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Permanent Improvement Revolving Fund shall only be applied towards payment of the costs of the Improvements or the Additional Improvements upon the determination by the Administrator that the application of the special assessments for such purpose will not cause the City to no longer be in compliance with Minnesota Statutes, Section 475.61, Subdivision 1. The City reserves the right granted by Minnesota Statutes, Section 429.091, Subdivision 7A to establish a separate construction account within the Permanent Improvement Revolving Fund into which the City may deposit the proceeds of the Bonds or the proceeds of Additional Bonds. (b) Permanent Improvement Revolving Sinking Fund. There are hereby irrevocably appropriated and pledged to, and there shall be credited to, the Permanent Improvement Revolving Sinking Fund heretofore created: (i) special assessments initially credited to the Permanent Improvement Revolving Fund and not already spent as permitted above and required to pay any principal and interest due on the Bonds; (ii) any accrued interest received upon delivery of the Bonds; (iii) capitalized interest in the amount of $ (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the Bonds on or before ); (iv) all funds paid for the Bonds in excess of the minimum bid; (v) any collections of all taxes herein and hereafter levied for the payment of the Bonds and interest thereon; (vi) all funds remaining in the Permanent Improvement Revolving Fund after completion of the Improvements and the Additional Improvements and payment of the costs thereof; (vii) all investment earnings on funds held in the Permanent Improvement Revolving Sinking Fund; and (viii) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Pei manent Improvement Revolving Sinking Fund. The Permanent Improvement Revolving Sinking Fund shall be used solely to pay the principal and interest and any premiums for redemption of the Bonds. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (I) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued and (2) in addition to the above in an amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Permanent Improvement Revolving Fund or Permanent Improvement Revolving Sinking Fund (or any other City account which will be used to pay principal or interest to become due on the bonds payable therefrom) in excess of amounts which under then applicable federal arbitrage regulations may be invested without regard to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. Money in the Permanent Improvement Revolving Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code "). -19-