(1) Local improvement districts may be established pursuant to the provisions of this section.

(2) The board of a service authority may establish local improvement districts within the boundaries of the service authority either by:

(a) Resolution of the board, subject to protest by the owners of a majority of all property benefited and constituting the basis of assessment as the board may determine; or

(b) Petition by the owners of a majority of all property benefited and constituting the basis of assessment in the proposed district.

(3) In either event, a public hearing shall be held at which all interested parties may appear and be heard. Right to protest and notice of public hearing shall be given as provided by the resolution of the board.

(4) The board has the power by resolution to prescribe the method of making such improvements, of assessing the cost thereof, and of issuing bonds for cost of constructing or installing such improvements, including the costs incidental thereto.

(5) Decisions of the board concerning the formation of a local improvement district are not subject to review unless action is instituted by an eligible elector of the service authority or owner of property within the local improvement district within forty-five days after passage of the resolution to form the improvement district, and any review shall extend only to the question of whether the board exceeded its jurisdiction or abused its discretion. If a court so finds, it shall remand the matter to the board for further proceedings, consistent with such findings.

(6) (a) Where all outstanding bonds of a local improvement district have been paid and any moneys remain to the credit of such district, they shall be transferred to a special surplus and deficiency fund, and whenever there is a deficiency in any local improvement district fund to meet the payments of outstanding bonds and interest due thereon, the deficiency shall be paid out of said surplus and deficiency fund.

(b) Whenever a local improvement district has paid and cancelled three-fourths of its bonds issued, and for any reason the remaining assessments are not paid in time to retire the remaining bonds of the district and the interest due thereon, and there are not sufficient moneys in the special surplus and deficiency fund, then the service authority shall pay said bonds when due and the interest due thereon and reimburse itself by collecting the unpaid assessments due said local improvement district.

(7) (a) In consideration of general benefits conferred on the service authority at large or on a special taxing district within the service authority, as the case may be, by the construction or installation of improvements in a local improvement district, the board may levy annual taxes on all taxable property within the service authority or within the special taxing district, as the case may be, at a rate not exceeding four mills in any one year, to be disbursed as determined by the board for the purpose of paying for such general benefits, for the payment of any assessment levied against the service authority or special taxing district, as the case may be, in connection with bonds issued for local improvement districts, or for the purpose of advancing moneys to maintain current payments of interest and equal annual payments of the principal amount of bonds issued for any local improvement district.

(b) The proceeds of such taxes shall be placed in a special fund and shall be disbursed only for the purposes specified; except that, in lieu of such tax levies, the board may annually transfer to such special fund any available moneys of the service authority or of the special taxing district, as the case may be, but in no event shall the amount transferred in any one year exceed the amount which would result from a tax levied in such year as limited in this section.