State-operated projects shall be established only in accordance with all of the following:

1. (a) The health of the population in a rural area would be substantially improved by the establishment of a project.
2. (b) There exists no local public or nonprofit agency willing and able to undertake the project.

3. (c) The project contains two or more of the elements specified in Section 124720.

   A project may employ staff, and may purchase, rent, or lease supplies and equipment where required. A project may also rent or lease land and buildings where required.