Article 6. Disposition Of Proceeds From Bond Sale of California Water Code >> Division 6. >> Part 3. >> Chapter 8. >> Article 6.

The proceeds from the sale of bonds shall be paid to the Treasurer or the designee of the Treasurer to the credit of the construction fund.

The proceeds shall be paid out, disbursed, or applied solely for one or more of the following:
  (a) The construction, reconstruction, and repair of the project.
  (b) Surveys and the preparation of plans and specifications.
  (c) Payment of all other costs and expenses prior to and during construction.
  (d) The acquisition of the necessary water, water rights, rights-of-way, easements, lands, electric power, power resources and facilities, other property of every kind and description, and any appurtenances to that property necessary therefor, including facilities planned and designed in cooperation with, and among, water agencies, water districts, and irrigation districts.
  (e) The payment of interest becoming due and payable on bonds prior to and during the period of actual construction and for the period of one year after the completion of construction.
  (f) All costs and expenses during a period of one year after completion of construction only as the need therefor shall arise.
  (g) The establishment of a debt service reserve fund.

(a) If the department sells bonds to finance a water purchase, the bonds, including all refinancing of the bonds, shall be scheduled to mature within five years of the date of the initial sale of the bonds.
  (b) (1) Subdivision (a) does not apply to bonds sold to finance a water purchase arrangement which is planned to extend beyond five years, if the bonds, including all refinancing of the bonds, are scheduled to mature not later than the date on which the water purchase arrangement will terminate.
  (2) "Water purchase arrangement," for purposes of this subdivision, means a purchase, exchange, or standby agreement entered into by the department with one or more persons or entities to receive water from, or as a result of actions by, those persons or entities for the duration of the agreement.
  (c) Subdivision (a) does not apply to bonds sold to finance a water purchase for the purpose of long-term carryover storage.

The department may agree with the purchaser of bonds upon any conditions or limitations restricting the disbursement of the proceeds that may be deemed advisable for the purpose of assuring the proper application of the proceeds.