Tuesday, January 13, 2009

Debating Annexation Law

No matter what your political pursuasion happens to be, if you are one of the thousands of people in North Carolina who now knows about the Annexation Laws of NC and are opposed to the concept, I hope that you will take the time to read some of the excellent work that the policy analysts at the John Locke Foundation are publishing about the annexation laws.

This State has been saturated for decades with rhetoric without substance from the NC Municipal League Lobbyists and helped along by the School of Government. (More about that in another post) Now, at last, there is somewhere else to turn to for some well researched analysis of the NC annexation laws.

First, I would recommend the "A Blueprint for Annexation Reform", written last month by Daren Bakst. Mr. Bakst is the legal analyst at JLF. You can read his 'Spotlight' about the paper and download the paper itself for reading later by using the link above.

This paper supports the growing consensus among more legislators about three key problems regarding forced annexation as it is being done by the cities, now 50 years from the time the law was enacted;

  • To provide a meaningful voice for the affected property owners
  • To define and require truly meaningful services in city initiated annexations
  • To create meaningful third party oversight of city initiated annexations.

The paper makes very good recommendations for reforming the laws. Every legislator who will be called upon to weigh in on passing good legislation to reform the law (and that would be all of them) should obtain and read "The Blueprint".

There is also an interesting post by Daren on the Locker Room Blog exposing some truths about the oft heard claim that NC Annexation Law is "a model for the nation".
Daren looked into this claim by researching the documents that were cited to back this claim and found some serious misleading going on with the claim.
"The Big Lie of NC Annexation: Exposed"

I'm pretty confident that there is a lot of fertile ground in the rest of those 'talking points' for uncovering more like this.

I'm counting on seeing more good stuff coming from the John Locke analysts like Daren about the annexation laws as well as more truth exposed about the "talking points" from the city lobbyists.

Thanks guys!

Saturday, January 03, 2009

Annexation Law Tweaks vs the Truth

The NCLM had their usual say in the N&O recently:
How N.C. should tweak its annexation laws

The city lobbyists claim that the law requires cities to provide a long list of urban services, but the truth is not so simply stated nor the bar necessarily so high. What do the laws require of the cities? It depends… it depends on what the city has to offer in the first place. Each annexation requires different responsibilities from the annexing city because the law allows such a wide variation regarding what the city must provide. The law allows cities that don’t even have their own fire and police departments to forcibly annex.

Before the NC Supreme Court decided in the Marvin case that the city should at least have something more than planning and tax collecting, some cities could forcibly annex without providing anything but tax collection. Garbage collection, street lighting, road maintenance, parks and recreation, police, fire, water and sewer, or any of the other services that most people equate with urban living were not necessarily required. The Marvin case changed that to where now a city initiated annexation has to provide “meaningful” service to be able to forcibly annex.
The Appeals Court later allowed the Town of Weddington to call just the addition of a contract with the County Sheriff's a "meaningful" service that qualifies the Town to forcibly annex. This is a good example of the absurdity of the law.

The city lobbyists make claims that annexing cities must provide water and sewer within two years, but the truth is _ it depends. First, if the annexing city is a provider of water and sewer service, the annexation victims have to figure out, before the city even votes to actually annex them, that in order to have water and sewer lines brought to their property they must submit an application request for the services. The property owner has five days after attending the meaningless Public Hearing, where the victims get to vent their opposition in vain, to make a request for the water and sewer. If they don’t apply, the city can make them wait as long as it suits the city to bring the service to them. There are forced annexation victims who have been, or will be, waiting for better than fifteen years for municipal water and sewer. And they’ll pay dearly for these services that they probably didn't need in most cases. It doesn’t even matter if your septic system malfunctions in the mean time. If it does, the owner gets to pay for repairs to a septic system that will eventually be replaced.

The areas that the cities can annex don’t even have to be urban enough to require higher levels of police and fire protection or municipal water and sewer. Farms can be forcibly annexed! Rural areas that aren’t farms can be forcibly annexed. What about those urban density requirements or the subdivision requirements, you say? To hear the city lobbyists tell it, the cities have to show that the area meets both density and subdivision tests. The area must be “urban in character”. Not really. The formulas in the statutes are not that strict and are filled with either/or provisions. The city planners can exercise their creativity to make a desirable area qualify while annexing around areas that the city knows will cost them more money to serve because the area actually does need some city services.

When the 1959 legislature studied the idea of giving the cities the power to forcibly annex, they justified overriding the property rights of land owners with the excuse that cities were the providers of modern services that would improve the lives of people living outside but within reach of the cities. It was the familiar argument of giving rights along with concurrent responsibilities. Now, in these “tweaks” proposed by the ‘tin cup’ municipal spokespersons is a request for more subsidies from every taxpayer in NC to pay the cities to do the job that the law gave them the responsibility to do in the first place.

The city lobbyists claim that forced annexation keeps municipal bond ratings AAA. The truth is that NC instituted something unique during the 1930’s depression in order to keep the cities from spending themselves into bankruptcy. It’s called the Local Government Commission. Cities must submit financial reports to the LGC every year showing that they have balanced books and are solvent. This is what keeps the bond ratings high.
There are quite a few other States that have more cities with AAA bond ratings from one of the rating agencies and they aren't "forced annexation States". A couple have no annexation by cities at all. It's time to look elsewhere for the reason that cities have AAA ratings. Perhaps it just boils down to better fiscal management in general, and that is what the LGC helps to insure in NC.

An interesting pattern can be found in these records reported to the Secretary of State regarding most forced annexations. The forced annexations seem to take affect predominately at the end of June, which is the end of the fiscal year for municipalities. Why might that be? Is it for the benefit of the new taxpayer? I doubt that is the case. It’s more likely for the benefit of the municipalities by using forced taxation to apply a temporary 'band-aid' to the balance sheets.

One NC City I know well prepared an Annexation Feasibility Report in 2001; the report included an analysis of the annexation revenues versus the incurred expenses for each of the considered areas. Many of the areas showed that the total expenses of the annexations would exceed the total revenues from 9 to 85 years.
But property tax revenue would be collected immediately while the capital expenses could be delayed for years. The annexation would bring an immediate infusion of property tax revenue into the General Fund and would certainly make their financial report to the LGC look better that year. The city could worry about the additional expenses later, when any related bond debt came due. Then the city could patch the books again with another forced annexation. This appears to be a financial shell game made possible by forced annexation that is unsustainable. Delay the day of financial reckoning, but the day will come.
Forced annexation was not supposed to be about revenue enhancement or for patching up the 'end of the year' financial picture for the cities.

The city lobbyists say that cites must grow outward or die. With this statement, they are admitting to being a failure already. If they can’t honestly balance their books at the size they currently are, I doubt being bigger would make a positive difference. It would just delay the day of reckoning and make the city a bigger failure once the inevitable end of annexable area was reached.

NC Annexation Law needs more than tweaking. The NCLM has been tweaking it to the advantage of the cities for decades. The laws are now failing to fulfill the original stated intent of the 1959 Legislative Commission. Much has changed over fifty years in the area of modernization and private provision of safe and healthy living conditions. The cities need to move forward and face the future instead of behaving and thinking like we are still living at the turn of the 20th century.
No more tweaks.
Restore the pre-1959 rights of the property owners in order to reign in the inevitable municipal abuses of this power.