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

(a) The successor district shall succeed to all the property, contracts, rights and powers of the consolidating 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 consolidating districts shall become the property of the successor district and upon collection shall be credited to the account of the successor district; and

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

(3) Districts providing potable water for domestic consumption, sanitary sewer or surface water quality and quantity purposes under separate principal Acts may consolidate as provided in this section. Upon the effective date of the consolidation, the district designated as the successor district shall have all powers held by the consolidating districts under the principal Acts of all of the districts.

(4) A county service district may consolidate with another district providing different or similar services as provided in subsection (3) of this section. The consolidating entities shall enter into an agreement that shall be binding on the successor district concerning elected representation on the board of the successor district. The agreement shall provide that no fewer than two members of the board of the successor 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 consolidate 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 consolidating entities must:

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

(b) Comply with the formation procedures set forth in ORS 450.600. [1971 c.727 §43; 1983 c.336 §23; 1997 c.590 §2; 2011 c.9 §19]