(a) Investments may be made in bonds of any county in the state and bonds of any city or town in the state having a population of not less than two thousand (2,000) by the last federal census preceding the investment, regardless of whether the bonds are payable from taxes levied on property in the county, city or town, or are payable solely from revenues of the waterworks system, electric distribution system or both owned and operated by the issuing county, city or town, or are payable from both taxes and revenues; provided, that the county, city or town has not defaulted within fifteen (15) years preceding the investment, for more than ninety (90) days, in the payment of any part of either principal or interest on any bond, note or other evidence of valid indebtedness.

(b) Before any funds may be invested in bonds payable solely from waterworks, electric revenue or both, there shall be furnished with the bonds a certified copy of an operating statement issued by the official in charge of the operations of the waterworks or electric distribution systems, showing that the net revenue from the system or systems pledged to and available for the principal of and interest on all outstanding bonds payable from that revenue, covering a period of twelve (12) consecutive months out of the fifteen (15) months preceding the investment, have been at least one and one-third (1⅓) times the highest combined principal and interest requirements for any one (1) year on all bonds then outstanding that are payable from the pledged revenues of the system or systems.

(c) “Net revenue” means total revenue less operating expenses incurred in connection with the operation of the system or systems.