Whenever there is paid out of a guaranty fund any sum on account of principal or interest of a local improvement bond or warrant, the city, as trustee for the fund, shall be subrogated to all the rights of the holder of the bond or interest coupon or warrant so paid, and the proceeds thereof, or of the assessment underlying the same, shall become part of the guaranty fund. There shall also be paid into each guaranty fund the interest received from bank deposits of the fund, as well as any surplus remaining in any local improvement fund guaranteed under this chapter after the payment of all outstanding bonds or warrants payable primarily out of such local improvement fund. (Ord. 1337, §29, 1980).