Any public body receiving a loan from the fund shall:

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(1) Appear on the annual project priority list to be identified for funding under the clean water act;
(2) Submit an application to the department;
(3) Establish and maintain a dedicated source of revenue or other acceptable source of revenue for the repayment of the loan; and
(4) Demonstrate to the satisfaction of the department that it has sufficient legal authority to incur the debt for which it is applying.