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Proposed legislation threatens pace of annexation

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Proposed legislation at the Indiana Statehouse would put a cap on the size of annexations, limit the ability of cities to stop towns from annexing land and require that residents be warned that they could some day be annexed when they buy a house.

The bills, if they had been approved years ago, potentially could have changed the outcome of the annexation battles that landed Greenwood and Bargersville in court. The legislation also could affect future annexations in Johnson County, such as if Bargersville or Whiteland wants to grow more.

Cities and towns across Johnson County have grown through annexation in recent years, even after the grabs for land in White River Township settled down.

Whiteland recently annexed land out to the Whiteland Road interstate exit. Greenwood is annexing land around the future Worthsville Road interchange, where it’s spending about $30 million on infrastructure improvements.

Greenwood also is annexing the Shepherds Grove neighborhood, where residents wanted to become part of the city. Long-terms plans call for extending Greenwood’s borders east as more development occurs.

Franklin has no immediate plans for annexation but could add land if developers planned projects outside the city borders, Mayor Joe McGuinness said. The city also would consider any requests from property owners who ask to be annexed.

“We’d be happy to have that communication, but we wouldn’t jump into anything without knowing whether we’d be able to provide services,” he said.

The proposed legislation could affect how much property Johnson County communities could annex at a single time, decide if cities could stop surrounding towns from annexing land they could want later and say whether cities and towns could rely on annexation waivers that developers signed in exchange for sewer service.

State Sen. Jim Buck, R-Kokomo, sponsored the bills. All three have been approved by the State Senate and are being considered in the State House of Representatives.

Buck has been concerned about Kokomo’s recent annexations and also sponsored legislation that would make it easier for property owners to stay out of cities and avoid city taxes. One bill, for instance, would have allowed 51 percent of affected property owners to block an annexation by signing a petition, instead of the current threshold of 65 percent.

His goals are to protect the rights of property owners and help preserve the character of small towns, so they don’t get encroached on by neighboring cities, Buck said.

“There have been some aggressive annexations where they’re just gobbling up land,” he said.

Disclosing waivers

One of his bills would limit the size of annexations so that cities and towns couldn’t do any large land grabs that would increase their assessed valuation by more than 15 percent. State law currently does not let cities annex enough land to boost the taxable value of the property within city limits by more than 15 percent, but they routinely get around that by pursuing several smaller annexations at the same time, Buck said.

His legislation would stop cities from using multiple annexations to annex land that would raise their assessed valuation by 15 percent or more.

The goal is to limit the financial impact of annexations on counties, schools, libraries and other local governments, Buck said.

Other governments typically collect fewer property tax dollars after annexations because the annexed residents would have to pay a new, higher tax rate that could push them over their property tax caps. Once property owners hit the caps, which limit tax bills to 1, 2 or 3 percent of a property’s value, they don’t have to pay more in taxes.

“It would slow down the annexations,” Buck said. “The other taxing units in those areas would get more time to adjust.”

Another bill Buck proposed would address a concern that he’s heard from residents who thought they were moving to a rural area and didn’t know they could be annexed.

Developers who build neighborhoods outside town limits often sign annexation waivers if the city or town extends sewers. The waivers prevent any future property owners from objecting to an annexation, such as by signing a petition known as a remonstrance.

The problem is that homebuyers often don’t realize such an agreement is in place because they’ve never seen the paperwork.

“Some of these waivers date back 50 or 60 years,” he said. “The home might have changed hands 12 or 15 times, and nobody ever knew the developer signed them. The records could get lost or destroyed. This would require them to divulge the contract with the municipality.”

New buffer rules

Under Buck’s proposal, any waivers of the right to protest annexation must be included in the closing paperwork homebuyers sign. The homebuyer has to get a chance to review the agreement before buying the home, he said. If that agreement isn’t included in the paperwork, the waiver would not be binding.

Senators voted unanimously to approve that bill, which Buck said would apply only to annexation waivers signed after June 30 if the proposal gets approval from the House and is signed by Gov. Mike Pence. The Senate also approved his proposal to change current law and shrink the buffer zones that let cities veto annexations within three miles of their borders.

Greenwood attorneys cited that law when the city sued to block a Bargersville annexation in White River Township in 2009. The legal battle that followed ended up going all the way to the Indiana Supreme Court, and Greenwood won by default when justices failed to reach a majority decision.

Buck’s legislation would eliminate the three-mile buffer. Towns could not annex within a mile of city limits, but the neighboring cities no longer could block annexations.

“I hope to preserve small-town culture across the state,” he said. “Towns should also be able to grow methodically for their own economic interests.”

Public policy consultant Mike Shaver, who advised Bargersville when it annexed much of the southern Center Grove area, said cities shouldn’t be able to stop towns from annexing land.

The issue should be which local government can best provide utilities to an area.

“It should be based on who can provide infrastructure and services,” he said. “You’ve got situations like along State Road 135 where Greenwood and Bargersville had utilities that wound around each other like some kind of umbilical knot, but it should really be about which government can provide utility service most cheaply and effectively, not whether it’s a city or town or whether it’s three miles or two miles away.”

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