DEPOSIT AND USE OF BOND PROCEEDS

(a) The governing body of the municipality: (1) shall provide for the deposit of money to the credit of the interest and sinking fund, the reserve fund, and other funds as prescribed by the ordinance authorizing the bonds; and (2) may provide for all or part of the bond proceeds to be deposited to the credit of those funds as necessary to pay interest during construction and for an additional period not to exceed two years. (b) The municipality shall deposit the bond proceeds to the credit of a fund to be used solely to pay: (1) the cost of issuing and selling the bonds; (2) the construction cost of any part of the water supply project that the contract between the municipality and the river authority obligates the municipality to provide; and (3) the construction cost of any part of the facilities to be constructed, owned, and operated by the municipality as provided by Section 1501.253. (c) Before the use of the bond proceeds for construction or during the period of construction, the municipality may: (1) invest the proceeds in bonds or other direct obligations of the United States; and (2) sell the investments as directed by the governing body for construction purposes when necessary.