§ 8221. Creation of sinking funds and deposits, reserves and surplus funds.
(a) General rule.--Every local government unit having outstanding any bonds or notes, other than tax anticipation notes and other than notes issued under section 8109 (relating to small borrowing for capital purposes), shall create forthwith, subject to the terms of any existing contracts with the holders of such bonds or notes, and every local government unit issuing any bonds or notes shall create simultaneously with or prior to the delivery of the bonds or notes, and thereafter maintain until the bonds or notes are paid in full, a sinking fund:
(1) for the aggregate or for one or more issues or series of its general obligation bonds and notes; and
(2) separately for each project or combination of projects financed by revenue or guaranteed revenue bonds or notes as to which different revenues are pledged.
If a sinking fund is established for more than one issue of bonds, a separate debt service account for each issue may be established in the sinking fund. The sinking fund shall be maintained with a bank, trust company or bank and trust company located and lawfully conducting a banking or trust business in this Commonwealth and appointed from time to time as a sinking fund depository.
(b) Deposit of moneys.--Moneys for the payment of taxes assumed and principal and interest on outstanding bonds or notes shall be deposited in the applicable sinking fund or sinking fund account from the sources, at the times and in the amounts provided in any contract with the holders of the bonds and notes but, in any event, prior to the time when payment of the taxes, principal and interest become due and payable. All moneys deposited in sinking funds as required by this subpart and all investments and proceeds of investments thereof shall, without further action or filing, be subject to a perfected security interest for the holders of the bonds or notes for which the sinking fund is held until the money or investments have been properly disbursed or sold.
(c) Revenues from use of capital project.--A local government unit pledging the rates, rentals, receipts, charges and tolls from the use of a capital project for the security of revenue or guaranteed revenue bonds or notes may by ordinance provide for the deposit thereof as and when received in the sinking fund for the project.
(d) Other funds and accounts.--A local government unit may provide by ordinance for the creation and maintenance of other accounts in the sinking fund or of other funds for revenue or guaranteed revenue bonds or notes, including operating accounts or funds for financed projects, reserve accounts or funds for various purposes, a bond or note redemption account or fund and a surplus account or fund, and may prescribe the purposes for which the moneys and investments in each account or fund may be withdrawn and the amounts, times and sources of deposits therein. No ordinance shall restrict the application of the rates, receipts, charges and tolls received in respect of a capital project or combined capital projects, exclusive of assessments and contributions for capital improvements, in any fiscal year in excess of the amount required during the year for operating expenses, plus 140% or such lesser percent as may be fixed by ordinance of the amount required to be deposited during the year from the revenues in the applicable sinking fund for the payment, at maturity or scheduled mandatory redemption, of the principal of and interest on the related bonds or notes. This excess shall at all times be available for use by the local government unit for any lawful purpose, and no contract with the holders of bonds or notes shall provide to the contrary.
Cross References. Section 8221 is referred to in section 8002 of this title.
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