(1) A water-sewer district may not prohibit the use of multipurpose fire sprinkler systems that are part of a structure's plumbing system for single-family homes and townhouses as defined by the state residential building code or require a separate water meter or backflow preventer for the multipurpose fire sprinkler system.

(2) For the purposes of this section, "multipurpose fire sprinkler system" means a fire sprinkler system that:

(a) Is supplied only by the purveyor's water;

(b) Does not have a fire department pumper connection;

(c) Is constructed of approved potable water piping and materials to which sprinkler heads are attached; and

(d) Terminates at a connection to a toilet or other plumbing fixture to prevent stagnant water.