§ 2-254 Effect of incorporation on all districts entirely within village. 1. Whenever the term "district" is used in this section it shall be construed as referring to a fire district, fire protection district or fire alarm district, or a town special district, or a town improvement district; and the term "governing body" as used in this section shall be construed as referring to all boards, bodies or persons, in which any of the governing powers of a district are vested.

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2. If on the date of incorporation of a village the limits of the village are coterminous with the limits of, or wholly include, the territory of a district, such district shall cease to exist at the end of the fiscal year of such district next following the first day of June following the first day of January next succeeding the date of incorporation; except as otherwise provided in this section, the powers and duties of the governing body of the district and of all the officers of the district in connection therewith shall then cease and determine; and any board of commissioners, any office of commissioner and any other office of any such district shall also cease to exist at such time.

2-a. If the limits of a village incorporated prior to the first day of April, nineteen hundred sixty-five are coterminous with the limits of, or wholly include the territory of, a district, the board of trustees of the village, by local law or pursuant to the provisions of Article 17-A of the general municipal law, may abolish any such district. In addition to any other notice required in connection with the adoption of such local law generally, thirty days' written notice of the hearing to be held in connection with such local law shall be given to the governing body of any such district and to the town clerk. A certified copy of any such local law shall be served upon or mailed to such governing body and clerk within five days following the adoption thereof. Except as otherwise provided in this section, the powers and duties of the governing body of a district so abolished and of all the officers of the district in connection therewith shall cease and determine upon the effective date of such local law and any board of commissioners, any office of commissioner and any other office of any such district shall also cease to exist at such time. No such local law shall become effective except on the last day of a fiscal year of the town or district, as the case may be.

3. a. The obligations and the contracts of a district which shall so cease to exist and the obligations and contracts of a town for the benefit of or chargeable to such a district shall not be impaired by this section.

b. Notwithstanding the dissolution of a district pursuant to this section,

(1) an amount shall be levied and collected annually sufficient to pay in regular course the principal of and interest on all bonds or obligations issued pursuant to the local finance law or otherwise by or on behalf of such district which are outstanding and unpaid as of the date of the dissolution of the district. Such annual levy and collection shall continue until all such outstanding bonds and obligations are paid in full.

(2) all levies, assessments, fees, rates or other charges of the district unpaid as of the date of dissolution and all penalties and interest thereon shall be collected.

(3) all moneys collected under subparagraph two of this paragraph which would be available for district purposes if the district were not dissolved shall be applied to the payment of all obligations of the district, other than those described in subparagraph one of this paragraph, which are due and payable at the time of the dissolution of the district. All such moneys so collected and not required for such purpose shall be paid over to the village treasurer.

(4) the levies, collections and payments described in subparagraphs one, two and three of this paragraph shall be made in the same manner as if the district had not been dissolved, except that for the purposes of this paragraph:

(a) if a fire district is dissolved, the board of trustees of the village shall constitute the board of fire commissioners of the former fire district and

(b) if a district other than a fire district is dissolved, the powers of the governing body of the district shall be exercised and performed by the town board of the town in which the district is located.

(5) in lieu of the requirements set forth in subparagraph one of this paragraph, the board of trustees by resolution, subject to permissive referendum, may provide that the village shall assume responsibility for the levy and collection, as a general village charge, of all amounts required to pay the bonds or obligations therein described. In such event the village shall annually pay an amount sufficient to pay the principal and interest on such bonds or obligations as same become due and payable in regular course. In the case of bonds or obligations of a district other than a fire district, such payment shall be made to the supervisor of the town in which the district is located. In the case of fire district bonds or obligations, payment shall be made directly to the holder of such bonds or obligations. The board of trustees shall give written notice of such resolution to the town board before same shall become effective. Nothing herein contained shall prevent the village from prepaying to the town for the purpose of redeeming such bonds or obligations, other than those of a fire district, in whole or in part provided the bonds or obligations permit such part payment or redemption. Nothing herein contained shall prevent the village from prepaying or redeeming such fire district bonds or obligations in whole or in part provided the bonds or obligations permit such part payment or redemption.

c. All contracts of or on behalf of and chargeable to a district which ceases to exist hereunder, including all amounts unpaid under such contracts but excluding all amounts unpaid thereunder which were due and payable at the time of dissolution of such district, other than obligations incurred pursuant to the local finance law, shall, to the extent they are the responsibility of or beneficial to such a district, be assumed by the village and all expenditures under such contracts shall be charged as provided in subdivision six of this section. The terms and conditions and all rights of or on behalf of the district, including any right of amendment or rescission of such contract, shall inure to the benefit of the village.

4. The governing body of a district shall be responsible for the payment of all obligations of the district other than those described in subparagraph one of paragraph b of subdivision three of this section which are due and payable at the time of the dissolution of the district. The governing body of a district shall be responsible for the payment of all obligations of the district described in subparagraph one of paragraph b of subdivision three of this section.

5. Upon a district ceasing to exist hereunder, all property of a district shall automatically become the property of the village and, in connection therewith, the governing body and any other officer or person empowered to transfer title to or having the custody or control of any moneys of such district, any moneys in a reserve fund, any real or personal property of such district or used or applied for the purposes of such district, any policies of insurance for the benefit of such district, any documents, instruments and other muniments of title to district property and of any official books, records and other data relating to the operation and management of such district shall prepare or cause to be prepared an inventory of all such property, shall certify same, shall deliver same to the village clerk and shall:

a. pay over to the village treasurer all such moneys except so much thereof as was collected for the purpose of paying principal of and interest on bonds or other obligations issued pursuant to the local finance law or otherwise by or on behalf of the district and further except so much of the balance of such moneys as may be required to pay those obligations of the district described in subdivision four of this section. The village treasurer on receipt of such moneys, shall set same aside and apply them pursuant to law to the purposes of the district which ceases to exist hereunder so long as the village continues to provide the service or function thereof and thereafter to be applied in reduction of village taxes levied against the area of such former district; provided, however, that so long as the village provides the service or function of the former district any moneys held by or on behalf of a district in a reserve fund subject to the provisions of Article 2 of the general municipal law or § 55-a of the town law shall be held and administered by the village as a reserve fund subject to those provisions of Article 2 of the general municipal law pertaining to villages for the same or similar purpose for which any such fund was established.

b. surrender and deliver all such insurance policies, books, such real or personal property.

c. assign such policies of insurance and its interest thereunder to the extent permitted therein to the village.

d. surrender and deliver all such insurance policies, books, records and other data to the village clerk. Copies of official books, records and other data relating to the operation and management of such district and certified by the officer responsible for same shall be sufficient to satisfy the requirements of this paragraph. No fees or expenses shall be charged for the making of such copies and same shall be entitled to the same admissibility in evidence in a court proceeding as the originals thereof.

e. surrender and deliver all other such personal property to such village officer, employee, board or commission as the board of trustees of the village shall designate The failure of the governing body or any other officer or person to comply with the requirements of this subdivision shall in no way impair the automatic transfer to the village of the right, title or interest of the district of, in or to such property.

6. Upon a district ceasing to exist hereunder and until such time as the village may discontinue the service or function pursuant to subdivision seven of this section, the service or function of such former district shall become a village service or function and shall be continued as, in the discretion of the board of trustees of the village, may be needed in all territory which previously received same and the board of trustees shall have all the powers and duties granted by law to village officials in connection with such service or function and such additional powers formerly held by the governing body or any officer of the district which may be necessary to continue the service or function of the district, provided, however:

a. if the limits of a district which ceases to exist hereunder are wholly within but are not coterminous with those of the village and the service or function formerly provided by such district is not extended outside the limits of the former district, all the costs and expenses of such service or function may be chargeable only to the territory of such former district.

b. if the limits of a district which ceases to exist hereunder are wholly within but are not coterminous with those of the village and the service or function formerly provided by such district is extended outside the limits of such former district, so much of all costs and expenses of such extension of service or function to such outside territory as is represented by the payment of the principal and interest on obligations incurred therefor by the village pursuant to the local finance law may be chargeable to and collected from such outside territory; and all other costs and expenses of such service or function may be chargeable only to that part of the entire territory of the village in which such service or function is provided. In any event and regardless of the territory to which such other costs and expenses may be made chargeable, same shall be apportioned and collected uniformly and without discrimination within such territory.

c. upon any fire district ceasing to exist hereunder, all fire, hose, protective or hook and ladder companies and all authorized squads or other units of such district, including the memberships thereof, shall continue to exist and shall not be affected thereby except as follows:

(1) the members of all such companies, squads or units shall constitute a corporation and the fire department of the village.

(2) all such companies, squads or units shall thereafter be subject to and governed by all the provisions of this chapter regulating and pertaining to any such company, squad or unit and the fire department of the village.

d. upon the incorporation of a village all existing fire, hose, protective or hook and ladder companies and all other firemanic squads or units independently organized and incorporated which are not companies, squads or units of any fire district ceasing to exist hereunder and the boundaries of which companies, squads or units as specified in their certificates of incorporation or charters or any laws establishing such companies, squads or units are coterminous with or wholly included within the limits of the village and the memberships thereof shall continue to exist and shall not be affected thereby except as follows:

(1) the members of all such companies, squads or units shall constitute a corporation and the fire department of the village.

(2) all such companies, squads or units shall thereafter be subject to and governed by all the provisions of this chapter regulating and pertaining to any such company, squad or unit and the fire department of the village.

e. all officers and employees of any district which ceases to exist hereunder shall to the greatest extent practicable in the discretion of the board of trustees be continued in the same or similar positions as village employees and, in connection therewith, shall have all the rights provided by the civil service law as if their former positions with the district had originally been established by the village.

7. The board of trustees of the village at any time by local law may discontinue the service or function of the former district in all or any part of the village; provided, however, that any such local law shall be subject to a permissive referendum of the qualified voters in the territory receiving the service or function at the time of the adoption of such local law and in which the service or function is proposed to be discontinued. For the purpose of such referendum such territory shall be considered as if it comprised the entire territory of the village.

8. This section shall not apply to any special assessment area or any area of assessment for benefit the boundaries of which are coterminous with or wholly included within the limits of the village, which was established only to pay the original cost of any special improvement or facility or any addition thereto, benefitting such area. As to any such area the assessments therein established shall continue to be levied and collected as if the village had not been incorporated. However, any such publicly owned improvement or facility shall become the property of the village in the same manner as provided in subdivision five of this section for property of a district.

9. Any other special assessment area or any other area of assessment for benefit the boundaries of which are coterminous with or wholly included within the limits of a village, shall be considered as a district subject to the provisions of this section and chapter if same was established not only to pay the original cost of any special improvement or facility, or any addition thereto, benefitting such area but also to pay the cost of the operation, maintenance, repair or replacement thereof.