As cities grow and change, they often undertake land annexation. Whether neighboring areas are in need of nearby municipal services or the city itself wants to expand and take control over adjacent suburbs or unincorporated areas, there are many reasons why cities undergo the land annexation process. Regardless of the reason, land annexation results in city sprawl.
No matter a city’s size or geography, there’s bound to be some level of growth outside its official boundaries. Nearby “fringe” areas typically develop because of less expensive land or less restrictive zoning laws. Even if cities don’t want fringe areas to pop up, they will. These areas often strain the effectiveness of local governments and take advantage of municipal resources and services without contributing to the cost. Land annexation is the answer. Here’s what you need to know about this common practice.
What is land annexation?
Land annexation is a complex process that occurs when a city or town expands into neighboring areas that aren’t already incorporated into a municipality. In simple terms, it’s the addition of an adjacent territory to a city.
Land annexation is a common practice, particularly in states seeing consistent population growth—including Arizona. It’s not uncommon for cities to consider annexing private and commercial properties to maintain both the physical and economic growth of the city. Cities use land annexation to their advantage to increase their tax base, utility taxes and other revenue sources like utility connection charges, fines, fees, etc.
What are the laws regarding land annexation?
Land annexation laws vary from state to state, so developers need to be aware of the specific rules that pertain to the jurisdictions of their projects. In Arizona, for example, land annexation requires the consent of at least one-half of the number of property owners in the proposed area of annexation. The property owners must also be compensated for at least one-half of the value of real and personal property in the area, as shown by the last assessment. Additionally, the city or town council must consent to the process.
How does land annexation start?
There are two general processes that cities use to annex land.
- Election method: This method of land annexation requires the approval of a majority of voters in a proposed annexation area. Circling a petition or proposing a city council resolution are two common ways to start the process.
- Petition method: This method of land annexation requires a petition to be submitted with a specific threshold of signatures.
Does land annexation affect property values?
Land annexation can have a significant impact on property values and, in turn, property taxes. Annexation can have a positive or negative effect on the value of a particular property. Property owners should direct any specific questions regarding their property’s value to the city’s district appraiser.
Land annexation can also increase taxes—especially for a person who owns property in the area being annexed. Often, residents living outside city limits only pay county, emergency services and school district taxes. Upon annexation, these residents are often unpleasantly surprised when they’re hit with a new city tax, along with utility taxes like water/sewer taxes.
How does annexation concern commercial developers?
Commercial developers often undertake a process of voluntary annexation, requesting the land they plan to use for building be brought into the city to access its protections and services. There are significant downsides when developers operate outside of city limits.
- Rapid development outside of city limits can create fringe areas that experience traffic congestion on inadequate roads; the need for more fire and police protection; and inadequate land use planning that leads to disorderly (often unsightly) growth.
- Fringe area growth may complicate government jurisdictions, causing inefficiency, administrative confusion, excessive costs, etc.
- Outlying areas may benefit from city amenities like parks or recreational activities without contributing to their cost. Unifying urban areas can strengthen the economic and social ties between in-city and out-of-city residents and businesses alike.
Many property developers voluntarily undertake the process of land annexation with nearby cities. Not only do commercial developments help sustain and grow the amenities and services that make their communities attractive to so many people, they also have access to city officials. Residents and businesses located within the city limits can share suggestions and help shape their city’s policies and vision, while those located outside city limits cannot.
Get to know the ins and outs of development
Need help navigating the complicated land development process for your next project? Partner with the dedicated team at Sandbox Development. We maintain strong relationships with local municipalities and professionals and have in-depth knowledge of relevant entitlements, including annexation concerns. We’re ready to leverage our industry knowledge and relationships to deliver premier services to the land development industry. Contact us today to learn more.