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<br />Section 2. The Fund. <br /> <br />2.1. The Special Assessment Bond Fund (the "Fund") is hereby created. It shall contain <br />a General Account and a Reserve Account. After deduction of the Administrative Increment, <br />and except as provided in Section 3 and Section 5, the City shall deposit all Assessments into the <br />General Account. As long as any Bonds remain issued and outstanding, money in the General <br />Account shall be used solely for the purposes listed below, in the following order of priority: <br /> <br />2.1.1. To pay any Debt Service on Bonds which was not paid when due; <br /> <br />2.1.2. To pay scheduled Debt Service on Bonds; <br /> <br />2.1.3. To restore the balance in the Reserve Account to an amount equal to the <br />Reserve Requirement; <br /> <br />2.1.4. To redeem Bond principal (and pay any associated interest and premiums) <br />prior to maturity. Amounts in excess of the requirements described in Sections 2.1.1 <br />through 2.1.3 (to the greatest integral multiple of $5,000) shall be used to redeem Bonds in <br />accordance with Bond redemption provisions. <br /> <br />2.2. Earnings on amounts in the General Account shall be credited to the General <br />Account. Any amounts remaining in the Fund after all Bonds have been paid shall be the <br />property of the City. <br /> <br />Section 3. Reserve Account. <br /> <br />3.1. Upon issuance of the Bonds, the City shall deposit into the Reserve Account an <br />amount of Bond proceeds such that the balance in the Reserve Account is at least equal to the <br />Reserve Requirement for the Bonds. The City shall maintain the balance in the Reserve Account <br />from transfers under Section 2.1.3 of this Resolution. <br /> <br />3.2. Moneys required to be maintained in the Reserve Account shall be used only to pay <br />principal of and interest on the Bonds, and only in the event that the balance in the General <br />Account is insufficient. However, amounts in the Reserve Account which exceed the Reserve <br />Requirement may be transferred to the General Account. <br /> <br />3.3. Earnings on the Reserve Account shall be credited to the General Account. <br /> <br />Page 3 Resolution <br /> <br />J:\HWR\CITIES\EUGENE\GENERAL\SABURES.DOC <br />