(1) At any time that the amount in the local improvement guaranty fund exceeds 10 percent of the outstanding obligations guaranteed by said fund, the excess amount or any portion thereof may, by ordinance of the town council, be transferred to the current expense fund of the town, subject to the conditions required by law and set forth in this chapter; provided, that the town shall not permit the amount in the guaranty fund at any time to exceed the maximum amount permitted under Section 103(c) of the United States Internal Revenue Code of 1954, as amended, and the applicable regulations thereunder, recognizing that any such excess could cause obligations guaranteed by the fund to become arbitrage bonds.

(2) Prior to transfer of any amounts pursuant to this section, there shall be on file with the town a certificate of the town treasurer that the guaranty fund has sufficient funds currently on hand to meet all valid outstanding obligations of the fund and all other obligations of the fund reasonably expected to be incurred in the near future. The net cash of the local improvement guaranty fund may be reduced by such transfer to an amount not less than 10 percent of the net outstanding obligations guaranteed by such fund.

(3) If, at any time within five years of any transfer of assets from the local improvement guaranty fund to the current expense fund, the net cash of the local improvement guaranty fund is reduced below the minimum amount specified in subsection (2) of this section, the town shall, to the extent of the amount transferred, pay valid claims against the local improvement guaranty fund as a general obligation of the town. In addition, the town shall pay all reasonable costs of collection necessarily incurred by the holders of valid claims against the local improvement guaranty fund. (Ord. 314 § 6, 1984)