The amount so advanced shall be reimbursed to the special . <br /> reserve fund from the proceeds of redemption or sale of the parcel <br /> for which payment of delinquent assessment installments was made <br /> from the special reserve fund. <br /> B. If any assessment is prepaid before final maturity of the <br /> bonds, the amount of principal which the assessee is required to. <br /> prepay shall be reduced by an amount which is in the same ratio to <br /> the original amount of the special reserve fund as the original <br /> amount of the prepaid assessment bears to the total amount of <br /> assessments originally levied in Sewer Assessment District No. 11. <br /> This reduction in the amount of principal prepaid shall be balanced <br /> by a transfer from the special reserve fund to the redemption fund <br /> in the same amount. <br /> 2 <br />