2011 ORS § 451.575¹
Excluding or including special districts from or in county service districts

If a district is authorized to construct, maintain and operate service facilities to provide services that are provided by a special district:

(1) The area within a special district described by ORS 451.573 (Definitions for ORS 451.573 to 451.577) (2)(a) shall not be included in or annexed to a district if prior to or at the hearing on the formation of or annexation to such district the governing body of the special district files with the governing body of the district a resolution withdrawing the area within the special district.

(2) When the formation of or annexation to a district is initiated, and the area to be incorporated or annexed includes the entire area within a special district, the governing board of the special district and the governing body of the district shall meet with each other to agree on a debt distribution plan to be a part of the proposed incorporation or annexation. The debt distribution plan may require that the property within the special district remain solely liable for all bonded indebtedness outstanding at the time of incorporation or annexation or it may provide for any other distribution of indebtedness between the district and the special district. If the governing boards do not agree on a debt distribution plan or if the area within the special district remains liable under the plan for any portion of the indebtedness outstanding at the time of the incorporation or annexation, and dissolution and transfer, the governing body of the district shall be the ex officio board of the dissolved special district for the purpose of levying taxes in such area until the bonded and other indebtedness of the dissolved special district is paid.

(3) The consent of all the known holders of valid indebtedness against the special district shall be obtained or provision made in the debt distribution plan for the payment of the nonassenting holders. The area within the boundaries of the special district shall not by reason of the incorporation or annexation and dissolution and transfer be relieved from liabilities and indebtedness previously contracted by the dissolving special district.

(4) The district officers of the special district, upon the effective date of the incorporation or annexation, shall forthwith deliver to the governing body of the district, the assets and records of the special district. Uncollected taxes, assessments or charges thereof levied by the special district shall become the property of the district and upon collection shall be credited to the account of such district. [1969 c.646 §15; 1973 c.785 §26; 2003 c.14 §276; 2005 c.510 §3]