What is Annexation in South Carolina?

Our Proposal for Annexation Reform

Strategy:

• Build consensus across South Carolina to support legislation that would grant legal standing to county governments to challenge municipal annexations within their jurisdiction. There are some gaps in existing annexation laws, with lingering effects of municipalities power from the Home Rule Act in the 70s (see rationale below for more info).

• Support legislation that would require the following: 

• Make adhesion contracts null and void

• Provide a procedure for municipal de=annexation

• Grant legal standing to counties for all types of annexation within their jurisdiction.

  •  Require municipalities to notify counties of proposed annexations. Notice should be given in time for the county to actively                  participate and provide input into the proposed annexation.

• Prohibit the creation of enclaves/donut holes. If a potential annexation creates a donut hole, prohibit the annexation. 

• Require municipalities to use the 75% annexation method for all types of annexation methods. Currently, the 100% annexation method is the simplest form to fill out with no requirements needed from municipalities or landowners.

  • With large tracts of land being developed and forever changing the texture of a community from traffic, density, etc. it is necessary to conduct studies to analyze and mitigate the potential impact of proposed annexations. This is especially necessary to ensure timely delivery and adequate level of public services (such as sewer, trash pickup, etc.) to serve the subdivision/development after annexation.

• Further define contiguity to delete shoestring annexations that create donut holes and define contiguity and water.

Rationale:

Make Adhesion Contracts Null and Void – An adhesion contract is a general contract that is done on a take it or leave it basis. In the usual contract negotiation, you can negotiate price, have arbitration, etc. but an adhesion contract is one where you must agree to it “as is” and you are forced to adhere to it. The term is rarely used in municipal agreements. If a neighborhood wants sewer or water, take it or leave it. Utilities can charge higher rates to non-residents, so it is unnecessary to annex this land into the municipality. Currently, it’s a condition of service to those outside city boundaries. To receive service, one must be contiguous or agree to be annexed if you become contiguous. These annexation agreements are enforceable down the line of purchase. If the house is sold, the new owner is subject to the laws. In the present scenario, this is how municipalities are forcing people into annexation. Take or leave it. Residents will have to annex eventually.

Municipal De-annexation – Right now there is no statutory guideline to change the county boundary, unless it’s by municipal ordinance. City council would have to change city boundaries by ordinance to remove the de-annexed portion. There is no way for a neighborhood (or farmer caught in a donut hole) to de-annex. If it’s easier to de-annex, cities might do more strategic planning with the 100% annexation method.

County Standing – The United States Constitution does not mention local governments. Each state decides for itself what kinds of local governments are allowed and what powers they may exercise. From the state’s POV all the powers and responsibilities rest with state government which has chosen to delegate some powers to local government. When there is a conflict, the courts decide. The General Assembly can overrule court decisions with subsequent legislation. Home rule came to SC late. In the 1880s, there was a national movement that made headway in other states which granted local governments more freedom, flexibility, home rule, and less state control. Just emerging from reconstruction after the Civil War, South Carolina was not part of that movement. It was not until the 1970s that South Carolina amended the 1895 state constitution to better define and expand the powers of local governments, especially counties. We feel that Home Rule needs to catch up to the changing landscape of SC. When current annexation laws went into effect in 1976, agriculture was in a different era. Now, as heirs inherit large tracts of land, there is a gap in the laws as hundreds and thousands of acres can be sold on a contingency basis to developers and annexed in one fell swoop, dramatically changing the fabric and texture of existing communities by filling out a simple form with no other requirements.

The incentives for farmers to sell their land is growing with huge land price increases. How it is working in Easley, is the developer buys the land on contingency – if the land is annexed into a municipality with sewer, the land will have a higher price per acre than if the land is sold as is in the county. Currently, there is no standing for counties or neighbors when these large tracts are annexed by one landowner to a municipality and then promptly sold to the developer. It was ONE owner, who then LEAVES immediately from the annexation. The land is then quickly clear cut, devastating the environment, causing stormwater issues, environmental issues, high density issues like traffic, overcrowded schools, lack of healthcare, police/fire services. No feasibility study is conducted to see if the potential revenues are outweighed by the cost of delivering services and investing in infrastructure in sewer lines, roads, schools. We agree with property rights, but when does one owner’s property rights outweigh another’s property rights?

Donut Hole – Municipalities have created donut holes. There are two ways to change donut holes.

1. Force anyone in the donut hole to be annexed when an annexation takes place or

2. If a donut hole is going to be created by a potential annexation, prohibit that annexation if it creates a donut hole. We would like to prohibit annexations that create donut holes. (In opposition to the bill that’s on the floor now HR 3236.)

Require municipalities to use the 75% method for all annexation – Section 5-3-150

With the large tracts of land like the deals described above, with the single landowner and annexation contingent upon deal going through – these deals are very complex and large in scope. As it stands, that is considered the 100% method of annexation, yet as soon as the property is annexed, the sale goes through and is divided into lots for sale. This method dramatically changes the landscape and zoning of existing property for neighbors and is now annexed into the city with highest density allowable for maximum profit, not keeping the county aesthetic or quality of development. Hence the reason why county residents and counties are looking for standing in annexation.

On the MASC doc page 20 – lists out the good practice of providing a feasibility study for the 75% method of annexation, and we feel would be good practice for any annexation. See requirement:

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Feasibility Study

The 75% petition and ordinance method of annexation, SC Code Sec. 5-3-150(1), requires the annexing municipality to conduct a public hearing. During the public hearing, the municipality must present a statement addressing what public services the municipality will assume or provide, the taxes and fees required for those services, and a timetable for services. No other annexation method has this requirement. However, the feasibility of providing services is an important consideration for any proposed annexation.

Council should analyze and consider the costs, benefits, and estimated revenues of a proposed annexation before acting on the petition. The analysis should include these elements:

• an inventory of existing outside services;

• an identification of the provider of each service and its contractual obligations, including availability of the service if desired after annexation;

• an identification of services to be assumed or provided by the annexing municipality;

• an identification of efficient service areas and areas that cannot be fully served;

• a determination of the level of additional services needed;

• a determination of the most cost-effective way to provide services to the area;

• a projected timetable for provision of services;

• the revenues needed to support services;

• the estimated revenues from current taxes, fees, and service charges;

• the projected level of taxes and fees required to support services;

• a comparison of costs to property owners before and after the annexation; and

• an identification of the burdens and benefits of annexation.

It is not unusual to discover that revenues from an annexed area will not offset the cost of providing services, particularly in residential areas. In such cases, the municipality might well forego the annexation.

It only seems logical that a well thought out document as necessitated with the 75% type of annexation should be compulsory for this deal and all annexation deals to analyze whether the revenues of the annexed area will offset the cost of providing services, especially in residential areas like the ones that we are discussing here with the 100% method dealmaking scenario.

Further define contiguity

In certain areas of the state, we have had issues with water and defining contiguous boundaries. Additionally, as we go around the state, we’ve heard that residents have been fired up in Spartanburg about shoestring annexation. We think it’s time the legislature address these two issues of contiguity.