The city shall pay to the board of waterworks commissioners a reasonable fire hydrant rental for such hydrants as may be used by the city for the purpose of fire protection, and washing and flushing the streets, crossings, alleys and sewers, which shall in no case exceed a reasonable and just price therefor, to be fixed by the concurrent action of the board of waterworks commissioners and city council every five years from the date of the purchase of said waterworks system. The inhabitants of the city shall be required to pay reasonable rates for the use of water, to be fixed by the board of waterworks commissioners, to be paid quarterly, and the amount paid by the city and private consumers shall be sufficient to raise funds adequate:

(1) To pay the current running expenses for maintaining the waterworks system, and provide for such extensions and renewals as may become necessary;

(2) To provide for the payment of the interest on the bonded indebtedness;

(3) To provide each year a sum equal to not less than two nor more than five percent of the entire bonded indebtedness herein provided for, which sum shall be turned into a sinking fund to provide for the final payment and extinguishment of the bonded debt; provided, that the rates in force at the time of taking over any such property shall not be reduced for the first five years, at which time they may be reduced by the board of waterworks commissioners, if it is apparent that the rates are higher than necessary to operate and maintain the plant, pay interest on the bonds, and create a sinking fund for the payment of said bonds at the end of twenty years, in which event it shall be the duty of the said board of waterworks commissioners to make a suitable reduction. Said sinking fund to remain in the depositary to be selected as herein provided, and to draw interest.