If funds are loaned to or otherwise credited to the Drinking Water Facilities Loan Fund or the Land Acquisition and Source Water Loan Fund with an obligation to repay such loan or credit, the obligation to repay the amount of the loan or credit and the interest thereon shall, upon authorization by the council and execution and delivery by the department of an agreement to repay the loan or credit, be a valid and binding obligation of such funds or either fund or portions thereof and payable in accordance with the terms of the agreement executed by the department.