A. Interest and earnings from the local improvement guaranty fund shall be paid into the fund. If in any local improvement fund guaranteed by the local improvement guaranty fund there is a surplus remaining after the payment of all outstanding bonds and short term obligations payable therefrom, it shall be paid into the local improvement guaranty fund.

B. Whenever any sum is paid out of the local improvement guaranty fund on account of the principal or interest of a local improvement bond or short term obligation, the city, as trustee of the fund, shall be subrogated to all the rights of the holder of the bond or short term obligation so paid and the proceeds thereof or of the underlying assessment shall be paid into the guaranty fund. [Ord. 9536, 1986].