KRS 74.300: Payment of bonds for additions -- Operating and depreciation funds.

(1) All money derived from any bonds issued under KRS 74.280 to 74.310 shall be

applied solely for the construction or acquisition of the additions, extensions and

appurtenances, or to advance the payment of interest on bonds during the first three

(3) years following the date of issue of the bonds.

(2) At or before the issuance of such bonds the commission shall by ordinance set aside

and pledge the income and revenue of the waterworks into a separate and special

fund to be used and applied in the payment of the cost of the additions, extensions

or appurtenances and the maintenance, operation and depreciation thereof. The

ordinance shall definitely fix and determine the amount of revenue that is necessary

to be set apart and applied to the payment of the princ ipal and interest of the bonds,

and the proportion of the balance of such income and revenue that is to be set aside

as a proper and adequate depreciation account. The balance shall be set aside for the

operation and maintenance of the waterworks. The rate s to be charged for the

service from the waterworks shall be sufficient to provide for the payment of

interest upon all bonds and to create a sinking fund to pay the principal when due,

and to provide for the operation and maintenance thereof and an adequa te

depreciation account.

(3) If there is a surplus in the operating and maintenance fund equal to the cost of

maintaining and operating the waterworks during the remainder of the current

calendar or fiscal year, and during the next calendar or fiscal year , the commission

may at any time transfer any excess over that amount to the depreciation account.

(4) The funds in the depreciation account shall be expended in balancing depreciation

in the waterworks or in making new constructions, extensions or additi ons thereto.

The funds may be invested as the commission designates and the income from

investments shall be credited to the depreciation account.