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e e public accountants. based upon an audit of the books of the System. certifies that the net earnings of the System for the previous fiscal year. or for any 12 consecutive month period ending not more than 90 days prior to the date of the adoption of the ordinance authorizing the Additional Bonds. were equal to each of the following detennined independently: (i) at least 1.50 times the average annual requirements for the payment of the principal of and interest on the Parity Bonds then outstanding and on such Additional Bonds. when issued. sold, and delivered; and (ii) at least 1.25 times the maximum annual requirement for the payment of the principal of and. interest on the Parity Bonds then outstanding and on such Additional Bonds, when issued. sold, and delivered; provided. however, should the certificate of the accountant cenify that the net earnings of the System for the period covered thereby were. in either case. less than required above. and a change in the rates and charges for the services afforded by the System became effective at least 60 days prior to the scheduled dale of adoption of the ordinance authorizing such Additional Bonds. then such Additional Bonds may nevertheless be issued if an independent engineer or engineering fnm having a favorable reputation with respect to such malters certifies that, had such change in rates and charges been effective for the entire period covered by the accountant's certificate, the net earnings for the System for the fiscal year covered by the accountant's certificate would have met the tests specified in (i) and (ii) above. The tenn "net earnings" as used in this Section shall mean all of the Net Revenues of the System. exclusive of income received specifically for capital items. and operation and maintenance expenses shall exclude expenditures which under standard accounting practice should be charged to capital expenditures or depreciations. (c) Such Additional Bonds are made to mature on March 15th in each of the years in which they are scheduled to mature. (d) The City shall establish a reserve fund for such Additional Bonds by providing a cash reserve fund therefor. a surety bond in lieu thereof, or a combination of such cash reserve fund and surety bond, all as the City Council deems reasonable and appropriate provided that (i) the amount of any such cash reserve fund or the coverage of any surety bond in lieu thereof or the amount of such cash reserve fund and the coverage of such surety bond when added together shall at least equal the maximum annual debt service requirements of such Additional Bonds, not to exceed the maximum permitted by applicable regulations, procedures, or published rulings of the Internal Revenue Service (the "Reserve Minimum"); (ii) if any cash reserve fund is funded by making ttansfers of Net Revenues in the System Fund, such transfers shall be made each month in an amount reasonably sufficient to reach the Reserve Minimum (or the portion thereof which is to be provided by such cash reserve fund) within a period of not more than five years after such Additional Bonds are sold and delivered: (ill) any such cash reserve fund may be combined with the Reserve Fund herein provided for the Bonds and with the cash reserve fund provided for any Additional Bonds then outstanding in order ratably to secure all Parity Bonds then outstanding and the Additional Bonds then being issued: (iv) any such surety bond provided in lieu of a cash reserve fund shall be issued by an insurance company or association of companies whose insured obligations are rated by Moody's Investors Service and by Standard & Poor's Rating Group in their highest rating categories; and (v) any such surety bond may be written (or amended) to provide coverage not only for such Additional Bonds but also pro rata for the Parity Bonds then outstanding, provided. any existing cash reserve fund or surety fund in lieu thereof which secures any such outstanding Parity Bonds is extended ratably to secure the Additional Bonds then being issued. It is the City's intention hereby to provide maximum flexibility with respect to the reserve fund to be provided for any Additional Bonds which may be issued hereafter and the foregoing provisions shall be liberally conslIUed in order to achieve that objective without malerially prejudicing the rights and interests of the owners of any Parity Bonds at the time outstanding. 13