(1) After the hearing, if the county board finds that the district is in fact operating as an active district, or that there is need for the district, the board shall continue the hearing until the reports required under ORS § 294.458 and 297.405 to 297.555 are properly filed. When the county board finds that the reports have been filed, it may:

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(a) Enter an order terminating all further proceedings under ORS § 198.345 to 198.365; or

(b) If the functions of the district could be performed by a county service district, continue the hearing and initiate proceedings to incorporate or annex the area within the district in a county service district organized under ORS § 451.410 to 451.610.

(2) If the county board proceeds as provided by subsection (1)(b) of this section and the district is terminated as provided by ORS § 451.577, the county board shall thereafter enter an order terminating all further proceedings under ORS § 198.345 to 198.365. [1971 c.267 § 12; 1977 c.774 § 15; 1979 c.286 § 2; 2007 c.71 § 69]