Sample Application of Reserve and Investment of Funds

Application of Moneys in Debt Service Reserve Fund   

Moneys held for the credit of the Debt Service Reserve Fund shall be used for the purposes first, of paying interest on the Bonds as the same becomes due, and second, of paying maturing principal of the Bonds, whether at the stated payment date or by mandatory redemption as aforesaid, whenever and to the extent that the moneys held for the credit of the Bond Fund and the Capital Replacement Fund, shall be insufficient for such purposes.

Moneys in the Debt Service Reserve Fund in an amount equal to the Debt Service Reserve Fund Requirement attributable to the Bonds shall be used in the final maturity of the outstanding bonds to pay the principal of and interest on the Bonds, unless otherwise required by the preceding paragraph. Any balance remaining in the Debt Service Reserve Fund upon final payment of all Bonds shall be applied in accordance with the Indenture.

After valuation balances in the Reserve Fund in excess of the Reserve Requirement may, at the direction of the Obligor, be applied to the Bond Fund or transferred to the Obligor.

Investment of Moneys

Money held for the credit of the Project Fund shall, as nearly as may be practicable, be continuously invested and reinvested at the verbal authorization, followed by written direction of the Corporation in Qualified Investments, which shall mature, or which shall be subject to redemption by the holder or owner thereof at the option of such holder or owner, not later than the respective dates, as estimated by the Construction Manager from time to time, when the moneys held for the credit of the Project Fund will be required for the purpose intended.

Money held for the credit of the Bond Fund, the Debt Service Reserve Fund and the Capital Replacement Fund shall, as nearly as may be practicable, be invested and reinvested at the verbal authorization, followed by written direction of the Corporation in Permitted Investments. Such obligations shall mature, or shall be subject to redemption by the holder or owner thereof at the option of such holder or owner, not later than the respective dates when the money held for the credit of such Funds will be required for the purposes intended. 

All income derived from the investment of moneys on deposit in the Project Fund and the Debt Service Reserve Fund shall be deposited in the Project Fund until receipt of the Completion Certificate with respect to any Improvements, and thereafter shall be deposited in the Interest Account. All income derived from the investment of moneys on deposit in the Bond Fund shall be retained in the Bond Fund, and all income derived from the investment of moneys in the Capital Replacement Fund shall be retained in the Bond Fund, and all income derived from the investment of moneys in the Capital Replacement Fund shall be retained in the Capital Replacement Fund.

In computing the assets of any Fund or Account, investments and accrued interest theron shall be deemed a part thereof. Such investments, other than in the Debt Service Reserve Fund, shall be valued at the lower of amortized cost or current market value as calculated on the last day of each June.

In computing the amount of the Debt Service Reserve Fund, obligations purchased as an investment of moneys therein shall be valued at fair market value. Valuation of the Debt Service Reserve Fund shall be made as of the last day of each Bond Year.

If after valuation the balance is in the Reserve Fund is less than 90 percent of the Reserve Requirement investment earnings from Reserve Fund investments shall be retained until the Reserve Fund is restored to the Reserve Requirement.