§ 1. Authority To Issue Bonds.

The City Council shall have the power and authority by ordinance duly passed, if it so elects, to borrow money on the credit of the City for permanent improvements, to an amount not to exceed one hundred thousand dollars ($100,000) in any one year, and may issue bonds of the City therefor. It may also have the power, and is hereby expressly authorized, to issue bonds for the purpose of refunding bonds of the City of previous issues; provided, the bonds may be refunded at a lower rate of interest than the bonds proposed to be retired draw.

No bonds shall be issued for any purpose, except for the purpose of making permanent improvements, which shall not exceed one hundred thousand dollars ($100,000) in any one year, and for the purpose of re-funding bonds of the City of previous issues, unless an election be duly ordered by the Mayor and City Council, and if at said election a majority of the vote polled shall be in favor of creating such debt, it shall be lawful for the City Council to make the issuance of bonds as proposed in the ordinance submitting the same at the election so held, but if a majority of the vote polled shall be against the creating of such debt, it shall be unlawful for the City Council to issue the bonds.

In all elections to determine the expenditure of money for the assumption of debt, only those shall be qualified to vote who pay taxes on property in said City, and are legally qualified voters in said City of Houston; provided, that no poll tax for the payment of debts thus incurred shall be levied upon the persons debarred from voting in relation thereto.

No bonds shall be issued drawing more than five percent. interest per annum, and they shall be invalid if sold for less than par and accrued interest, and all bonds shall express upon their face the purpose for which they are issued.

The ordinance authorizing any bonds to be issued shall provide for the creation of a sinking fund sufficient to pay the bonds at maturity, and make provisions for the payment of the interest thereon as it matures, and said sinking fund shall be invested in bonds of the State of Texas, or in the bonds issued by Counties in the State of Texas, or in bonds of the United States, or such funds may be used for the purchase of the bonds of the City of Houston which are not yet due, and neither interest nor sinking fund shall be devoted to any other purpose whatsoever.

Any officer of the City who shall willfully or knowingly direct or use said fund for any other purpose except that for which the fund is created, or herein expressly authorized to be invested, shall be deemed guilty of a felony, and subject to prosecution as provided under the general laws of the State for the diversion and conversion of funds belonging to any of the municipalities of said State. (Act of 1905)