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<br /> <br /> <br />13 <br />received representing optional prepayments of the Installment Payments, in accordance with a <br />Written Request of the Authority. Amounts on deposit in the Redemption Fund shall be used <br />and withdrawn by the Trustee solely for the purpose of paying the principal and premium (if any) <br />of the Bonds to be redeemed under the optional redemption provisions of the Indenture; <br />provided, however, that at any time prior to the selection of Bonds for redemption, the Trustee <br />may apply such amounts to the purchase of Bonds at public or private sale, when and at such <br />prices (including brokerage and other charges, but excluding accrued interest, which is payable <br />from the Interest Account) as shall be directed under a Written Request of the Authority, except <br />that the purchase price (exclusive of accrued interest) may not exceed the redemption price <br />then applicable to the Bonds. <br /> <br />No Reserve Fund <br /> <br />Neither the Authority nor the City will fund a debt service reserve fund for the 2026 <br />Bonds. <br /> <br />Rate Stabilization Fund <br /> <br />The City has previously established a rate stabilization fund (the “Rate Stabilization <br />Fund”) to be held by it and administered in accordance with the Installment Sale Agreement <br />and the Parity Debt Instruments, for the purpose of stabilizing the rates and charges imposed by <br />the City with respect to the Water System. From time to time the City may deposit amounts in <br />the Rate Stabilization Fund, from any source of legally available funds, including but not limited <br />to Net Revenues that are released from the pledge and lien, which secures the Installment <br />Payments and any Parity Debt, as the City may determine. <br /> <br />The City may, but is not required to, withdraw any amounts on deposit in a Rate <br />Stabilization Fund and deposit such amounts in the Water Fund in any Fiscal Year. Amounts so <br />transferred from a Rate Stabilization Fund to the Water Fund will constitute Gross Revenues for <br />such Fiscal Year (except to the extent of amounts transferred into the Rate Stabilization Fund <br />from Gross Revenues received by the City in such Fiscal Year, so as to avoid double-counting), <br />and will be applied for the purposes of the Water Fund. Amounts on deposit in a Rate <br />Stabilization Fund will not be pledged to or otherwise secure the Installment Payments or any <br />Parity Debt. The City has the right at any time to withdraw any or all amounts on deposit in a <br />Rate Stabilization Fund and apply such amounts for any lawful purposes of the City. <br /> <br />The City does not currently have any amounts set aside in a Rate Stabilization Fund, but <br />does maintain other reserves related to the Water System. See “THE WATER SYSTEM – <br />Funds and Reserves.” <br /> <br />Rate Covenants under Installment Sale Agreement <br /> <br />Sum Sufficient. Under the Installment Sale Agreement, the City will fix, prescribe, <br />revise and collect rates and charges for the Water System during each Fiscal Year that are at <br />least sufficient, after making allowances for contingencies and error in the estimates, to produce <br />Gross Revenues which will be sufficient to pay the following amounts: <br /> <br />(a) all Operations and Maintenance Costs of the Water System estimated by <br />the City to become due and payable in such Fiscal Year; <br /> <br />(b) the Installment Payments and Debt Service on any Parity Debt; <br />Page 141 of 205