From Ending Forced Annexation in Texas: Hon. Jess Fields & James Quintero, TPPF, Center for Local Governance (July, 2015)
8 Clinton v. Cedar Rapids and the Missouri River Railroad. 24 Iowa 455. 1868.
9 People v. Hurlbut. 24 Michigan 44, 95. 1871.
12 “Houston Annexation Doubles City’s Size.” Lubbock Evening Journal. Dec. 31, 1948. Print.
14 The Galveston News Editorial page. “Race to the Sea.” The Galveston Daily News. Aug. 20, 1949. Print.
18 Akers, Monte, Barbara Boulware-Wells, and Jason D. King. “Municipal Law 101.” Akers & Boulware-Wells, LLP. The 2009 Riley Fletcher Basic Municipal Law Seminar. Feb. 13, 2009. p. 2.
20 Ibid. § 43.025.
22 Ibid. 29-30.
23 Ibid. 27-28.
26 Ibid. § 43.052(j)
33 New State Ice Co. v. Liebmann, 285 U.S. 262 (1932) U. S. Supreme Court, Justia version (case law online).
37 Edwards, Mary and Yu Xiao. “Annexation, Local Government Spending, and the Complicating Role of Density.” Urban Affairs Review. Nov. 2009. Vol. 45, No. 2. p. 152.
38 Ibid. 160.
39 Cho, Yong Hyo. “Fiscal Implications of Annexation: The Case of Metropolitan Central Cities in Texas.” Land Economics. Vol. 45, No. 3. Aug. 1969. 372.
40 Edwards and Xiao. p. 164.
41 Ibid. 164.
From Ending Forced Annexation in Texas: Hon. Jess Fields & James Quintero, TPPF, Center for Local Governance (July, 2015)
Annexation has almost always been a controversial issue in Texas, with advocates on both sides offering widely different views on matters of property rights and self-determination. But much of the real debate centers on the proper role of government.
Perhaps more than ever, Americans are becoming acutely aware of the need to protect their property rights, as government at the federal, state, and local levels seem inclined to diminish the natural Constitutional rights that have long been held in esteem. It is the duty of all Texans to question the policies and institutions threatening our individual liberty and property rights.
From Ending Forced Annexation in Texas: Hon. Jess Fields & James Quintero, TPPF, Center for Local Governance (July, 2015)
Reverse Intergovernmental Aid
Before concluding this study, it is worth addressing another issue that is often brought forward by cities as a reason for needing to annex involuntarily. It is also commonly brought up by the Texas Municipal League (TML), which represents the majority of Texas cities as members and lobbies on their behalf for preserving local authority on most things, including their ability to involuntarily annex.
In presentations and in testimony, the TML has repeatedly referred to a concept that it calls “Reverse Intergovernmental Aid” (RIGA), as a primary reason why Texas cities need to retain the authority to annex involuntarily.46 The argument is that most states aid cities directly out of their budgets, while Texas provides little financial assistance to cities, and in fact takes money from cities through RIGA. As a result, the power to annex involuntarily exists as a counterweight to RIGA, and so long as it exists, the ability of RIGA to negatively affect cities is limited.
It is difficult to gauge the fiscal positives of involuntary annexation taken as a whole, for reasons previously described here. That said, the TML is correct about RIGA’s harmful effect on Texas cities, and as part of broader reform of statutes affecting local governments generally, it is necessary to include RIGA in the discussion.
In order to address RIGA, which the TML pegs at hundreds of millions of dollars, several state agency fees and programs would need to be eliminated. First is the Texas Comptroller’s cut of sales tax remittance to municipalities. The TML estimated in 2012, this figure rose to $137 million, which accounts for a significant portion of the operating budget of the Comptroller’s office.47
Additionally, another major component of RIGA is the amount of municipal court fines remitted to the state, which the TML reports at a $227 million for 2012.48
Another player in RIGA is the Commission on Fire Protection, which generates its budget of nearly $4 million through “fees on cities and firefighters,” and is tasked with generating even more revenue to go into the state’s general fund.49
Other Proposed Changes to Statute
Many states’ annexation reform proposals have included some level of consent by the municipality’s residents also. While there is merit in including the voices of existing residents, to some extent their ability to hold their elected officials responsible for a poor financial decision lays at the ballot box. Additionally, there are some local charter provisions that would already cover the ability of citizens to either halt or end an annexation process.
However, because it is such a common inclusion in annexation reform proposals, and because there are conceivable instances in which a community may strongly oppose an annexation for some reason, the statute should be amended to include a provision to allow existing residents of the municipality to delay the annexation for a period of time.
Here is what this proposal could look like:
- A city’s residents, during days 31 through 90 after the passage of the resolution declaring intent to seek annexation, may terminate the annexation process if at least five qualified voters who are city residents gather petition signatures numbering at least 10 percent of the total voters of the most recently held regular municipal election to call an election in which city residents may vote to reject the annexation with a majority vote. If the annexation is stopped by local petition, it may not be attempted again by the municipality for a period of two years.
- While this is a high threshold, if an annexation produces a great amount of opposition, it will not be an insurmountable barrier by which citizens may hold their local government accountable.
- Another important difference with this proposal and existing statute is that the new statute should apply to both general law and home rule municipalities. There is no reason to discriminate against general law cities by only delegating to them a limited annexation authority. Home rule and general law cities should, as long as consent is obtained, be able to annex in the same fashion. The only limit, inasmuch as it is not also reformed, should be the extraterritorial jurisdiction.
- Another change that should be enacted is that areas proposed for annexation, whether city initiated or property-owner initiated, do not need to be contiguous as long as they fall within the extraterritorial jurisdiction of the municipality. This may seem a strange concession, but it allows for cities to not have to draw contiguous boundaries that may inadvertently bring in unwilling property owners in order to get to an area farther out in their extraterritorial jurisdiction. As long as the city is able to provide services, contiguity in municipal boundaries is not necessary—at least with the extraterritorial jurisdiction in place.
- Finally, limited-purpose annexation, which allows cities to gain tax dollars and regulatory authority without providing services, should be eliminated as part of moving annexation to a consent-driven process. This has not been addressed within the prior pages as it is altogether a different mechanism, but nonetheless allows government to exercise its authority over individuals in unincorporated areas without their consent.
Procedures for City-Initiated Annexation of Area Containing 200 or More Residents
For a larger population, a petition becomes more challenging. In this instance, it is reasonable to hold an election as is required by many states with consent-driven annexation processes. If a municipality wishes to annex an area larger than 200 residents, it ought to seek an election.
To that end, an election should be held, but not on a holiday or some strange date when no one is able to participate. Instead, it behooves the municipality to hold the election on a date that is standard. Under current Texas law, the May municipal election date, which is the second Saturday of May, or the November election date, which is the first Tuesday in November, are the standard election dates.
Municipalities seeking to annex 200 or more residents should seek consent in an election occurring on one of these standard dates, allowing for the maximum participation of those residents, but potentially allowing for less money to be spent than would be if an election was not already being held on that day.
Importantly, municipalities cannot hold the election sooner than 90 days from the passage of the resolution of intent to annex; this allows for a full public debate within the area proposed for annexation, and provides time for public hearings. A municipality should hold at least two—one in the first month, and one in the second 60-day period. If municipalities wish to hold more, it would be their decision to do so, but they would not be required to or prevented from that broader level of engagement.
The following is the proposed procedure for a municipality to annex an area containing 200 or more residents:
- The municipality shall pass a resolution clearly establishing intent to annex the area, and including detailed descriptions and maps of the properties to be annexed, as well as a full description of the services to be provided after annexation, using the existing inventory of services already required by statute. The resolution shall also establish the date of election for the annexation.
- The annexation election shall take place in a fixed polling place or places within the area proposed for annexation. If a suitable location is not available, it shall take place in the nearest available location within the municipal limits.
- The annexation election may only take place on the May or the November regular election dates. The municipality may choose either, however, the election date must be no sooner than 90 days from when the resolution is passed calling for it.
- The first 30 days after the resolution is passed shall contain at least one public hearing to be held by the municipality in the area to be annexed, not sooner than 21 days and not further than 30 days after the passage of the resolution initiating the annexation process. Within seven days of the passage of the resolution, notice shall be mailed to every property owner of the annexation hearings, election, as well as information regarding service provision after annexation.
- An additional public hearing shall be held in the 60-day period following the first 30 days; between days 31 and 90 after the passage of the resolution.
- The election shall only be open to qualified voters of the area proposed for annexation.
- If the voting age population in the area proposed for annexation (that is, the number of persons residing in the area who are at least 18 years of age and in good standing to register to vote, whether or not they are indeed registered), do not own at least 50.1 percent of the total land area of the area to be annexed, then at least 50.1 percent of the nonresident property owners must also consent to the annexation through a petition process during days 31 through 90 after the resolution is passed, except that the non-resident property owners need not be registered to vote in the same county or counties where the annexation is taking place. Additionally, they may provide verified signatures electronically for expedience. The municipality may collect these petitions only between days 31 and 90 after the resolution has been passed. The municipality may solicit petitions by going door to door, mailing notices, and making phone calls, however, the petitions must be signed in person.
- Once the election has been held, all property owners must be notified of the result of the election. If at least 50.1 percent of qualified voters in the area proposed for annexation have voted in the affirmative, and a petition of non-resident property owners has been signed by a sufficient number in the affirmative, a public hearing shall be held and, at least 10 business days after, a meeting for deliberation and final passage of the annexation process as well.
The election process for seeking consent to annex, which is used by many states, need not be overly burdensome. To that end, once consent is obtained, the annexation is done. It does not require additional steps, beyond a simple public hearing and then final passage by the governing body. As with the petition process, the election process of seeking consent can be accomplished in as little as four months, and yet still allows for full resident and property owner consent to be considered in the annexation process, whether there are 201 or 20,000 residents involved.
A Proposal for City-Initiated Annexation with Fewer Than 200 Residents
Because of the many kinds of annexations that are conceivable, it makes sense to split the annexation process up in statute into smaller and larger segments. In moving toward a consent-driven process, the Legislature should also recognize that not all populations need the same kind of consent. For a larger area, it may be feasible to seek an election. For a smaller area with fewer than 200 residents, it is not necessary.
Therefore, the proposal recommended for such small-scale annexations is to use a process of seeking consent by petition. As with voluntary annexation, there is no need to overly complicate the process and take longer than necessary. However, in the interest of respecting the rights of the people who are to be annexed, it is important to allow enough time for either consent to be granted or for people to decide to reject a proposed annexation.
To that end, the core process should take no more than a few months, allowing the bulk of the time for the residents to consider granting consent, or denying it.
The following is the proposed procedure for a municipality to annex an area containing no more than 199 residents:
- The municipality shall pass a resolution clearly establishing intent to annex the area, and including detailed descriptions and maps of the properties to be annexed, as well as a full description of the services to be provided after annexation, using the existing inventory of services already required by statute. The resolution marks the beginning of a 90-day period in which the informational and petition gathering processes shall be contained.
- The first 30 days shall contain at least one public hearing to be held by the municipality in the area to be annexed, not sooner than 21 days and not further than 30 days after the passage of the resolution initiating the annexation process. Within seven days of the passage of the resolution, notice shall be mailed to every property owner of the annexation hearing and forthcoming petition process, as well as information regarding service provision after annexation.
- A 60-day petition collection period shall follow the 30-day informational process. The municipality may solicit petitions by going door to door, mailing notices, and making phone calls. However, the petitions must be signed in person.
- A resident of the area to be annexed who is not registered to vote at the beginning of the petition process may be allowed to sign the petition in the affirmative or negative if registered to vote at least 30 days prior to signing the petition; however, the municipality may not register voters in order to gather more signatures.
- If the voting age population in the area proposed for annexation (that is, the number of persons residing in the area who are at least 18 years of age and in good standing to register to vote, whether or not they are indeed registered), do not own at least 50.1 percent of the total land area of the area to be annexed, then at least 50.1 percent of the nonresident property owners must also consent to the annexation through a petition process concurrent to the process for qualified resident voters, except that the non-resident property owners need not be registered to vote in the same county or counties where the annexation is taking place. Additionally, they may provide verified signatures electronically for expedience.
- Those who sign the petition may give written notice in person, prior to the petition period closing, that they wishes to remove their name from the petition.
- If the petition process closes and a sufficient number of signatures from qualified voters and nonresident property owners (if necessary) have not been obtained, the annexation process is closed, and the city may not propose the same area for annexation for a period of at least one year.
- If the petition process closes and a sufficient number of signatures have been obtained from qualified voters and non-resident property owners (if necessary), then the city shall finalize the annexation process by holding one more public hearing and then an additional final meeting for deliberation, and final passage, at least 10 business days apart. Additionally, the public hearing shall not be held until all property owners have been notified of the results of the annexation petition process.
Of note, property owners who are not residents nonetheless have a right to their property that ought to be recognized and protected within the annexation process. For this reason, such non-resident property owners are considered within the seeking of consent if they represent more than half of the properties sought for annexation. This is a reasonable compromise between always seeking to include the property owners who are not residents and never including them. Under current law, non-residents are not considered. This proposal is equitable for cities, residents, and property owners alike. This also speeds up the annexation process such that it may occur in less than four months, as long as consent is obtained.
A Proposal for Voluntary Annexation
Voluntary annexation should not be subject to unnecessary delays. The principle at hand in voluntary annexation is simple: a property owner consents to be annexed by seeking annexation. As a result, the process should take no longer than the amount of time necessary to obtain full agreement between the property owner and the municipality.
In order to allow cities and property owners to more readily come to an understanding regarding the services provided after an annexation occurs, property owners seeking voluntary annexation should be able to negotiate with a city and draw up a service agreement that outlines the specific responsibilities of the city and property owners.
For example, a property owner seeking annexation may only care about obtaining police and fire coverage, but does not need other improvements, such as sewer service. He may wish to place this stipulation in an agreement with a city; therefore, it is to the city’s advantage to have the property owner able to consent to a lower level of services than might be required by the current service inventory in statute.
Similarly, the property owner may wish to obtain a certain kind of zoning designation after he is annexed, and allow the city to forego certain services in the interest of obtaining that designation. In either case, it is the agreement which would stipulate the terms—and the agreement must be signed off on by both the property owner and the municipality.
Once a property owner (or owners) agrees to the terms of annexation, the city should be able to annex quickly. A reasonable solution would be for the city to hold a public hearing and then, no sooner than 10 business days later, post for final passage of the annexation. This would speed up voluntary annexation to a process that could take as little as a few weeks, which would clearly benefit both municipalities and property owners.
An Equitable Solution for Annexation Reform in Texas
Proponents and opponents of the present annexation situation may never completely agree as to what constitutes an ideal compromise. Municipalities are unlikely to voluntarily give up their authority to annex involuntarily, and residents in unincorporated areas outside of municipalities have little recourse to defend against annexation. This means that, in Texas’ case, a statewide solution is necessary—as has been already passed by many other states.
This does not mean that residents and property owners in unincorporated areas, particularly those within the Extraterritorial Jurisdiction of cities, should have complete control over the annexation process. The municipality itself may not have “rights,” but the citizens therein do, and they may seek policies that create a desire to annex. Where the compromise, so to speak, must come in is that these residents, through their city, cannot violate the rights of property owners in unincorporated areas.
Therefore, an equitable solution for annexation reform in Texas must include several key components:
- It must protect the rights of property owners and residents in unincorporated areas, particularly within the Extraterritorial Jurisdiction;
- It must allow cities to initiate the annexation process;
- It must allow annexation to occur in a timely fashion, in other words, without undue delays.
The third point is particularly important, because under current law, both voluntary and involuntary annexation proceedings tend to take a very long time and require a great deal of bureaucratic wrangling. This should not be the case; if annexation is done in a proper manner—that is, with the consent of those being annexed— there should be no reason for excessive statutory delay. This also allows cities to have more opportunities to annex even if annexation becomes, in a sense, more “difficult” because of some requirement of consent. Additionally, it provides an opportunity for voluntary annexations—those initiated by the property owner— to be significantly shortened in duration, due to the pre-existing consent of the property owner(s) seeking annexation.
In the following sections, equitable annexation reform will be explained according to three distinct situations that it covers, which likely account for all instances of municipal annexation: voluntary annexation initiated by property owners, annexation initiated by municipalities of areas with low population (fewer than 200 residents), and annexation initiated by municipalities of areas with high population (200 or more residents).
Ending Forced Annexation in Texas: Hon. Jess Fields & James Quintero, TPPF, Center for Local Governance (July, 2015)
The Fiscal Implications of Involuntary Annexation
The takings aspect of annexation does not simply come through taxation, however. There is also a very real regulatory takings inherent in annexation that, unlike the new taxes annexation begets, is rarely discussed. This is the regulatory takings aspect of annexation. It is, perhaps, best illustrated with an example.
Suppose you own 50 acres within the extraterritorial jurisdiction (ETJ) of a city and are within the city’s short-term annexation plan. Because you are not presently zoned, being in the county, you are reasonably free to improve your property as you wish. You may be subject to some restrictions the city has placed upon the ETJ, but these likely will not affect your ability in any significant way to improve your property as you desire. Now, suppose you have plans to build a sizeable 5,000 sq. ft. steel shed on a part of your property, and while it is a fairly large structure, you have no plans to wire it for electricity, water, or wastewater. Your plans have been drawn up but not yet implemented. As long as you are in the county, the materials, labor, and services required to build your shed will cost $30,000.
Now suppose that the city has decided to proceed with annexation of your property. The annexation will place your property in a zoning designation that prohibits the building of a basic steel structure, so you will have to meet the development requirements of the city you now reside in. In addition, you will have to meet the requirements of a masonry ordinance which requires the external use of masonry on any new building. Further, you will be forced to provide utilities to whatever detached structure you build, and adhere to a much stricter and more updated set of building codes.
Once you are annexed, still wanting to build a shed, you modify the plans to meet the codes and requirements of the city and figure up all the costs, and the most basic 5,000 square foot shed you can build will now cost $80,000.
That $50,000 difference is a loss to you—you did not want, desire, nor need the additional cost or features. Nor did you desire or need the additional regulatory process and approval process necessary to build the shed within the city. Your shed might even be located in a stand of trees where no one can see it. Regardless of all these considerations, you will still be subject to these additional regulatory costs.
That $50,000 represents a takings that affects you directly. You now face a choice of either paying an additional $50,000 to build what you previously could build much more cheaply, or you must choose to not build the shed, in which case you have lost the value of the shed entirely, both to you and your property value. The resultant unrealized gain in property value also represents a financial loss, although it is impossible to calculate exactly. Needless to say, you do not come out a winner because of the additional cost you must bear.
The regulatory takings aspect of annexation is rarely discussed, but it is all too real. Every year, in many cities, annexation represents a significant regulatory takings that residents are unlikely to be aware of, because the current annexation process does not require an explanation of all additional regulatory burdens upon newly annexed properties. These property owners, therefore, are often very much unaware of all the regulations that will greet them upon their entry into the city. Even if they want to be annexed, they may not understand the scope of new regulations that will affect them and what it will do to their ability to improve and use their property.
At the very least, however, if property owners and residents were given the chance to consent to annexation, or if they decided to be annexed of their own accord, they would be providing the government with their consent to regulate them. Being annexed entails much more than services and taxes; this regulatory feature must be considered as well, because annexed property owners and residents may lose rights that they take for granted in an unincorporated area. If annexed involuntarily, this is an exceptionally unjust situation.