§8-16-17. Sinking fund; sinking fund commission; transfer of
funds; purchase of outstanding bonds.
Before the issuance of any such bonds, the governing body or
bodies shall, by ordinance or ordinances, provide for a sinking
fund for the payment of the bonds and the interest thereon, and the
payment of the charges of banking institutions or trust companies
for making payment of such bonds and interest, out of the net
revenues of said works, and shall set aside and pledge a sufficient
amount of the net revenues of the works hereby defined to mean the
revenues of the works remaining after the payment of the reasonable
expenses of repair (including replacements), maintenance and
operation, such amount to be paid by the board into the sinking
fund at intervals, to be determined by ordinance or ordinances
adopted prior to the issuance of the bonds, for (a) the interest
upon such bonds as such interest shall fall due; (b) the necessary
fiscal agency charges for paying bonds and interest; (c) the
payment of the bonds as they fall due, or if all bonds mature at
one time, the proper maintenance of a sinking fund sufficient for
the payment thereof at such time; and (d) a margin for safety and
for the payment of premium upon bonds retired by call or purchase
as herein provided, which margin, together with unused surplus of
such margin carried forward from the preceding year and the amounts
set aside as reserves out of the proceeds from the sale of the
bonds, or from the revenues of said works, or from both, shall
equal ten percent of all other amounts so required to be paid into the sinking fund. Such required payments shall constitute a first
charge upon all the net revenues of the works. Prior to the
issuance of the bonds, the board may, by ordinance or ordinances,
be given the right to use or direct the trustee or the state
sinking fund commission to use such sinking fund, or any part
thereof, in the purchase of any of the outstanding bonds payable
therefrom, at the market prices thereof, but not exceeding the
price, if any, at which the same shall in the same year be payable
or redeemable, and all bonds redeemed or purchased shall forthwith
be cancelled, and shall not again be issued. After the payments
into the sinking fund as herein required and after reserving an
amount deemed by the board sufficient for repair (including
replacements), maintenance and operation for an ensuing period of
not less than twelve months and for depreciation, the board may at
any time in its discretion transfer all or any part of the balance
of the net revenues into the sinking fund or into a fund for
improvement, renovation, extension, enlargement, increase or
equipment for or to the works, or the governing body or bodies may,
notwithstanding the provisions of section twenty, article thirteen
of this chapter, transfer all or any part of the balance of the net
revenues to the general or any special fund of the municipality or
municipalities and use such revenues for any purpose for which such
general or special fund may be expended.
All amounts for the sinking fund and interest, as and when set
apart for the payment of same, shall be remitted to the state sinking fund commission at such periods as shall be designated in
the ordinance or ordinances, but in any event at least thirty days
previous to the time interest or principal payments become due, to
be retained and paid out by said commission consistent with the
provisions of this article and the ordinance or ordinances pursuant
to which such bonds have been issued. The state sinking fund
commission is hereby authorized to act as fiscal agent for the
administration of such sinking fund under any ordinance or
ordinances passed or adopted pursuant to the provisions of this
article and shall invest all sinking funds as provided by general
law.