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Attachment B ARTICLE III Issuance of Bonds; Disbursement of Proceeds Section 3.1. Issuance of Bonds. (a) In order to provide funds to defray the costs of the Housing Improvements, the City will issue the Bonds in the ma�mum principal amount that is supported by the Fee Revenues and will produce total funds in the amount of $1,595,336 (the "Net Project Amount"), including (i) proceeds of the Bonds, net of costs of issuance, administrative costs, and capitalized interest; and (ii) all Fee Revenues prepaid by owners of Housing Units prior to issuance of the Bonds in accordance with the Fee Resolution. At closing on issuance of the Bonds, proceeds will be applied as follows: into the Bond Fund will be deposited capitalized interest through August 1, 2010 together with accrued interest on the Bonds, if any; into the Administration Fund will be deposited costs of issuance; into the Contingency Fund will be deposited the amount specified in Section 3.5 hereof; and into the Project Fund will be deposited the balance of proceeds of the Bonds together with prepaid Fee Revenues. Moneys in the Project Fund will be disbursed from time to time to pay the costs of Housing Improvements in accordance with the Disbursing Agreement. None of the funds in the Project Fund shall be used for any purposes other than payment or reimbursement of such costs of the Housing Improvements. The City will sell the Bonds by September 1, 2009, subject to Unavoidable Delays and the City's ability to issue the Bonds under existing laws and market conditions. (b) Under the Bond Resolution, all Fee Revenues (excluding Fee Revenues prepaid by owners of Housing Units prior to issuance of the Bonds in accordance with the Fee Resolution) in excess of the amount necessary to pay when due the principal, interest and redemption premium, if any, on the Bonds will be deposited into a separate revenue account to be established under the Bond Resolution and maintained by the City until the Maturity Date (referred to as the "Surplus Find"). Subj ect to the prior pledge of Fee Revenues to payment of principal and interest on the Bonds, the City may at its sole discretion apply funds the Surplus Fund (i) to pay registrar and paying agent fees, if any, in connection with the Bonds; (ii) to pay other administrative costs in connection with the Bonds or the Housing Improvement Area; (iii) to pay costs in connection with enforcement by the City of the Association's obligations under this Agreement (provided that any such payment is subject to reimbursement by the Association pursuant to Section 22(h) hereof, and nothing in this Section 31(b) shall be construed to require the City to pay costs of enforcement in the first instance as provided herein); and (iv) in accordance with Section 3.4 hereof. (c) The City and Association agree, and the Bond Resolution shall so provide, that interest earnings on funds in the Bond Fund, the Project Fund and the Contingency Fund will be credited to the respective fund from which the interest was derived. Interest earnings on all other funds and accounts will be credited to the surplus revenue account described in Section 31(b). Section 3.2. Deposit of Funds bv Association. If the City shall at any time in good faith determine that the amount of funds then on deposit in the Project Fund and the Contingency Fund, combined, together with expected earnings thereon, is less than the amount required to pay all costs and expenses of any kind which reasonably may be anticipated in connection with the completion of the Housing Improvements and shall thereupon send written notice thereof to the Association specifying the additional amount required to be deposited by the Association to provide sufficient 7