(1) A governmental body issuing bonds or entering into a contract pursuant to this part with respect to a project may appropriate, apply, or expend the revenue of the project for the following purposes:
(a) to pay when due all bonds and interest on the bonds or amounts owing under contracts for the payment of the revenue that is or has been pledged, charged, or otherwise encumbered, including reserves;
(b) to provide for all expenses of operation and maintenance of the project, including reserves;
(c) to pay and discharge bonds and interest on the bonds or amounts under contracts not issued or entered into under this part for which the revenue of the project is or has been pledged, charged, or encumbered;
(d) to pay and discharge bonds and interest on the bonds that do not constitute a lien, charge, or encumbrance on the revenue of the project and that have been issued for the purpose of financing the acquisition, purchase, construction, reconstruction, improvement, or extension of the project; and
(e) to provide a reserve for improvements to the project.
(2) A governing authority shall fulfill the requirements of subsection (1) before the governing authority may transfer any of the revenue of the project to its general fund.