This article may be cited as the Investment Bond Act of 1909.

Whenever the public interest or necessity requires, any city may incur a bonded indebtedness to acquire bonds:

It is the intent of the Legislature in adopting this article that the acquisition of such bonds or investments of the general improvement fund shall be for any or all of the following purposes:

Bonds issued pursuant to this article shall be issued substantially in the manner prescribed by Article 1 of this chapter.

The ordinance calling the election need not contain any statement as to the estimated cost of the proposed public improvement.

If the bonds are to be issued to acquire outstanding bonds, the ordinance shall state generally:

The interest rate on the bonds need not be the same during the entire term and different rates may be fixed for one or more interest payments.

The bonds shall not be sold at less than their par value. They may be exchanged at their par value for the outstanding bonds if the outstanding bonds are taken in exchange at a price not exceeding the maximum purchase price stated in the ordinance calling the election.

In the exchange of bonds, interest upon the bonds to be acquired accruing to the date of exchange may be offset against the interest accruing upon the bonds issued pursuant to this article. In the purchase of bonds, interest accruing to date of exchange may be paid.

Bonds issued pursuant to this article shall be redeemed and paid pursuant to Article 1 of this chapter.

Taxes for the payment of the bonds shall be levied pursuant to Article 1 except where any issue of bonds pursuant to this article is to mature at one time.

The legislative body of any city shall keep the funds arising from the sale of bonds pursuant to this article separate and distinct from all other municipal funds in a fund to be called “general improvement fund,” and shall invest and reinvest the money in bonds issued by the city, or bonds issued for street, sewer, drainage, or any other improvements within the city. It shall collect the principal of and interest on such bonds and credit it to the fund.

If the bonds are issued to acquire or to provide funds for the purchase of certain outstanding bonds, they may be used only for that purpose. All of the funds not so used and all sums received in payment of principal or interest of the bonds acquired by the city or received from their sale shall be used for the payment of the principal and interest of the bonds issued pursuant to this article.

At such times as the legislative body determines, it may sell any of the bonds purchased by it. The bonds shall not be sold at a price less than that paid for them.

The purchase price of any bonds sold and the accrued interest on them shall be placed in the general improvement fund and may be reinvested in bonds, or, if such reinvestment is not permitted, shall be used to pay principal and interest of the bonds issued pursuant to this article.

During the time the city owns any district bonds payable from taxes or assessments levied wholly or partially in accordance with the assessed value of the land within the district, the legislative body may omit any sum for the payment of principal and interest past due and unpaid because of delinquencies from the amount of the annual tax or assessment to be levied for the payment of principal and interest of such bonds. It may also limit or omit any sum for anticipated delinquencies. The legislative body may exercise its discretion as to such omission each year. The tax or assessment shall be levied pursuant to the statute under which the bonds acquired were issued, but the total amount of the annual levy may be limited as provided in this section.

When bonds are acquired at less than their par value, the legislative body may reduce the total principal amount of any issue acquired and held by it to a total principal amount to be fixed by ordinance. The reduced total principal amount of the issue shall not be less at par than the total purchase price of the total principal amount of the issue acquired by the legislative body.

The ordinance is subject to referendum as other ordinances and shall designate:

At the time and place fixed, the bonds shall be publicly canceled, and the city clerk shall enter on the minutes of the legislative body a record of the bonds canceled sufficient to identify them and the fact and date of their cancellation.

If the bonds canceled are issued under the Improvement Bond Act of 1915, the legislative body shall reduce the principal amount of the assessments securing the bonds to the total principal amount of the unpaid and uncanceled bonds of the same issue.