(a) "Neighboring city" means a city that has any part of its territory situated within three miles of the area proposed to be incorporated.
(b) "Rural unincorporated community" means a settlement with a boundary identified in an acknowledged comprehensive plan of a county and that:
(A) Is made up primarily of lands subject to an exception to statewide planning goals related to agricultural lands or forestlands;
(B) Either was identified in the acknowledged comprehensive plan of a county as a "rural community," "service center," "rural center," "resort community" or similar term before October 28, 1994, or is listed in the Department of Land Conservation and Development’s "Survey of Oregon Unincorporated Communities" (January 30, 1997);
(C) Lies outside the urban growth boundary of a city or a metropolitan service district; and
(D) Is not incorporated as a city.
(c) "Urban reserve" has the meaning given that term in ORS 195.137.
(d) "Urban services" has the meaning given that term in ORS 195.065.
(2) When any of the area proposed to be incorporated as a city lies within an urbanized area, but outside the urban growth boundary of a city or a metropolitan service district:
(a) The area proposed to be incorporated must also be located entirely within a designated rural unincorporated community and contiguous lands subject to an exception to statewide planning goals related to agricultural lands or forestlands.
(b) The petition required by ORS 221.031 must be accompanied by an affidavit, signed by a chief petitioner, stating that:
(A) Ten percent of the electors registered within the area proposed for incorporation favor the incorporation; and
(B) The chief petitioners have engaged the neighboring cities in discussions concerning the effects of the proposed incorporation, including discussions specifically relating to how those cities and the proposed city will allow for expansion of urban growth boundaries and, where applicable, for creation or expansion of urban reserves.
(c) The economic feasibility statement required by ORS 221.035 must:
(A) Indicate that the proposed city must plan for and provide urban services in a cost-effective manner at the minimum level adequate to meet current needs and projected growth;
(B) Contain a proposed permanent rate limit for operating taxes to provide revenues for urban services; and
(C) Indicate that the proposed city must plan for residential development at or above the same urban density planned for an existing city, within the county, that has a similar geographic area within the existing city’s urban growth boundary or, for a proposed city within three miles of Metro’s boundary, a minimum urban residential density in accordance with a statewide planning goal and rules pertaining to needed housing for cities within Metro’s urban growth boundary.
(d) If the proposed city will be required to complete a public facility plan and a transportation systems plan, the proposed city must demonstrate the ability to provide urban services to meet current needs and projected growth. The proposed city may meet this requirement, in whole or in part, by establishing an agreement in principle with a city or a district, as defined in ORS 195.060, to provide the urban services.
(3) If the governing body of a neighboring city determines that the proposed incorporation adversely affects that city, the governing body may ask the county court with which the petition for incorporation was filed to reject the petition and terminate the incorporation proceedings. The objections by the city to the incorporation shall be heard and considered by the county court at a public hearing held under ORS 221.040.
(4) If, at the hearing held under ORS 221.040, the county court finds that any of the requirements of subsection (2) of this section are not met or that the proposed incorporation will adversely affect a neighboring city, the county court shall provide by order for the termination of the incorporation proceedings. The order shall contain the findings of the county court relating to the proposed incorporation and the reasons for terminating the incorporation proceedings.
(5) In the manner provided in ORS 197.830 to 197.845, the Land Use Board of Appeals shall review, upon the petition of a party to the incorporation proceedings, the order of the county court under subsection (4) of this section. [2001 c.132 §2; 2005 c.396 §2; 2007 c.723 §8]