(a) The proceeds derived from all of the bonds other than refunding bonds may be used only to pay the costs of acquiring, constructing, improving, enlarging, and equipping the project with respect to which they were issued, as may be specified in the proceedings in which the bonds are authorized to be issued and all costs incidental thereto, including, without limitation:
(1) The costs of any land forming a part of the project and all easements which may pertain to or be associated with any project;
(2) The costs of the labor, materials, and supplies used in any construction, improvement, and enlargement, including architect's and engineer's fees and the cost of preparing contract documents and advertising for bids along with all other reasonable and necessary project costs;
(3) The purchase price of and the cost of installing equipment for the project;
(4) Legal, fiscal, accounting, and recording fees and expenses incurred in connection with the authorization, sale, and issuance of the bonds issued in connection with the project;
(5) Interest on bonds for a reasonable period prior to, during, and after the time required for the construction and equipment;
(6) The amount necessary to fund a debt service reserve in an amount deemed appropriate by the water authority;
(7) Costs associated with the obtaining of default insurance, ratings, and other credit enhancements of every nature; and
(8) Other operational expenses, reserves, and other accounts of every nature.
(b) If any of the proceeds derived from the issuance of bonds remains undisbursed after completion of the project and the making of all such expenditures, the balance shall be used to pay principal of and interest on the bonds to fund a debt service reserve or for the redemption of bonds of the same issue.