The grants may be made to districts or communities to assist in financing, including engineering and legal service costs, specific projects for construction, original or enlargement of supply, source water protection treatment, purification, storage and distribution facilities for water systems and collection, treatment, forced mains, lift stations and disposal facilities for sewage systems, or any other item necessary for the physical operation of the water or sewage systems where grant funds are necessary to reduce the project cost per user to a reasonable level. The grants may be made to supplement funds from loan proceeds or other private or public sources when such grants are not available through any other state or federal agency.