For a period of ninety days after a petition proposing the incorporation of a city or town is filed with the county auditor, a petition or resolution proposing the annexation of any portion of the territory included in the incorporation proposal may be filed or adopted and the proposed annexation may continue following the applicable statutory procedures. Territory that ultimately is annexed, as a result of the filing of such an annexation petition or adoption of such an annexation resolution during this ninety-day period, shall be withdrawn from the incorporation proposal.
A proposed annexation of a portion of the territory included within the proposed incorporation, that is initiated by the filing of an annexation petition or adoption of an annexation resolution after this ninety-day period, shall be held in abeyance and may not occur unless: (1) The boundary review board modifies the boundaries of the proposed incorporation to remove the territory from the proposed incorporation; (2) the boundary review board rejects the proposed incorporation and the proposed city or town has a population of less than seven thousand five hundred; or (3) voters defeat the ballot proposition authorizing the proposed incorporation.