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<br />system for the Bonds shall upon receipt of the proceeds of the Bonds be <br />transferred forthwith from the Improvement Fund and placed in the Bond <br />Administration Fund. Fees or charges incurred by the City payable to <br />the Agent in satisfaction of the City's liability to the Agent for the <br />Agent's services in performing the duties of the registration system <br />described herein, shall be paid from the Bond Administration Fund. <br />Such fees or charges, not paid from the proceeds of the Bonds, cash <br />payment of assessments or investment earnings on monies in the Bond <br />Administration Fund shall be reimbursed or satisfied by the collection <br />of such fees or charges or estimates thereof with the principal of and <br />interest on the assessments which remain unpaid at the time of such <br />collection and which pertain to the Bonds. The amount of any such <br />collection shall be apportioned pro rata among such assessments <br />remaining unpaid at the time of such collection. Such amounts shall be <br />collected with the same collection and enforcement procedures and with <br />the same priority and effect as with respect to the collection of the <br />principal of and interest on the unpaid assessments and shall be placed <br />in the Bond Administration Fund and expended as aforesaid. <br /> <br />Section 15. Investment of Funds. Monies in the Improvement <br />Fund, the Redemption Fund, the Reserve Fund and the Bond Administration <br />Fund may be invested in any obligations which are then authorized by <br />the laws of the State of California as investments for local agencies, <br />maturing on a date or dates prior to the need for such monies. Any <br />income or interest thereon shall accrue to and be deposited in the fund <br />from which said monies were invested, subject to the limitation in <br />Section 13 hereof with respect to the Reserve Fund. <br /> <br />Section 16. Arbitrage Covenant. The City covenants that as <br />long as any of the Bonds remain outstanding, no use will be made of the <br />proceeds thereof at any time which use (1) was not reasonably expected <br />at the time of issuance of the Bonds, and (2) would, if such use had <br />been reasonably expected at the time of issuance of the Bonds, have <br />caused such Bonds to be "arbitrage bonds" within the meaning of Section <br />l03(c) of the Internal Revenue Code of 1954, as amended, and applicable <br />regulations thereunder as the same may be amended from time to time, <br />and that the City will comply with the requirements of said Section <br />l03(c) and applicable regulations thereunder, as they apply to the <br />Bonds throughout the term thereof. <br /> <br />Section 17. Collection of Unpaid Assessments. The unpaid <br />assessments shown on the list of unpaid assessments filed with the <br />Treasurer, together with the interest thereon, shall remain and <br />constitute a trust fund for the redemption and payment of the principal <br />of the Bonds and for the interest due thereon, which unpaid assessments <br />shall be payable in annual series corresponding in number to the number <br />of serial maturities of the Bonds issued. An annual proportion of each <br />unpaid assessment shall be payable in each year preceding the date of <br />maturity of each of the several annual series of Bonds issued, <br />sufficient to pay the Bonds when due, and such proportion of each <br />unpaid assessment coming due in any year, together with the annual <br />interest thereon, shall be payable in the same manner and at the same <br /> <br />-9- <br />