If an agreement entered into pursuant to Sections 10109 and 10110 provides for the payment of refunds, and to the extent that the works, appliances, or improvements to which the refund payments are applicable are financed by special assessments, any amounts paid by the public agency, public utility, or mutual water company as a refund payment for the works, appliances, or improvements to be transferred to the public agency, public utility, or mutual water company under the agreement shall be deposited into a special fund to be established and administered by the city treasurer and applied as a credit upon the assessment and supplemental assessment, if any, in the same manner as provided in Section 10427.1, or shall be used to call bonds, or both. The credits shall be applied only to the assessments levied for the particular improvements for which the refund is made. Any such amounts shall be transferred to the general fund of the city if either of the following occurs:
(a) The amounts are paid later than four years from the date of recordation of the assessment and any supplemental assessment.
(b) If bonds have been issued, the amounts have been paid later than four years after the due date of the last installment upon the bonds or of the last principal coupons attached thereto.
(Amended by Stats. 1991, Ch. 966, Sec. 10.)