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• • <br /> C. The amounts deposited in the reserve fund will never <br /> exceed 10% of the proceeds of the bond issue. Proceeds of <br /> investment of the special reserve fund shall be deposited in the <br /> investment earnings fund. <br /> D. When the amount in .the special reserve fund equals or <br /> exceeds the amount required to retire the remaining unmatured bonds <br /> (whether by advance retirement or otherwise) , the amount of the <br /> special reserve fund shall be transferred to the redemption fund, <br /> and the remaining installments of principal and interest not yet due <br /> from assessed property owners shall be cancelled without payment. <br /> Section 5.4. INVESTMENT EARNINGS FUND. Proceeds of the <br /> investment of amounts in the improvement fund and the special <br /> reserve fund (and the redemption fund if its earnings exceed <br /> $100, 000 in any' bond year) will be deposited in the investment <br /> earnings fund. On July 1 of each year during the term of the bonds <br /> (or at other times as may be required or permitted by regulations of <br /> the United States Internal Revenue Service) , the Treasurer shall <br /> determine whether any portion of investment earnings must be rebated <br /> to the United States pursuant to Section 148 of the United States <br /> Internal Revenue Code and regulations adopted thereunder. Any <br /> amounts required to be rebated will be transferred to the arbitrage <br /> rebate fund, and the balance will be transferred as follows: <br /> • <br /> (a) To the extent that the balance in the special reserve <br /> fund is less than the Reserve Requirement, a transfer will be made <br /> from the investment earnings fund to the special reserve fund. <br /> (b) The remaining balance in the investment earnings fund, if <br /> any, will be transferred to the improvement fund until the <br /> improvement is completed and the improvement fund is closed; <br /> thereafter the balance in the investment earnings fund will be <br /> transferred to the redemption fund to be used, in the discretion of <br /> the City Treasurer, as a credit upon the annual installments of <br /> assessment or for the advance retirement of bonds. <br /> The City Treasurer is authorized to retain independent <br /> attorneys, accountants and other consultants to assist in complying <br /> with Federal requirements. <br /> Section 5.5. ARBITRAGE REBATE FUND. Amounts in the <br /> arbitrage rebate fund shall be invested in the same manner as <br /> amounts in the other funds and shall be held in trust for rebate to <br /> the United States at the times required by Section 148 of the United <br /> States Internal Revenue Code and regulations adopted thereunder. <br /> Section 6. PAYMENT ON BONDS. The principal and interest on <br /> the bonds shall be payable at the office of the Bank of America <br /> NT&SA, P. O. Box 37000, San Francisco, California 94137. Principal <br /> and interest shall be paid by check, draft or warrant mailed to the <br /> registered owner of each bond at the owner's address appearing on <br /> 3 <br />