Cal. Government Code § 38742

The legislative body of any city may: (a) Contract for supplying the city with water for municipal purposes. (b) Acquire, construct, repair, and manage pumps, aqueducts, reservoirs, or other works necessary or proper for supplying water for the use of the city or its inhabitants or for irrigating purposes in the city. (c) Use any portion of the revenues from any water works or water supply or distribution facilities, including but not limited to water works or water supply or distribution facilities acquired or constructed with funds from bonds issued under an act entitled “An act to provide for the formation of districts within municipalities for the acquisition or construction of public improvements, works and public utilities; for the issuance, sale and payment of bonds of such districts to meet the cost of such improvements; and for the acquisition or construction of such improvements,” approved April 20, 1915, the Municipal Improvement District Act of 1927, an act entitled “An act to provide for the formation of districts within municipalities for the acquisition, construction or extension of water works, water systems or water distribution systems; for the issuance, sale and payment of bonds of such districts to meet the cost of such water works, water systems or water distribution systems; and for the acquisition, construction or extension of such water works, water systems or water distribution systems” approved April 26, 1935, or from general obligation bonds of the city, for the payment of principal and interest of any of such bonds or any other bonds authorized by vote of electors and issued to acquire or construct any water works or water supply or distribution facilities within the city. (d) Enter into agreements with, and accept financial or other assistance from, the United States or a federal department or agency, for the acquisition, construction, maintenance, and operation of the city water system and the sale and distribution of water from the system.