Oregon Revised Statutes Cities § 221.785

(1) Notwithstanding ORS 221.770, 323.455, 366.785 to 366.820 and 471.810, when a proceeding challenging the validity of the incorporation of a city is commenced before a court or administrative agency of this state within two years after the incorporation, if the court or agency determines that the incorporation is invalid, moneys otherwise payable to the city under ORS 221.770, 323.455, 366.785 to 366.820 and 471.810 shall not be distributed to the city, but shall be deposited with the State Treasurer as provided in subsection (3) of this section.

(2) Not later than 30 days after the issuance of an order or judgment declaring the incorporation of a city invalid, the party challenging the incorporation shall send a certified copy of the order or judgment to the State Treasurer, Department of Transportation, Department of Revenue and the Oregon Liquor Control Commission.

(3) Upon receiving a certified copy of the order or judgment under subsection (2) of this section, the state officer or department having responsibility for the distribution of moneys under ORS 221.770, 323.455, 366.785 to 366.820 and 471.810 shall deposit those moneys in an escrow account administered by the State Treasurer.

(4) Upon final determination of the validity of an incorporation by judgment rendered by the highest court in which a decision could be had, the moneys in the escrow account established under subsection (3) of this section shall be distributed as follows:

(5) The State Treasurer, upon receiving a certified copy of the judgment of the court which constitutes the final determination of the validity of the challenged incorporation shall distribute moneys in the escrow account as provided in subsection (4) of this section.

(6) The State Treasurer shall retain interest earned on moneys deposited in the escrow account and shall distribute the interest in the same manner as other moneys in the account are distributed.