Cal. Wat. Code § 44750
The proceeds of sale of district bonds shall be placed in the treasuries of the respective affected counties to the amount of the unpaid assessment in each county and credited to the bond fund of the district, except that any premium received upon the sale of district bonds shall be credited to the bond reserve fund of the district if the resolution of the board directing the sale of the bonds so provides. Said proceeds may be used for the purposes for which the bonds were authorized to be issued under Part 8 (commencing with Section 45100) of this division. Upon completion of an adopted project, or any unit thereof, any balance in said fund shall be used exclusively for the payment of principal of or interest on the bonds sold, or shall be deposited in the bond reserve fund or shall be used for the purchase at not more than par and cancellation of any such bonds.
Ca. Water Code § 44750