(1) Any combination may create, by contract, an authority which shall be authorized to exercise the functions conferred by the provisions of this part 5 upon the issuance by the director of the division of a certificate stating that the authority has been duly organized according to the laws of the state. Such certificate shall be issued by the director upon the filing with him of a copy of the contract by the combination joining in the creation of the authority and upon a determination by him that each member of the combination is located in the same metropolitan region. The director shall cause such certificate to be recorded in the real estate records in each county which has territory included in the boundaries of the authority. Upon issuance of the certificate by the director of the division, the authority shall constitute a separate political subdivision and body corporate of the state and shall have all of the duties, privileges, immunities, rights, liabilities, and disabilities of a public body politic and corporate.

(2) Any contract establishing an authority shall specify:

(a) The name and purpose of the authority and the public highways to be provided;

(b) The establishment and organization of the board of directors in which all legislative power of the authority is vested, including:

(I) The number of directors, which shall include at least one elected official from each member of the combination, except as provided in subsection (4) of this section; except that all of the directors shall be elected officials from the members of the combination, except as provided in subsection (4) of this section;

(II) The manner of their appointment, their qualifications, their compensation, if any, and the procedure for filling vacancies;

(III) The officers of the authority, the manner of their appointment, and their duties; and

(IV) The voting requirements for action by the board; except that, unless specifically provided otherwise, a majority of the voting members of the board shall constitute a quorum and a majority of the quorum shall be necessary for action by the board of directors;

(c) Provisions for the distribution, disposition, or division of assets of the authority;

(d) The boundaries of the authority, which may include territory which, at the time of designation, is not more than one and one-half miles from the proposed center line of the public highway to be constructed but which may not include territory outside of the boundaries of the members of the combination; except that the boundaries of the authority may not include territory which, at the time the territory is included within the boundaries of the authority, is located within the boundaries of a municipality, unless such municipality is either a member of the combination or consents to the inclusion of such territory within the boundaries of the authority;

(e) The term of the contract, which may be for a definite term or until rescinded or terminated, and the method, if any, by which it may be terminated or rescinded; except that the contract may not be rescinded so long as the authority has bonds outstanding;

(f) Provisions for amendment of the contract;

(g) Limitations, if any, on the powers granted by this part 5 which may be exercised by the authority pursuant to this part 5; and

(h) The conditions to be satisfied to add or delete parties to the contract.

(3) No municipality or county shall enter into the contract establishing the authority without holding a hearing thereon. Notice of the time, place, and purpose of the hearing shall be given by publication in a newspaper of general circulation in the municipality or county, as the case may be, at least ten days prior to the date of the hearing.

(4) The state, acting by and through the commission and upon the approval of the governor, may join in the contract creating the authority. The number of members on the board to which the state shall be entitled shall be established in the contract, but in no case shall the state be entitled to less than one member of the board. The state member or members of the board shall be appointed by the governor, with the consent of the senate, for such term as shall be established by the governor.

(5) The appropriate regional transportation agency, if any, the air quality control commission, and the regional planning commission, if any, shall each designate a representative to serve as nonvoting members of the board.