To adequately secure the payment of bonds and interest on the bonds, the authority and its officers, agents, and employees shall:

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1.    Pay or cause to be paid punctually the principal and interest of every bond on the dates, at the places, in the manner, and out of the funds provided in the refunding bond and in accordance with the resolution authorizing its issuance.

2.    Make certain any project financed by the authority is operated in an efficient and economical manner, enforce all water purchase and water sales contracts, and establish, levy, maintain, and collect related necessary or proper fees, tolls, rentals, rates, and other charges. Such fees, tolls, rentals, rates, and other charges must be sufficient, after making due and reasonable allowances for contingencies and for a margin of error in the estimates, at least:

a.    To pay all current expenses of operation and maintenance of any project; b.    To make all payments required under any water purchase contract the authority may execute; c.    To pay the interest and principal on the authority’s notes and bonds as they become due; d.    To comply with the terms of the resolution authorizing the issuance of the bonds or any other contract or agreement with the holders of the refunding bonds; and

e.    To meet any other obligations of the authority that are charges, liens, or encumbrances upon the revenues of the authority.

3.    Operate, maintain, preserve, and keep every part of any tangible project financed and owned or operated by the authority in good repair, working order, and condition.

4.    Enforce the provisions of all water purchase and sale contracts that produce revenues pledged to payment of bonds.

5.    Preserve and protect the security of the bonds and the rights of the bondholders and warrant and defend such rights against all claims and demands.

6.    Pay and discharge all lawful claims for labor, materials, and supplies which, if unpaid, might become by law a lien or charge upon the revenues, or any part of the revenues, superior to the lien of the bonds or which might impair the security of the bonds.

7.    Hold in trust the revenues pledged to the payment of the bonds for the benefit of the holders of the bonds and apply the revenues only as provided by the resolution authorizing the issuance of the bonds or, if the resolution is modified, as provided in the modified resolution.

8.    Keep proper separate books of record and accounts of the project in which complete and correct entries must be made of all transactions relating to any part of the project.

All books and papers of the authority are subject to inspection by the holders of ten percent or more of the outstanding bonds or of their representatives authorized in writing.

The duties contained in this section may not require any expenditure by the authority of any funds other than revenue received from a project or water sale contract. The performance of the duties enumerated in this section is of the essence of the contract of the authority with the bondholders.