(1) Whenever the entire area of a rural fire protection district, a water district, including a domestic water supply corporation, a park and recreation district, a highway lighting district, a county service district, a special road district, a road assessment district or a sanitary district or authority, lawfully organized and existing, becomes incorporated in or annexed to a city in accordance with law, the district is extinguished and the city shall, upon the effective date of the incorporation or annexation, succeed to all the assets and become charged with all the liabilities, obligations and functions of the district. The district officers shall forthwith deliver to the city officers the district assets and records. Uncollected taxes theretofore levied by the district become the property of the city and must be delivered to it by the county treasurer upon collection.
(2) Notwithstanding subsection (1) of this section, a rural fire protection district, a water district, including a domestic water supply corporation, a park and recreation district, a highway lighting district, a county service district, a special road district, a road assessment district or a sanitary district or authority, lawfully organized and existing, the entire area of which becomes incorporated in a city, may continue to provide services if the continuation is proposed by petitioners in a petition for incorporation that is subsequently approved by voters in an incorporation election. At any time after incorporation, a city may cause a district to be extinguished and succeed to all the assets and become charged with all the liabilities, obligations and functions of the district if:
(a) The governing body of the city holds a public hearing on the question of the extinguishment, hears objections to the extinguishment at the hearing, determines that the extinguishment is in the best interest of the city and adopts an ordinance extinguishing the district;
(b) After the hearing, the governing body of the city refers the ordinance extinguishing the district to the electors of the city; and
(c) The majority of all votes cast favors that the district be extinguished.
(3) For the public hearing required in subsection (2)(a) of this section, the governing body shall fix a date, time and place for the hearing and cause notice of the date, time, place and purpose of the hearing to be published once each week for two successive weeks prior to the date of the hearing in a newspaper of general circulation in the city, and shall cause notices of the hearing to be posted in four public places in the city for a like period.