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proceeds of the Bonds may also be used to the extent necessary to <br />pay interest on the Bonds due prior to the anticipated date of <br />commencement of the collection of taxes or special assessments <br />levied or covenanted to be levied; and provided further that if <br />upon completion of the Improvements there shall remain any <br />unexpended balance in the Capital Account, the balance (other <br />than any special assessments) may be transferred by the Council <br />to the fund of any other improvement instituted pursuant to <br />Minnesota Statutes, Chapter 429; and provided further that any <br />special assessments credited to the Capital Account shall only be <br />applied towards payment of the costs of the Improvements upon <br />adoption of a resolution by the City Council determining that the <br />application of the special assessments for such purpose will not <br />cause the City to no longer be in compliance with Minnesota <br />Statutes, Section 475.61, Subdivision 1. <br /> <br /> (ii) Debt Service Account. There are hereby irrevocably <br />appropriated and pledged to, and there shall be credited to, the <br />Debt Service Account: (a) all collections of special assessments <br />herein covenanted to be levied with respect to the Improvements <br />and either initially credited to the Capital Account and not <br />already spent as permitted above and required to pay any <br />principal and interest due on the Bonds or collected subsequent <br />to the completion of the Improvements and payment of the costs <br />thereof; (b) the accrued interest received upon delivery of the <br />Bonds plus $ -0- representing capitalized interest thereon, <br />all to be used to pay the interest first coming due thereon; (c) <br />all funds paid for the Bonds in excess of $1,153,350; (d) any <br />collections of all taxes herein or hereafter levied for the <br />payment of the Bonds and interest thereon; (e) all funds <br />remaining in the Capital Account after completion of the <br />Improvements and payment of the costs thereof, not so transferred <br />to the account of another improvement; (f) all investment <br />earnings on funds held in the Debt Service Account; and (g) any <br />and all other moneys which are properly available and are <br />appropriated by the Council to the Debt Service Account. The <br />Debt Service Account shall be used solely to pay the principal <br />and interest and any premiums for redemption of the Bonds and any <br />other general obligation bonds of the City hereafter issued by <br />the City and made payable from said account as provided by law. <br /> <br /> No portion of the proceeds of the Bonds shall be used <br />directly or indirectly to acquire higher yielding investments or <br />to replace funds which were used directly or indirectly to <br />acquire higher yielding investments, except (1) for a reasonable <br />temporary period until such proceeds are needed for the purpose <br />for which the Bonds were issued and (2) in addition to the above <br />in an amount not greater than the lesser of five percent (5%) of <br />the "Sale Proceeds" of the Bonds (being the "issue price" of the <br />Bonds less accrued interest). To this effect, any proceeds of <br />the Bonds and any sums from time to time held in the Capital <br />Account or Debt Service Account in excess of amounts which under <br />then-applicable federal arbitrage regulations may be invested <br /> <br />35~666.1 19 <br /> <br /> <br />