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H. Prepayment Reserve <br />As described above, a portion of the funds generated by the Additional Interest will be <br />allocated to fund the associated interest charged between the date of prepayment of a <br />Special Assessment and the date on which related PID Bonds are actually redeemed (the <br />"Prepayment Reserve"). The Prepayment Reserve shall be funded each year until it <br />reaches 1.5% of the par amount of the related PID Bonds, but in no event will the annual <br />collections be more than 0.20% per annum higher than the actual interest rate paid on the <br />related PID Bonds. If the PID Act is subsequently amended to allow a prepayment of a <br />Special Assessment to include all applicable interest from the date of prepayment through <br />and including the date of the regularly scheduled PID Bond payments to be charged upon <br />the prepayment of the Special Assessment, the 0.20% per annum allocated to fund the <br />associated interest charged between the date of prepayment of the Special Assessment and <br />the date on which PID Bonds are actually prepaid may be eliminated at the election of the <br />City. If the Prepayment Reserve requirement is so eliminated or in a given year the <br />additional reserve is fully funded at 1.5% of the par amount of the PID Bonds, the City can <br />allocate the Prepayment Reserve component of the Additional Interest collected during <br />that year to the Delinquency Reserve or to pay Administrative Expenses or for any other <br />use that benefits the Assessed Property as set forth in the Indenture related to such PID <br />Bonds and as determined by the City. <br />I. Delinquency Reserve <br />As described above, a portion of the funds generated by the Additional Interest will be <br />allocated to offset any possible delinquent payments. This additional reserve (the <br />"Delinquency Reserve") shall be funded each year up to 4.0% of the par amount of the <br />related PID Bonds, but in no event will the annual collection of the Delinquency Reserve be <br />more than 0.30% per annum higher than the actual interest rate paid on the related PID <br />Bonds. If in a given year the additional reserve is fully funded at 4.0% of the par amount of <br />the related PID Bonds, the City can allocate the Delinquency Reserve component of the <br />Additional Interest collected during that year to redeem PID Bonds or for any other use <br />that benefits the Assessed Property as set forth in the Indenture related to such PID Bonds <br />and as determined by the City. <br />15 <br />