(1) Local improvement districts for capital improvements may be financed by use of funds obtained from the sale of general obligation bonds approved by the voters of the City of Kenai for such capital improvements.

(2) The principal and interest of general obligation bonds so issued shall be payable from the levy of assessments so issued against the property benefited, but any deficiency in meeting payments of principal and interest shall be made up by an appropriation from the general fund. The assessments shall constitute a sinking fund for the payment of principal and interest on the bonds.

(3) Interest on funds borrowed to finance the capital improvement prior to the sale of general obligation bonds shall be a cost of the improvement district.

(1) The City Council may, by ordinance, authorize in compliance with the City Charter the issuance and sale of special assessment bonds to pay all or part of the cost of an improvement in a local improvement district. The principal and interest of bonds so issued shall be payable solely from the levy of special assessments against property to be benefited. The assessments shall constitute a sinking fund for the payment of principal and interest on the bonds. The property benefited may be pledged by the Council to secure a payment.

(2) Interest on funds borrowed to finance the capital improvement prior to the sale of special assessment bonds shall be a cost of the improvement district.