Regardless of city size or geography, all cities experience some development outside their boundaries (in the “fringe” areas) often due to less expensive land prices or less restrictive zoning laws. Not only are these fringes socially and economically linked to the city, but oftentimes the residents and industrial and commercial businesses in the fringe areas utilize the city’s resources and services without contributing their share of the cost to the city. Such practices strain the effectiveness of municipal governance. In addition, the growth of separate fringe areas may produce a complex pattern of government by multiple jurisdictions, resulting in confusion of authority and an inefficient overlapping of services.
To resolve these issues, the urbanized core city may seek to annex (transfer a parcel of land from one government to another) the adjacent urbanizing fringe area in order to use resources efficiently, capture growth, gain a tax base, or implement a plan across current borders. In some cases, annexation may precede urbanization as a means of capturing anticipated growth.
Annexation law varies from state to state. In Wisconsin, for example, annexation statutes are created by the legislature but are interpreted by case law emanating from the Supreme Court and Court of Appeals. The state’s statutes allow several methods of annexing property such as annexation by unanimous consent and a mediation process. Each of the methods has its unique requirements, process, timeline and participants.
While annexation is an important avenue of growth, it is also a contentious one. For the jurisdiction being annexed, there may be a strong interest to preserve its existing tax base as well as a strong sense of place. In addition, the fiscal impact of annexation is a complex assessment. Besides the expected complexity of choosing an analysis method, impact is difficult to calculate because adjacent jurisdictions will be impacted, tax rates will change, and social impact can be unpredictable. Furthermore, new commercial development may generate its own costs, such as increased traffic congestion along new routes, resulting in increased street maintenance and repair costs. While cost evades easy calculation, it depends on the type of land annexed, its current value, the number of residents, and the expense of expanding services to those residents, if necessary.
Edwards, Mary. “Annexation: A “Winner-Take-All” Process?” State and Local Government Review, 31(3) (1999): 221-231.
Krane, Dale, Platon Rigos, & Melvin B. Hill, Jr. Home Rule in America: A Fifty-State Handbook. Washington, D.C.: CQ Press, 2001.
Municipal Research & Services Center of Washington, Annexation Handbook. Seattle, WA: Municipal Research and Services Center of Washington, 2009.
Municipal Technical Advisory Service, Annexation Guidelines: How to reduce negative impacts. Knoxville, TN: The University of Tennessee, Institute for Public Service, 1999.
State of Wisconsin, Department of Administration, “Annexation Law,” http://www.doa.state.wi.us/divisions/intergovernmental-relations/municipal-boundary-review/annexation/annexation-law