(2)(a) Subject to ORS 222.465, if the affected territory is to be annexed to a city, and lies within the boundaries of a district, the affected territory is withdrawn from the district on the date of the final order unless the city is part of the district. The city shall have the right to exercise the choice permitted by ORS 222.520 (2).

(b) Paragraph (a) of this subsection does not apply when the territory to be annexed lies within a water district organized under ORS chapter 264, a sanitary district organized under ORS 450.005 to 450.245 or a park and recreation district organized under ORS chapter 266. Withdrawal of territory from such a water, sanitary district or park and recreation district shall be governed solely by ORS 222.465 and 222.520 to 222.575.

(c) When a city receives services from a district and is part of that district, any territory thereafter annexed to the city shall be included in the boundaries of the district and shall be subject to all liabilities of the district in the same manner and to the same extent as other territory included in the district.

(3) After the date of a final order or proclamation withdrawing or transferring territory from an affected city or district, the territory withdrawn or transferred shall be free from assessments and taxes levied thereafter by the affected city or district losing the territory. However, the withdrawn or transferred territory shall remain subject to any bonded or other indebtedness existing at the time of the order, except as provided by ORS 198.882. If the territory is being withdrawn from a district into a city, the city shall have the right to exercise the choice permitted by ORS 222.520 (2). The proportionate share shall be based on the assessed valuation, according to the assessment roll in the year of the levy, of all the property located within the city or district immediately prior to the withdrawal. [1969 c.494 §18; 1971 c.462 §17; 1973 c.808 §2; 1975 c.361 §7; 1977 c.663 §2; 1981 c.265 §12; 1985 c.702 §19; 1989 c.483 §1]