Infrastructure & Environment

Not-So-Smart Growth

One way for communities to expand is to grab any piece of unattached territory nearby. But compulsive annexation carries a high price.
by | October 2000

Largo, Florida, is a suburb of 65,000 people, just north of St. Petersburg. It is a comfortable place, with one major regret in life: It isn't located on the water. It sits in the middle of a peninsula, halfway between the Gulf of Mexico and Tampa Bay.

But Largo has a strategy for breaking out of its landlocked position. Between it and the Bay there's a strip of unincorporated territory that uses the Largo sewer system. Not long ago, town officials began contacting residents of this strip and handing them an ultimatum: Become part of Largo, or we turn off the sewer service.

Those tactics provoked a suit from the neighboring town of Pinellas Park. Also landlocked, Pinellas Park has an official goal of adding 150 acres a year to its territory. The Largo ploy was a threat to its dreams of expansion.

Welcome to annexation politics, Florida-style. Communities play it for one reason: to win. "It's always competition and always entrepreneurship," says Jack Schluckebier, city manager of the town of Casselberry, just outside Orlando. "You're either in it with that perspective, or if you don't have that perspective, others will, and pretty soon you'll be a footnote."

Pinellas County, in which both Largo and Pinellas Park are located, has done its best to bring order to the chaos. Earlier this year, the Pinellas County Planning Council brokered a peace. Its director, Dave Healey, worked out a map to which each of the county's 24 cities agreed--some of them reluctantly--showing where their growth would occur, based on existing service capabilities and what made the most sense. "All of the cities were forced into this competition," explains Healey. "With predetermined, logical limits, they could plan better for their future and avoid the race to see who could get there first." Next month, the new growth plan will be submitted to the county's voters as a charter amendment.

Florida's annexation wars may sound extreme, but they are not unusual. As jurisdictions all over the country come to terms with the torrid pace of development, they are discovering that annexation lies somewhere close to the heart of the matter.

California is currently trying to bring a measure of reason to the whole process by which communities and service districts draw and redraw their boundaries. A bill to strengthen the county-level agencies that oversee such activities has been working its way through the legislature. Meanwhile, Ohio lawmakers are working on a plan to shift the balance of annexation power away from cities, and to give more of a say to the jurisdictions--both townships and counties--that lose tax base when land is annexed.

When it is done intelligently, annexation can impose order on complicated planning problems. It can bring a city and its existing service infrastructure to newly developed land that badly needs it. But annexation is also a potential flash-point, for all sorts of reasons. To begin with, one community's tax-base gain is inevitably another jurisdiction's loss. Yet any effort to control who can claim a particular piece of land is sure to bump up against home-rule sensitivities: Cities don't like other governments telling them how they can grow. And just as ticklish, annexation puts a crimp in the ability of developers to choose the jurisdiction with the friendliest zoning or the most cost-effective services.

In other words, annexation politics is not just about what piece of land will wind up in which jurisdiction. It's about who controls what happens on the land, who reaps the fiscal benefits and who pays the cost of shifting that control, and whose governmental infrastructure can best handle the demands that development is bound to generate.

"Drawing boundaries is more than an exercise in cartographic neatness," says Peter Detwiler, staff director for the California Senate Committee on Local Government. "The hand that controls boundaries also controls the location, timing and cost of the public facilities and services upon which private development depends." Small wonder that annexation law, arcane as it might seem, is fast becoming the newest front in the growth-control wars.

The most dramatic annexation flare-up in recent years occurred in Tennessee, where a law passed by the legislature in 1997 blocked virtually all cities in the state from annexing land, and encouraged even the tiniest subdivisions to incorporate. The law was eventually thrown out in court, but before the controversy died down, the state had enacted a sweeping new planning measure requiring cities and counties to get together and agree on cities' future growth boundaries.

Actually, states have been seeking to temper the excesses of the annexation issue for a long time. As far back as 1963, the California legislature created a set of 58 boundary watchdogs, one for each county, known as Local Agency Formation Commissions, or LAFCOs. Under their enabling legislation, LAFCOs were asked to rule on boundary changes--incorporations, annexations and the creation and expansion of special-service districts--for two purposes: to promote the orderly formation or extension of local governments, and to discourage urban sprawl.

Anyone who's spent some time on the outskirts of Los Angeles or San Francisco might well question whether LAFCOs have served the latter purpose, but what is especially clear is that the law now needs some sort of update. This point was driven home in January by the report of the state's Commission on Local Governance for the 21st Century-- appointed by former Republican Governor Pete Wilson and headed by the Republican mayor of San Diego, Susan Golding--which stated baldly that "there is no comprehensive strategy to determine how the burdens of growth will be shared, how resources benefiting more than one locality will be protected, and how necessary but locally undesirable facilities will be sited. As a result, farmland and open space continue to be swallowed up by sprawling suburban expansion." The report went on to suggest that the powers of LAFCOs to "prevent sprawl" be strengthened.

This is precisely what Robert Hertzberg, the speaker of the California Assembly, has set out to do. Hertzberg's interest was sparked by the San Fernando Valley's move to secede from Los Angeles and create a separate city, but the measure he ended up writing goes a good bit beyond that parochial dispute. In addition to making sure that LAFCOs become truly independent--they've usually been funded and staffed by the counties, even though cities and special districts are also represented on their boards--Hertzberg would empower LAFCOs to review each jurisdiction's so-called "sphere of influence"--its projection of future boundaries--every five years to ensure that they make sense.

Not surprisingly, the Hertzberg bill has aroused great antagonism among developers and municipalities. In particular, they objected to strong language in the original version promoting in-fill development and requiring LAFCOs to consider regional growth policies in making their decisions. The bill was rewritten to be neutral on in-fill development, and gives LAFCOs the option of considering regional policy, but does not require it. "Most of the provisions that we had the most concern with, in terms of a radical expansion of powers, have been modified to the point we can live with," says Dan Carrigg, the League of California Cities' lobbyist on land use issues. The bill passed the Assembly in June and at the end of the summer was still in committee in the Senate.

In Ohio, the annexation debate seems to be bringing cities and developers together, although it is far from clear how much of an impact they will have on a measure now working its way through the legislature. The big beneficiaries of that bill are counties and townships: County boards would get more of a say in whether or not unincorporated land could be annexed, and municipalities would be required to share tax revenues from territory they annexed with the township it was annexed from.

Ohio's townships--land outside incorporated cities in Ohio is divided into townships, which have a few governmental powers but mostly rely on the counties for government--have actually been pushing such a move for the better part of a decade, and three years ago came quite close to getting what they wanted. A bill tilted in their favor was defeated by a single vote in the Senate Rules Committee after the governor at the time, former Cleveland mayor George Voinovich, threatened a veto.

These days, however, the politics of local government in Ohio are quite different. Township trustees are an increasingly influential bloc, both in the legislature and at the county level. They have induced the County Commissioners Association of Ohio to flip its position on township-backed annexation reform. The commissioners have dropped their opposition of previous years and come out in favor of the current measure.

Although Ohio's townships portray the annexation issue as a matter of controlling growth and promoting farmland preservation, at base it's a question of who gets to say where growth occurs and who reaps its benefits. The central dilemma, as Susan Cave of the Ohio Municipal League, says, is this: "Developers want to do business in locations that provide two things: the least expensive way of doing it; and a regulatory and service climate that allows them to do their development in the best way they can. Well, the least expensive way is generally out in the unincorporated areas: The land is less expensive, and there are no old industrial sites to clean up. On the other hand, they also want services, and in Ohio, cities are the traditional providers of water and sewer." Moreover, township zoning often requires scattered development without density, whereas cities allow much greater density; not surprisingly, then, developers prefer to buy up unincorporated land and then petition for annexation into a nearby city. Where landowners want the annexation to occur, for the most part it does.

The new measure, though, would allow county commissioners to consider the interests of property owners within a half-mile of the land proposed for annexation, which essentially hands the property owners a veto. "Let's say that 10 years ago I built an expensive house, and now the land next to me is annexed and I've suddenly got a shopping center with a parking lot 30 feet from my house. There's something not right about that in our members' minds," says Larry Long, director of the county commissioners' association. "Development interests feel that if a majority of the people want to be in a city, it ought to be automatic. Our people say, `OK, as long as you're not really messing up your next-door neighbor or breaking the bank of that township government.'" Under Ohio law, the counties don't actually lose tax revenue when a piece of land is incorporated, which is why the issue has been of less vital import for them than for cities and townships.

As Tom Hart, of the Building Industry Association of Central Ohio, puts it, "The public policy question is a tough one: How do you determine whose rights are greater, the right of the person to develop his or her land, or the person next to it who doesn't want to see it change?" Handing final say over annexations to neighbors affected by development or left behind by annexation may well put a crimp in development in Ohio, as Hart predicts. Or it may produce development that remains in townships, which will then have to acquire a service infrastructure that until now many have lacked.

It was precisely this sort of unplanned development that Dave Healey and the Pinellas County Planning Council in Florida wanted to end. Eager to capture land and new taxes, cities in Florida have bent over backwards to make themselves appealing to neighborhoods and developers. In the process, however, some cities have relaxed growth- management plans--easing up, for example, on rules governing how intensely a given parcel can be developed, or waiving impact fees--and making costly plans to extend infrastructure. "We've had situations where a piece of property was in one community's water, sewer and fire district," says Healey, "and the community across the street offered to jack and bore its sewer system under the street to extend it. By getting to that parcel, it provided a leg in the door to get to the next one, but it wasn't a sound financial decision."

The "leg in the door" to which Healey refers is a provision in Florida law that says that only territory "contiguous" to a municipality's borders can be annexed, which explains why cities have an incentive to amass as much territory as possible: The parcel they annex this year may not be terribly important, but the parcel next to it could bring in a wealth of taxes. The problem with this, of course, is that it makes land use planning futile. "When annexation happens, it is in a disparate, ad hoc manner," Healey says. "It's when a city can get there and if they can get contiguous, and isn't rational when you look at service areas."

All of this may make it sound as if Florida law makes it easy for cities to annex land. In fact, just the opposite is true, which is why cities anxious to keep up with growth take whatever land they can get. "When you compare Florida to any other growth state," says Jack Schluckebier, "we're way down the list in terms of growth of population compared to growth of boundaries of cities in terms of land mass. The problem is, cities often confront the same demands for services whether someone is formally in their city or not. You could say you're not going to let folks outside your city use your services, but that's pretty difficult with parks and police and emergency services. So you end up with the worst of two worlds, which is having to plan for infrastructure but not being able to support it with the right population. There's fewer people paying the full tab." This is why, Schluckebier says, "the state should get into the heart of this like nobody's business. Annexation should be one of the centerpieces of any serious growth-management reform."

As it happens, Florida Governor Jeb Bush has just created a new Growth Management Study Commission, and asked it to look at the panoply of development issues affecting his state. The commission has not decided whether it will take up annexation reform or not. Schluckebier isn't optimistic. "The basic rules we operate under for annexation purposes have been established for almost 30 years," he says. "In that time there have been two or three growth management commissions that have come and gone, and they've managed to steer their way clear of dealing with that treacherous `A' word." But you can only do that for so long. As state and local governments around the country are discovering, development pressures ultimately guarantee painful conflict over who can claim their benefits.

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Rob Gurwitt  |  Former Correspondent
robg@valley.net

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