(1) For a discontinued sanitary district which lies solely within the zoning jurisdiction of a city, title to all funds and all other property and property rights of the discontinued district, and all taxes, assessments, and demands of every kind due or owing to the discontinued district, shall be vested in or paid to and collected by (a) such city or (b) except as specifically provided in subsection (3) of this section, the riverfront development authority established pursuant to section 19-5305 if such city has elected to create a riverfront development district pursuant to section 19-5304.

(2) The city or riverfront development authority described in subsection (1) of this section shall also be liable for and recognize, assume, and carry out all valid contracts and obligations of that portion of the discontinued district assumed by such city or authority, including all outstanding bonds, warrants, or other debts and financial obligations.

(3) For any discontinuance of a district under subdivision (1)(b) of this section, the riverfront development authority shall only take title to and ownership of that property or those property rights of the discontinued sanitary district contained within the boundaries of the riverfront development district managed by the authority. The city shall take title to and ownership of any discontinued sanitary district property outside the boundaries of such riverfront development district. The city or authority shall thereafter maintain any drainway or drainage or sewage system of that portion of the discontinued district conveyed or transferred to the city or authority.