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Annexation Michael
Crowell Published in the January 2005
newsletter of the North Carolina Bar Association's Government and Public
Sector Section. ANNEXATION Michael
Crowell Nationally, North Carolina’s annexation law long has been viewed as a sound, thoughtful approach to urban development. As far back as the 1960s, for example, Harvard Law School’s local government course featured the North Carolina annexation statutes as a model for legislation in this area. Since 1967 the United States Advisory Commission on Intergovernmental Relations has recommended the North Carolina procedure for the rest of the country. Here at home, the League of Municipalities credits the annexation statutes for orderly growth of our cities, avoiding the clutter of too many governmental units with overlapping jurisdictions. Yet, in recent years, more and more citizens, and lawmakers, have decried what they see as the unfairness of “forced” annexation — adding citizens to a municipality without a vote on whether they want to be included. Annexation of territory into a city can occur three ways: by act of the legislature; by the voluntary request to be annexed by the affected property owners; and involuntarily, by action of the city council. This article gives an overview of the last method, the involuntary annexation process. The philosophy of the involuntary annexation law is simple: For orderly growth, a city should be able to add territory when that area has become urbanized — and once the territory is added, the city should be obligated to provide services at the same level as within the existing city. Thus, if an area adjoins an existing municipality and meets very specific urbanization tests — subdivision of lots, population, percentage of land occupied, and so on — it may be annexed by the city, and upon annexation the city must provide to the new area the same kind of water, sewer, fire, police and other services as enjoyed by the existing city. The process begins with the city’s adoption of a resolution and publication of notice that it is considering an area for annexation. See G.S. 160A-49. The notice must be published, and must be sent to all affected landowners, at least 45 days before the first required public event, a public informational meeting at which city representatives explain the annexation. At least 30 days before the public informational meeting, the city must have an annexation report prepared. The annexation report, usually done by the city’s planning department, is the basis for all future action. It must describe in detail the area to be annexed, with maps; analyze whether the various tests for urbanization have been met; and must state how and when the city intends to provide the essential services of police, fire protection, garbage collection and street maintenance to the area. See G.S. 160A-47. The annexation report also must state which urbanization test is met by the annexation area. First, the annexation area must adjoin the current city boundaries, with at least one-eighth of the annexation area boundary coinciding with city limits. Then, the area must meet at least one of several alternative tests for development. The tests are somewhat complicated, but the essentials are that the area being annexed must either:
See G.S. 160A-48. It is not difficult to see that city planners must be careful in assessing the qualification of an area for annexation. It also is not difficult to see how lawyers can argue over whether a property’s use is residential or commercial or vacant. The other key portion of the annexation report is the plan for providing services. The city must describe the current level of service in the city — e.g., number of police officers per 1,000 residents; number of garbage pickups per week; response time for fire calls — and must commit itself to comparable performance in the annexation area. The report must say, too, how the services are to be financed. The fiscal calculations will show the new tax revenue expected from the annexed area, the charges to be imposed for services, whether the revenue will be sufficient to cover the work and, if not, how the difference will be financed. See G.S. 160A-47(3), (5). Areas being annexed often do not have the lines in place for water and sewer service. In that situation, the city does not have to have the lines installed at the time of annexation but must have plans for doing so within two years of the annexation. G.S. 160A-47(3)d. Likewise, if, as is often the case, existing-city-level fire service cannot be provided immediately upon annexation because the necessary water trunk lines and fire hydrants are not in place, the city may temporarily contract with a volunteer fire department (which likely already was providing service to the annexation area) for coverage until the trunk lines and hydrants are constructed. G.S. 160A-47(3)a. Once the annexation report is prepared the city must hold, first, the public informational meeting explaining the report and, next, a public hearing. The public hearing must be within 60 to 90 days after the city council passes the resolution stating its intent to consider annexation. G.S. 160A-49. Notice of both events must be sent to all affected property owners. When residents are not pleased with prospect of annexation, and the accompanying increases in their property taxes, these meetings can be crowded, emotional and unruly. After the public hearing, the city council may reduce the area being annexed and amend the annexation report accordingly. When it is satisfied with the area to be included, and that services can be provided, the council adopts an annexation ordinance specifically describing the annexation area, stating how the urbanization test has been satisfied, and committing to the provision of essential city services. See G.S. 160A-49(e). Typically the ordinance provides for the annexation to be effective several months into the future, accepting that legal challenges are likely and will have to be satisfied before the annexation actually happens. Now the fun begins. The statutes contemplate a quick, abbreviated appeal process, but in practice the pace often is tortoise-like and the judicial review is broader than intended. As often as not, the final outcome can be clearly seen — the annexation will be upheld — but the opponents view the costs of litigation as far less than the taxes they would pay during that period of time. With the statute declaring that an annexation cannot take effect until all appeals are resolved (G.S. 160A-50(i)), the litigation can become more of a tug-of-war over the scheduling of hearings than a real test of the merits. The petition contesting the annexation must be filed in superior court within 60 days of adoption of the annexation ordinance. G.S. 160A-50(a). The statute declares that the hearing is to be expedited and “shall preferably be within 30 days following the last day for receiving petitions to the end that review shall be expeditious and without unnecessary delays.” G.S. 160A-50(f). At the same time, however, the law allows discovery. Campbell v. City of Greensboro, 70 N.C. App. 252, cert. denied and appeal dismissed, 312 N.C. 492 (1984). Accommodation of discovery necessarily means at least several months of delay before the hearing. Opponents will submit interrogatories on the all the details of urbanization and provision of services; will ask for all the many documents the city will have created on those issues; and will want to depose all the key players in the development of the annexation report. At the hearing itself the law is stacked in favor of the municipality. Various constitutional challenges, such as the lack of jury trial, have been rejected. In re Annexation Ordinance No. D-21927, 303 N.C. 220 (1981). Federal due process and equal protection claims have failed. Baldwin v. City of Winston-Salem, 544 F.Supp. 123 (M.D.N.C. 1982), aff’d, 710 F.2d 132 (4th Cir. 1983). The superior court’s review is to be limited to whether the annexation proceedings substantially comply with the statutory requirements. Thrash v. City of Asheville, 95 N.C. App. 457 (1989); Huyck Corp. v. Town of Wake Forest, 86 N.C. App. 13 (1987). If the annexation record submitted by the city to the court shows substantial compliance, the burden is on the protestors to show that the statutory requirements were not met and that their substantive rights were materially prejudiced as a result. Huyck. For the city, the key phrase is “substantial compliance” with the annexation statutes: Absolute and literal compliance with a statute enacted describing the conditions of annexation is unnecessary; substantial compliance only is required. The reason is clear. Absolute and literal compliance with the statute would result in defeating the purpose of the statute in situations where no one has been or could be misled. In re Annexation Ordinance (New Bern), 278 N.C. 641, 648 (1971). Thus, an annexation report is acceptable, and the annexation upheld, even if the description of current service levels are only general in nature, without detail as to number of police calls, number of officers, response times, or so forth. In re Annexation Ordinance (Charlotte), 304 N.C. 549 (1981); In re Annexation Ordinance (Jacksonville), 255 N.C. 633 (1961). If the report states the city’s commitment to provide the same level of service, even without discussing the specifics, that usually will be sufficient. See Sonopress, Inc., v. Town of Weaverville, 149 N.C. 492 (2002); Parkwood Assoc. v. City of Durham, 124 N.C. App. 603 (1996). As to property use, the burden is on the petitioners to show that the use assigned by the city is insignificant as compared to other uses. Shackelford v. City of Wilmington, 127 N.C. App. 449 (1997). A parcel may be classified as industrial, for example, even when the majority of the tract is vacant. Scovill Manufacturing Co., Inc., v. Town of Wake Forest, 58 N.C. App. 15 91982). Given the state of the law favoring annexation, and the care planning departments usually take with annexations, the odds usually are with the city at the annexation hearing. If the court finds that the statutory requirements have not been met but can be fixed by the city — e.g., revising the plans for providing services or deleting a tract of land to satisfy the urbanization tests — the court can remand the annexation ordinance to the city council to make those changes within 90 days. G.S. 160A-50(g). The portion of the annexation law that strongly favors protestors is the provision that the annexation cannot take effect until all appeals are exhausted. See G.S. 160A-50(i). That includes the lengthy time in the Court of Appeals, which usually consists of several months compiling the record on appeal, a few more months for briefs to be filed, a break of several months before oral argument, then another few months before a decision appears. Time in the Court of Appeals, thus, can delay a final decision, and annexation, for a year to year and a half, regardless of the merits of the appeal, and there is no good way to make the process go quicker. Taking full advantage of G.S. 160A-50(i), the opponents usually can delay an annexation for nearly two years, with the value of their tax savings more than offsetting the costs of litigation. For cities in 40 counties there is yet another step after the appeals are concluded. For counties covered by Section 5 of the federal Voting Rights Act, most of which are in the eastern part of the state, an annexation must be precleared before it can take effect. The preclearance process, which usually is through the United States Justice Department, is intended to assure that the annexation, by adding voters to the city, does not diminish the opportunity of African American voters to elect candidates. The preclearance test does not preclude a city from adding territory which includes a lower percentage of black voters than the current city, but when that occurs it can lead to harder questions from the reviewers in Washington, especially if the opponents see this process as another chance to make mischief and delay the annexation. Even an ordinary, noncontroversial preclearance usually takes at least 60 days, and typically the Justice Department will not begin the formal review until the state appeals are concluded. Consequently, the timeline for an annexation can be stretched several months more in those 40 preclearance counties. In sum, North
Carolina has an annexation process which is
admired among local government advocates around the country but remains
controversial at home. The statutory and case law
generally backs up the legislative policy favoring annexations and clearly
favors municipalities when an annexation is
tested. Nevertheless, the opportunity for and financial gain from delay of
the annexation encourages litigation
regardless of the seriousness of the objections. For that reason, once
litigation begins cities sometimes negotiate with petitioners to modify
and reduce annexations to dispose of the most troublesome opponents.
November 2004 |