Ky. Rev. Stat. § 220.530
Where a city having existing sewers constructed and maintained by general tax funds of the city annexes an entire sanitation district, the city shall be bound for all the debts and liabilities, and be the owner of all the property and rights, of the district, the users of sewers in the district shall be relieved from any further rentals and obligations, and the district shall thereupon be automatically dissolved. If only a portion of a sanitation district is annexed, the city shall be the owner of all the sewers within the annexed portion, the amount of the existing debts and liabilities for which the city shall be bound shall be in such proportion as the amount of rentals within the territory annexed bears to the amount of rentals in the entire district, the city shall in the same proportion contribute its proportionate share to the cost of the operation and maintenance of a sewer disposal plant or system as long as such plant or system is used by the property within the annexed area, and the users of sewers in the annexed portion shall be relieved from any further rentals or obligations to the district. Any city annexing a portion of a sanitation district may furnish sewage disposal for the portion of the district annexed and discontinue the use of the district's sewage disposal plant or system, in which event the city shall be relieved from any further contribution towards the cost of operation or maintenance of the district's plant or system.
KRS 220.530