Section 10. (a) The commission is hereby authorized and empowered to provide by resolution for the issuance, at one time or from time to time within three years following the acceptance of this chapter, of notes of the commission for the purpose of providing funds for (i) paying the cost of constructing or acquiring such improvements, extensions, enlargements, alterations, reconstruction or remodeling of the water works system and the sewer works system as may be authorized by such resolution, including the funding of interest payable on or before three years following the acceptance of this chapter on any notes of the commission issued pursuant to section ten in anticipation of federal, state or local grants for such work and (ii) providing funds for paying the current expenses of the commission to the extent not paid out of its revenues or provided for in clause (i) from the acceptance of this chapter until one year afterwards.

Except as otherwise provided herein, notes issued by the commission in accordance with this section shall be issued in anticipation of bonds to be issued by the commission pursuant to section ten and shall be authorized, issued and sold in the same manner as, and shall otherwise be subject to section eleven and the other provisions of this chapter relating to, such bonds. Such notes shall mature at such time or times as provided by resolution of the commission and may be renewed from time to time, provided that all such notes and renewals thereof shall mature on or prior to three years following the acceptance of this chapter.

(b) The proceeds of the notes authorized by this section shall be applied as follows:

(1) Such amount of such proceeds as may be provided in the resolution of the commission for paying the current expenses of the commission to the extent not paid out of its revenues or provided for in clause (2) from the acceptance of this chapter until three years thereafter shall be deposited with a corporate trustee in accordance with section eleven and disbursed in such manner and under such restrictions as may be provided in the resolution of the commission;

(2) The balance of such proceeds shall be deposited with the trustee to be used solely for paying or providing for the cost of extensions, improvements or enlargements of the water works system and the sewer works system, including repayment of interest on notes of the commission as provided in clause (i) of paragraph (a) and shall be disbursed in such manner and under such restrictions as may be provided in the resolution of the commission.

(c) The municipality, acting by and through its municipal treasurer, shall, upon application of the commission, guarantee the principal of and interest on notes of the commission issued in accordance with this section. The municipal treasurer, with the approval of the executive director and without further authority, may approve the form, terms and conditions of, and may execute and deliver on behalf of the municipality such guaranty and any related agreements with or for the benefit of the holders of such notes containing such terms, conditions and covenants of the municipality as the municipal treasurer may deem reasonable including provision for the payment of notes not paid or refunded by the commission by applications of the proceeds of the loan authorized in this paragraph and provision for the payment of such notes by the municipality over such period of time as the municipality shall be pledged for the guaranty provided for in this section. The total amount of notes permitted to be guaranteed as aforesaid shall be reduced by the outstanding principal amount of bonds issued by the commission to refund notes so guaranteed. Notes guaranteed by the municipality under authority of this section shall not be included in determining the limits of indebtedness of the municipality as established by law nor shall the principal and interest payments thereof be included in any computation under section twenty-one C of chapter fifty-nine. The guaranty of the municipality of such notes shall be executed by the municipal treasurer. It shall be sufficient if the signature of the municipal treasurer upon such notes, if any, is an engraved, printed or stamped facsimile signature, provided that he has, by writing bearing his written signature filed with the municipal clerk, authorized his facsimile signature to be placed thereon. The facsimile signature of the municipal treasurer so engraved, printed or stamped shall have the same validity and effect as his written signature. If the municipal treasurer shall cease to be such officer before the delivery of such notes, such signature or facsimile shall nevertheless be valid and sufficient for all purposes as if he had remained in office until such delivery.

For the purposes of determining the amount of notes or bonds issued or outstanding pursuant to this chapter, the amount of any notes or bonds sold by the commission at a discount shall be equal to the net proceeds thereof determined by subtracting the discount from the face amount of such notes or bonds.

If the commission shall fail or otherwise be unable to refund or pay when due any guaranteed note or notes and the interest thereon issued by the commission in accordance with this section, the treasurer of the municipality with the approval of the executive director and without further authority is hereby authorized and empowered, for the purpose of refunding or paying such guaranteed notes and the interest thereon, to borrow, at one time or from time to time, not exceeding in the aggregate the outstanding principal amount of and interest on such notes so guaranteed and not paid or refunded by the commission, and issue and sell bonds or notes of the municipality therefor, payable in not more than twenty years from their dates. Such bonds shall be registered or with interest coupons attached, may be issued as serial bonds or term bonds or both, and may contain such provisions for the redemption of such bonds or notes prior to maturity at the option of the municipality and at such price or prices and under such terms and conditions as the treasurer with the approval of the executive director may determine prior to the issuance of such bonds. Bonds issued from time to time by the municipality under the authority of this section shall not be included in determining the limit of indebtedness of the municipality as established by law, but shall, except as herein provided, be subject to the provisions applicable to the municipality, of chapter forty-four, including the provisions of section seventeen of said chapter forty-four relative to temporary loans in anticipation of the issue of bonds.