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Section 5.1. IMPROVEMENT FUND. Except as provided in <br />Section 5.3, proceeds of sale of the bonds, together with all <br />amounts paid on the assessments prior to bond issuance, shall be <br />deposited in the improvement fund to be maintained by the <br />Director of Finance. Disbursements from the improvement fund <br />shall be made by the Director of Finance in accordance with the <br />budget of estimated costs and expenses set forth in the <br />engineer's report heretofore approved by the City Council, which <br />report and budget are subject to modification by the City <br />Council from time to time as prescribed by the Act. <br />Section 5.2. REDEMPTION FUND. The redemption fund <br />shall be maintained by the Director of Finance. All payments of <br />principal and interest installments on the assessments, together <br />with penalties, if any, shall be deposited in the redemption <br />fund, which shall be a trust fund for the benefit of the <br />bondholders. Payment of the bonds at maturity, or at redemption <br />prior to maturity, and all interest on the bonds shall be made <br />from the redemption fund. <br />Section 5.3. SPECIAL RESERVE FUND. The special <br />reserve fund shall be maintained by the Director of Finance. <br />There shall be deposited into the special reserve fund the <br />amount of $898,450.00 from the proceeds of the sale of bonds. <br />The special reserve fund shall be administered as follows: <br />A. During the term of the bonds, the amount in <br />the special reserve fund shall be available for transfer into <br />the redemption fund in accordance with Section 8808 of the <br />Streets and Highways Code. The amount so advanced shall be <br />3 <br />