A district that charges a fee that is an impact fee as described in Section 395.001(4), Local Government Code, shall use the fees collected and any interest accrued on the fees collected only for:
(1) payment of principal and interest on bonds, notes, or other obligations issued by or on behalf of the district to finance the capital improvements or facility expansions identified in the capital improvement plan required by Section 395.012(d), Local Government Code; or
(2) cash payment of the costs of capital improvements or facility expansions identified in the capital improvement plan required by Section 395.012(d), Local Government Code.
Official text of the Texas Water Code as published by the Texas Legislative Council.