§ 275. Sale of water district facilities. 1. The board of supervisors may sell all or any part of the water supply and distribution system of a county water district to a water authority or to a joint water works system established pursuant to article five-B of the general municipal law, provided, however, that the sale shall have been approved by a majority vote of the qualified electors of the district voting thereon. Such referendum shall be held in the manner prescribed in section one hundred and one hundred two of this chapter, except, however, that only those electors shall be qualified to vote who are residents of the district and owners of property in the district assessed upon the last completed town or city assessment roll, as the case may be.

2. The proceeds of the sale of a part of a water supply and distribution system shall be deposited in a reserve fund established for the purpose of retiring outstanding obligations issued on behalf of the county water district to finance the cost of the facilities sold and shall be expended only for such purpose, except as provided below. If the proceeds exceed the sum of all installments of principal of and interest on such indebtedness due or to become due, or if, when all such outstanding obligations shall have been retired, any moneys remain unexpended in the reserve fund, such excess moneys may be used for any purpose properly chargeable against the entire district.

3. If it is proposed that all of the property and facilities of the district be sold, the proposition submitted to referendum shall provide, as a part thereof, for dissolution of the district as well as for sale of such property and facilities. If the proposition for sale and dissolution is approved, the moneys received from such sale must be set aside in a reserve fund and used to amortize outstanding obligations, as provided in subdivision two of this section. Any excess over and above the amount necessary to be set aside in a reserve fund and used to retire indebtedness, as aforesaid, together with any other moneys of the district, shall be disposed of to the credit of real property within the district by any equitable method described in the proposition submitted to referendum.

4. If no provision for distribution of such excess is made in the proposition, the excess proceeds shall first be apportioned to each town and city upon the basis of the true equalized value of real estate within the district computed in the manner prescribed in section eight hundred four of the real property tax law. The amount thus apportioned to a town or a city shall be further apportioned on the basis of assessed valuation among the several parcels of land situated in the district, as shown on the last completed assessment roll of the town or city. The amounts so determined shall be credited to each such parcel of land in reduction of county and town taxes or county and city taxes, as the case may be, on so many successive tax rolls as may be necessary to exhaust such amounts. When a tax is required to be levied by the city, the county treasurer, or comparable officer or body, shall certify to the proper city officer the amount available for credit against such tax. The aggregate amount credited in any year in reduction of town or city taxes shall be paid over to the proper town or city officer from the available excess moneys.

5. If there be any real property in the district which is wholly exempt from general taxation, but which, while exempt from general taxation, paid, as an assessment for benefit, a proportionate share of the cost of the improvement, the amount apportioned to such real property shall be refunded to the owner or owners thereof as shown on the last completed assessment roll at the time of the distribution.