1. Whenever any city owning a waterworks or water supply system extends its corporate limits to include any part of the area in a public water supply district, and the city and the board of directors of the district are unable to agree upon a service, lease or sale agreement, or are unable to proceed under section 247.160, then upon the expiration of ninety days after the effective date of the extension of the city limits, that part of the area of the district included within the corporate limits of the city may be detached and excluded from the district in the following manner:

(1) A petition to detach and exclude that part of the public water supply district lying within the corporate limits of the city as such limits have been extended, signed by not less than five percent of the registered voters who are patrons of the water supply district, or twenty registered voters that are patrons of each subdistrict, whichever is less, shall be filed in the circuit court of the county in which the district was originally organized.

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(2) The court, being satisfied as to the sufficiency of the petition, shall call a special election of the voters of the district at which election the proposal to detach and exclude the part of the district lying within the corporate limits of the city shall be submitted to the voters in the entire district for a vote thereon. The election shall be conducted within the district by the election authority.

(3) The ballot shall briefly state the question to be voted on.

(4) In order to approve the detachment and exclusion of any part of the area in a public water supply district, the proposal shall require the approval of not less than a majority of the voters voting thereon.

(5) The election authorities shall thereafter promptly certify the result to the circuit court. The court, acting as a court of equity, shall thereupon without delay enter a decree detaching and excluding the area in question located within the corporate limits of the city from the public water supply district; except that before the decree detaching and excluding the area becomes final or effective, the city shall show to the court that it has assumed and agreed to pay in lump sum or in installments not less than that proportion of the sum of all existing liquidated general obligations and of all unpaid revenue bonds and interest thereon to date of the water supply district as the assessed valuation of the real and tangible personal property within the area sought to be detached and excluded bears to the assessed valuation of all of the real and tangible personal property within the entire area of the district, according to the official county assessment of property as of December thirty-first of the calendar year next preceding the date of the election, and in addition thereto that the city has assumed and agreed to assume or pay in a lump sum all contractual obligations of the water district that are greater than twenty-five thousand dollars for debt that pertains to infrastructure, fixed assets or obligations for the purchase of water, and to pay the court costs.

(6) The decree shall thereupon vest in the city the absolute title, free and clear of all liens or encumbrances of every kind and character, to all tangible real and personal property of the public water supply district located within the part of the district situated within the corporate limits of the city with full power in the city to use and dispose of the tangible real and personal property as it deems best in the public interest.

(7) If the proposal fails to receive the approval of the voters the question may be again presented by another petition and again voted on, but not sooner than six months.

(8) Any and all sums paid out by the city under this section, other than the costs of the election, shall be administered by the circuit court for the benefit of the holders of the then existing and outstanding bonds of the district, and the remainder of such sums, if any, shall be delivered to the district to be expended in the operation, maintenance and improvement of its water distribution system.

2. Upon the effective date of any final order detaching and excluding any part of the area of any public water supply district, or leasing, selling or conveying any of the water mains, plant or equipment therein, the circuit court may, in the public interest, change the boundaries of the public water supply district and again divide or redivide the district into subdistricts for the election of directors in conformity with the provisions of section 247.040, without further petition being filed with the court so to do.