(1) Notwithstanding any of the provisions of Chapter 31, article 5, the board of trustees of any sanitary district heretofore or hereafter organized under any of such sections, which includes within its boundaries any incorporated city or village, shall have full power without further authorization to contract with any such city or village for said district to discontinue the operation of any sanitary sewer system located within or serving such city or village, including any and all sewage treatment works or plants, and to convey, sell or otherwise transfer all of the properties used or useful for that purpose to any such city or village upon such terms and conditions as may be agreed upon between such city or village and such sanitary district. The sanitary district shall thereafter cease to have the authority to maintain, operate, construct, or assume jurisdiction of any sanitary sewers or treatment works within such city or village and the area served by such sanitary sewer system; Provided, that nothing contained in this section shall be construed as prohibiting such sanitary district from constructing, maintaining, and operating a sanitary sewer system or any part thereof in the area outside of the corporate limits of such city or village, pursuant to the provisions of Chapter 31, article 5.
(2) Before exercising any of the powers contained in subsection (1) of this section, the board of trustees of any such sanitary district shall hold a public hearing. At such public hearing it shall hear any and all persons interested with respect to: (a) Whether the proposed transfer of property and jurisdiction will eliminate duplication and promote efficiency in the collection and treatment of sewage in the area to be served by the existing sewerage system of such city or village and the sewage facilities which it is proposed be transferred to such city or village; (b) whether such city or village is capable of operating, maintaining, improving, financing, and otherwise providing for sewage collection and treatment in the geographic area in question; and (c) any other matters relating to the merits of the proposed transfer as they will affect the health and welfare of the inhabitants of the area to be served. Notice of such public hearing of the board of trustees shall be given by publication in a newspaper of general circulation in said district at least ten days prior to such hearing.