(1)    Except as provided in sub. (2), upon the creation of a district the property, assets, claims, contracts, obligations, rights, duties and liabilities relating and pertaining to the existing technical colleges in the territory included in the district shall become the property, assets, claims, contracts, obligations, rights, duties and liabilities of the district.

   (2)   

      (a)    Upon the creation of a district the property, assets, claims, contracts, obligations, rights, duties and liabilities relating and pertaining to the existing technical college operated in a city, village or town located in the territory included in the district shall remain the property, assets, claims, contracts, obligations, rights, duties and liabilities of such city, village or town, unless the governing body of such city, village or town transfers the whole or any portion thereof to the district under an agreement between such city, village or town and the district as to the use, obligation and ownership thereof.

      (b)    The purchase price of such property, except as otherwise agreed upon under par. (a), shall be the fair market value as determined by an independent appraiser selected jointly by the governing body of the city or village and the district board, less any outstanding obligations against the property which shall be assumed by the district.

      (c)    In financing the purchase of property transferred to the district under this subsection, the district may issue its bonds or promissory notes under ch. 67 to pay the cost thereof including assumption of outstanding obligations.

      (d)    The city or village shall deposit the proceeds of the sale of technical college property in the debt service fund, if any, created for payment of existing technical college obligations. The indebtedness of such city or village shall, for purposes of computing its legal debt limit, be deemed reduced by the amount of such deposit. The city or village may invest these debt service fund moneys under s. 66.0603 (1m) or 67.11 (2) and (3). Bonds and notes issued by districts for purposes of this subsection shall not be subject to referendum. The purchase agreement shall include an irrevocable clause providing that the district shall pay annually to the city or village a sum of money equal to the amount in which the interest received by the city or village upon investments authorized hereunder is less than the amount of interest paid by the city or village on the bonds of the city or village for technical college purposes.

      (e)    The district purchasing property under this subsection may, with approval of the city council or village board involved, pay the purchase price by issuing and delivering directly to the city or village the general obligation promissory notes or the notes of the district under s. 67.12 (12), except that no referendum may be held and the 20-year limitation on such notes shall be inapplicable to such notes issued under this paragraph. Such notes shall mature and be payable at such times, in such amounts and at such rate of interest as will amortize and pay when due the principal and interest on the outstanding obligations of the city or village for technical college purposes. All such notes, upon execution and delivery to the city or village, shall in all respects be held and considered as an authorized investment under s. 66.0603 (1m) or 67.11 (2) and (3) of the debt service fund created for payment of the city or village obligations issued for technical college purposes and shall be offset against city or village indebtedness in computing legal debt limit to the same extent as other authorized investments of the debt service fund and such notes may be sold and hypothecated. If the offset against city or village indebtedness under this paragraph is determined to be invalid in any respect, such city or village immediately may require the district issuing the promissory notes to such city or village to comply with pars. (c) and (d) to the extent necessary to cure such invalidity.