Section 14-234-104 - Improvements - Financing with promissory notes(a) Any municipality owning or operating a waterworks system, however constructed or acquired, and desiring to construct improvements and betterments thereto, may borrow money to be used for those purposes, to refinance or retire existing indebtedness related to the waterworks system, or to provide funds for preliminary expenses prior to the issuance of revenue bonds, the loan to be evidenced by revenue promissory notes as set out in this section. The money so borrowed shall be deposited in a revenue note fund and shall be used solely for the purposes authorized in this section.(b) The note or notes evidencing the loan shall be authorized by the legislative body of the municipality and shall be due in no more than five (5) years from date and shall bear interest at a rate or rates as shall be provided in the ordinance authorizing their issuance, interest payable semiannually.(c)(1) The note or notes shall be payable solely from the revenues derived from the waterworks system and shall not in any event constitute an indebtedness of the municipality within the meaning of the constitutional provisions or limitations.(2) It shall be plainly stated on the face of each note that it has been issued under the provisions of this act and that it does not constitute an indebtedness of the municipality within any constitutional or statutory limitations.(d) The note or notes shall be subordinate to any outstanding revenue bonds theretofore issued by the municipality.(e) It shall be no objection to the subsequent issue of any revenue bonds that a portion of the proceeds received from the sale of the revenue bonds is to be used to retire the indebtedness permitted by this section. If the proceeds of the bonds are so used, then the improvements constructed or purchased with the proceeds of the loan authorized by this section shall be considered to be a portion of the improvements constructed or purchased with the revenue bonds subsequently issued and shall be subject to the lien of the bonds.(f) All interest paid on the revenue bonds shall be exempt from State of Arkansas income tax.Acts 1955, No. 321, § 5; 1969, No. 90, § 1; 1979, No. 529, § 1; 1981, No. 425, § 42; A.S.A. 1947, § 19-4218.1; Acts 1989, No. 254, § 1.