AUTHORITY TO ANNEX WATER OR SEWER DISTRICT.

(a) In this section, "water or sewer district" means a district or authority created under Article III, Section 52, Subsections (b)(1) and (2), or under Article XVI, Section 59, of the Texas Constitution that provides or proposes to provide, as its principal function, water services or sewer services or both to household users. The term does not include a district or authority the primary function of which is the wholesale distribution of water.

(b) A municipality may not annex area in a water or sewer district unless it annexes the entire part of the district that is outside the municipality's boundaries. This restriction does not apply to the annexation of area in a water or sewer district if the district is wholly or partly in the extraterritorial jurisdiction of more than one municipality.

(c) An annexation subject to Subsection (b) is exempt from the provisions of this chapter that limit annexation authority to a municipality's extraterritorial jurisdiction if:

(1) immediately before the annexation, at least one-half of the area of the water or sewer district is in the municipality or its extraterritorial jurisdiction; and

(2) the municipality does not annex in the annexation proceeding any area outside its extraterritorial jurisdiction except the part of the district that is outside its extraterritorial jurisdiction.

(d) Area annexed under Subsection (b) is included in computing the amount of area that a municipality may annex under Section 43.055 in a calendar year. If the area to be annexed exceeds the amount of area the municipality would otherwise be able to annex, the municipality may annex the area but may not annex additional area during the remainder of that calendar year, except area subject to Subsection (b) and area that is excluded from the computation under Section 43.055.

(e) Subsections (b)-(d) do not apply to the annexation of:

(1) an area within a water or sewer district if:

(A) the governing body of the district consents to the annexation;

(B) the owners in fee simple of the area to be annexed consent to the annexation; and

(C) the annexed area does not exceed 525 feet in width at its widest point;

(2) a water or sewer district that has a noncontiguous part that is not within the extraterritorial jurisdiction of the municipality;

(3) a part of a special utility district created or operating under Chapter 65, Water Code; or

(4) a property by a municipality with a population of less than 3,000 if the governing body of a water or sewer district the boundaries of which include the property consents to the annexation.

(f) To annex the entire part of a water or sewer district that is outside the municipality's boundaries, a general-law municipality incorporated after 1983 that is, after incorporation of the district, incorporated over all or any part of the district may annex territory by ordinance without the consent of the inhabitants or property owners of the territory.

(g) For an annexation of an area in a water or sewer district that is wholly or partly in the overlapping extraterritorial jurisdiction of two or more municipalities, any one of those municipalities is not required to obtain under Section 42.023 the written consent of any of the other municipalities in order to annex the area if:

(1) the area contains less than 100 acres;

(2) the annexing municipality, before June 1, 2005, annexed more than 50 percent of the territory of the water or sewer district, as the district existed on the date of its creation; and

(3) the entire water or sewer district would be contained in the annexing municipality after completion of the annexation.