13-2406.   Sinking fund to pay bonded debt; investment; records and report.It shall be the duty of the board of commissioners to createand maintain a sinking fund for the payment of the bonded indebtedness ofsuch city arising from the purchase of the waterworks, by layingaside from the revenues of the department an amount equal tonot less than 2% per annum upon thegross bonded debt. The board of commissioners shall use such sinkingfund in the purchase and cancellation from time to time of bonds issuedto pay the purchase price of the waterworks but shall not payfor any such bonds any greater sum than par, nor more than the actual marketprice thereof at the time of purchasing the same, if less than par. Allbonds purchased by the board shall be canceled and retired by the board.

      If the board of commissioners are unable to purchaseany of the bonds on such terms, then it shall be the duty of theboard to invest the moneys of the sinkingfund in investments authorized by K.S.A. 12-1675, and amendments thereto,in the manner prescribed therein or in bonds of the state of Kansas, orgeneral improvement bonds of cities of the first or second class, or bondsof any county in this state wherein a city of the first or second classis located or bonds of unified school districts in this state. Anymunicipal bonds purchased shall bear no less than 3% interest per annumexcept that any municipality may purchaseits own bonds for sinking fund investments which bear less than the maximumrate of interest prescribed by K.S.A. 10-1009, and amendmentsthereto. The board shall not buy the bonds of any city, wherein the outstandingbonded city indebtedness, exclusive of the bonded debt created for the purchaseor extension of any waterworks system of any bonds for the payment of whichspecial assessments are levied exceeds 15%of its assessed valuation as fixed by such city. In making such investment,the board shall not pay for anysuch bonds any greater sum than par, nor more than the actual market pricethereof at the time of purchasing the same, if less than par, except byunanimous vote of the board.

      It shall be the duty of the city attorney to examine the validity of allsuch bonds and report thereon in writing to the board of commissioners,and no bonds shall be purchased by the board until they havebeen approved andfound valid by the city attorney. It shall be the duty of thesecretary to keep a permanent record of the amounts turned intothe sinking fund and a full description of all bonded indebtedness ofthe waterworks department canceled and retired, and a fulldescription of all bonds bought for the sinking fund, the dateof the bonds, rate of interest, when payable, number of anycoupons attached, when bought, for whom purchased and the price orrate paid therefor.

      Immediately upon the receipt of any such bonds purchased forthe sinking fund, the city auditor or city clerk, shall cause each bondand any coupons appertaining thereto to be plainly stampedupon the back thereof, "Property of the waterworks sinking fund of the cityof _______________." The auditor or city clerk shall also keepa record of each of the bonds and any coupon theretoattached, which record shall show amount, date, rate of interest of suchbond, when and where payable, the date, amount and the number of eachcoupon and when payable. The bonds shall be kept by the city treasurer.

      The board of commissioners shall not sell any of such bonds for less thantheir par value. The city auditor or city clerk shall also keep a duplicaterecord of the payment of all such bonds or coupons, and all moneys receivedfrom the payment of any such bonds and interest thereonshall be reinvested as a part of the sinking fund as hereinbeforeprovided. It shall be the duty of the secretary to report on January1 of each year the amount of outstanding indebtedness of thewaterworks department and an itemized statement ofthe moneys and bonds in the sinking fund and the bonded indebtednesspaid off during the preceding year.

      History:   L. 1907, ch. 114, § 104; L. 1913, ch. 85, § 8; R.S.1923, § 13-2406; L. 1935, ch. 116, § 1; L. 1970, ch. 64, § 101;L. 1977, ch. 54, § 16; L. 1983, ch. 49, § 66; May 12.