1. All cities and towns in this state containing five hundred and less than three thousand inhabitants, and all towns existing under any special law, and having less than five hundred inhabitants which shall elect to be cities of the fourth class, shall be cities of the fourth class.
2. Notwithstanding the population requirements of subsection 1 of this section, all incorporated villages as of August 13, 1982, may elect by majority vote of the voters therein to be a city of the fourth class and shall retain such classification at its option.