(1) An issuer of bonds pursuant to this part for the acquisition, construction, or improvement of any undertaking may apply the revenue of the undertaking for the following purposes:
(a) to pay when due all bonds and interest thereon for which the revenue is pledged, including reserves;
(b) to provide for all expenses of operation and maintenance of the undertaking, including reserves;
(c) to pay and discharge notes, bonds, or other obligations and interest thereon not issued under this part for which the revenue of the undertaking is pledged;
(d) to pay and discharge notes, bonds, or other obligations and interest thereon that do not constitute a lien or encumbrance on the revenue of the undertaking and which were issued for the purpose of financing the acquisition, construction, or improvement of the undertaking; and
(e) to provide a reserve for improvements to the undertaking.
(2) Unless adequate provision has been made for the purposes listed in subsection (1), no irrigation district may transfer the revenue of the undertaking to its general fund.