(a) In this section, “colonia” means a geographic area that consists of 11 or more dwellings that are located in close proximity to each other in an area that may be described as a community or neighborhood and that:
(1) has a majority population composed of individuals and families of low income and very low income, as defined by § 2306.004, Government Code, and based on the federal Office of Management and Budget poverty index, and that meets the qualifications of an economically distressed area under § 17.921, Water Code; or
(2) has the physical and economic characteristics of a colonia, as determined by the Texas Department of Housing and Community Affairs.
(b) A colonia that is annexed by a municipality remains eligible for five years after the effective date of the annexation to receive any form of assistance for which the colonia would be eligible if the annexation had not occurred.