(a) All bonds issued under the authority of this act shall be redeemed at maturity and all interest due from time to time after July 1, 1967, on such bonds and on all notes issued under the authority of this act shall be paid by the Board of Finance and Revenue of the Commonwealth from the Land and Water Development Sinking Fund. The General Assembly beginning with the fiscal year commencing July 1, 1967, shall appropriate annually the moneys necessary to pay the aforesaid interest on said bonds and notes and the principal of said bonds at maturity. All moneys so appropriated shall be paid into the Land and Water Development Sinking Fund by the State Treasurer. All of such moneys not necessary to pay accruing interest shall be invested by the Board of Finance and Revenue in such securities as are provided by law for the investment of the sinking funds of the Commonwealth.

(b) The investment of such moneys and the accumulations thereon in the Land and Water Development Sinking Fund shall be devoted to and be used exclusively for the payment of the interest accruing on such bonds and notes and for the redemption of such bonds at maturity. The Board of Finance and Revenue is authorized at any time to use any of such funds for the purchase and retirement of all or any part of the bonds issued under the authority of this act. In the event that all or any part of said bonds shall be purchased by the Commonwealth, they shall be cancelled and returned to the State Treasurer, as cancelled and paid bonds and thereafter all payments of interest thereon shall cease and the cancelled bonds and coupons shall be destroyed within two years after cancellation in the presence of the issuing officials. A certificate evidencing the destruction, satisfactory to the duly authorized loan and transfer agent of the Commonwealth, shall be furnished to it. All cancelled bonds and coupons shall be so mutilated as to make the cancelled bonds and coupons nonnegotiable.