(2) If the merger is approved, the district boards and officers of the merging districts shall turn over to the board of the surviving district all funds, property, contracts and records of the merging districts. Upon the effective date of the merger:

(a) The surviving district shall succeed to all the property, contracts, rights and powers of the merging districts, and shall constitute and be a regularly organized district as if originally organized in the manner provided by the principal Act and ORS 198.705 to 198.955;

(b) Uncollected taxes, assessments or charges levied by the merging districts shall become the property of the surviving district and upon collection shall be credited to the account of the surviving district; and

(c) Subject to any debt distribution plan adopted under ORS 198.900, the surviving district shall become liable for all the obligations, legal or contractual, of the merging districts.

(3) Districts providing potable water for domestic consumption, sanitary sewer or surface water quality and quantity purposes under separate principal Acts may merge as provided in this section. The district designated as the surviving district shall have all powers held by the other district under the principal Act of the other district.

(4) A county service district may merge with another district providing different or similar services as provided in subsection (3) of this section. When the county service district is not the surviving district, the merging entities shall enter into an agreement concerning elected representation on the board of the surviving district. The agreement shall provide that no fewer than two members of the board of the surviving district shall be appointed by the board of county commissioners, acting as the governing body of the county service district, to serve until replaced by individuals elected to the office at the next regular district election.

(5) Subsections (3) and (4) of this section do not apply to water authorities or sanitary authorities seeking to provide a different water-related service if the entities that seek to merge with the existing water authorities or sanitary authorities are within the urban growth boundary of a city and the city provides water supply, wastewater treatment or surface water management and treatment. When such entities are within the urban growth boundary of a city, the merging entities must:

(a) Obtain consent for the merger from the city prior to calling an election; or

(b) Comply with the formation process set forth in ORS 450.600. [1971 c.727 §42; 1983 c.336 §22; 1997 c.590 §1; 2011 c.9 §18]