HomeMy WebLinkAbout2002-04-19 LMC Ltr to OPH Re Shared Svc AgreementsLeague of Minnesota Cries
Cities promoting excellence
April 19, 2002
Dear Ms. Kamper:
APR 2 4
Kim Kamper
City of Oak Park Heights
14168 Oak Park Boulevard
Oak Park Heights, MN 55082
f t ; I i
:1.45 University Avenue West, St. Paul, MN 55103 -2044
Phone: (651) 281 -1200 ° (800) 925 -1 122
TDD (651) 2814290
LMC Fax: (651) 281 -1299 ° LMCIT Fax: (651) 281 -1298
Web Site: http://www.lmnc.org
This letter transmits some information on `shared service agreements' as you requested in
our telephone conversation of a few weeks ago.
As 1 understand it, the city is being approached on a development project that would be
partly artl in the city, and partly in the adjacent township. The developer is requesting the
city's consideration of a "joint powers or shared services agreement" as the township
landowners want the property to remain in the township as a condition of sale to the
developer.
As the city investigates whether they want to provide services, and possible ways to do
so, ou might also want to inquire further into the developer's idea to keep the land in the
y g
townshi p . Cities, towns and property owners have powers provided in law related to
annexation that may be difficult to overcome in a contract for real estate. See in general
M.S. Chap. 414. This, in turn, may affect how the city and the developer proceed
`Shared service agreement' seems to be a generic description that could incorporate joint
powers agreements or various contracts for services. Joint powers agreements must be
between two governments that share the power in common because this is required by
statute — M.S. 471.705. Other contracts for service are often also between governmental
units but can be between the city and an individual, a business, a homeowners'
association, etc.
For example the developer, or individuals in the development, might contract with the
cit y to pro-Vide services like sewer, water, or road maintenance, etc. The township could
also contract or form a joint powers arrangement with the city to provide these and other
services such as fire or police protection.
The following items discuss various shared service concepts:
0 Choices for Change: A Guide to Local Government Cooperation and
Restructuring in Minnesota, Minnesota Cities May 1996
AN EQUAL OPPORTUNITY /AFFIRMATIVE ACTION EMPLOYER
• 2001 Annexation Update — See the last page discussing the pros and cons of
extending sewer service via contracts or joint powers agreements.
I'm sorry but the League's collection of sample contracts does not have any good, recent
samples of sewer and water service agreements, either between governmental units or
otherwise. We have some examples of fire or police protection joint powers agreements
and contracts for service between governmental units. If you would like sample fire or
police agreements please let me know. The Research Service has just begun an effort to
solicit recent service agreements of all types. Please check back with us at a later stage in
the project if you need samples in a particular area to see what results we had with our
solicitation.
I hope this information is helpful. If the League can be of other assistance please contact
us.
Sincerely,
Jeannette Bach
Research Manager
Enc:
••!•• -••••••••,•••.-•••--
Coalition of Greater Minnesota Cities
2001 Annexation Update
ChristiiHer Hoo
Flaherty & Hood, i.A.
444 Cedar Street, Suite 1200
St. Paul, Minnesota 55101
(651) 225-8840 (phone)
(651) 225-9088 (fax)
cmhood@flaherty-hood.com
Presented by
June 21,2001
Coalition of Greater Minnesota Cities
2001 Annexation Update
15
Coalition of Greater Minnesota Cities
2001 Annexation Update
2001 LegislativeSession
2001 CGMC Objectives: Give the new annexation process a chance to work before making changes to
annexation law and don't change annexation law in 2001 unless the CGMC, counties, and townships all
agree to the changes.
2001 Legislative outcome: No process changes were made to annexation law in 2001.
2000 Annexation Law Changes:
• Clarified that the use of alternative dispute resolution in contested case roceedings may include;
�, v rnclude,
1) A contested case before an administrative law judge ,
2) Mediation and arbitration under Chapter 572A, if mutually agreed to the parties; �' � by p s or
3) Another mediation/arbitration process ordered by the director of Minnesota Pl
an.rung .
• Clarified that the director of Minnesota Planning may delegate all authority to hear and issue slue a
final order in a contested annexation case to the Office of Administrative Hearings to
be heard by
an ALT;
• Clarified that costs for a contested case must be paid by the arties to the proceeding; and
p �, nd
O Requires Minnesota Planning, by February 1, 2002, to report to the Legislature regarding the
successes and failures of the new boundary adjustment process.
Prepared by Flaherty & Viand, P.A. • 444 Cedar Street, Suite 1200, Saint Paul, 1'fN 5.5101 • 651-225-8840
Coalition of Greater Minnesota Cities
2001 Annexation Update
2001 Legislative Session: Bills Relating to Annexation and Land -Use
1. H.F. 85 (Jennings) 1 S.F. 131 (Ring): Exempts City of Chisago from reirnbursennent limits paid to Wyoming
Township for annexed property.
2. E.F. 352 (Kuisle) / S.F. 392 (Scheevel): Requires that sewer and water service must be provided to
substantially all annexed property within two years or the property reverts back to the township.
3. H.F. 399 (Kuisle) / S.F. 393 (Scheevel): Requires annexed property to be taxed at township property tax rates
until substantially all the annexed property has received sewer and water service.
4. H.F. 436 (Bishop): Provides alternative streamlined municipal annexation by ordinance procedures.
5. H.F. 437 (Bishop): Requires townships to hold a referenda on continued existence every four years.
5. H.F. 869 (Howes)1 S.F. 962 (Lourey): Requires an annexation election on the question of annexation in the
annexed area only upon submission of a petition of 35% of the property owners, or 100 property owners,
whichever is less.
7. H.F. 971 (Bishop): Allows counties to designate urban services areas around cities, and provides that county
zoning laws preempt town zoning. Prohibits incentives for businesses to relocate from cities to townships
unless the affected city adopts a resolution approving the relocation.
8. H.F. 1 076 (Kuisle) 1 S.F. 1296 (Pariseau): Limits annexation of urban towns to two procedures: 1) by joint
agreement, or 2) by concurrent detachment/annexation of land between cities,
9. E.F. 1189 (Vandeveer)1 S.F. 1376 (Bachman): Provides that, where a city annexes an entire township, the
city must hold new city council elections.
10. H.F. 1239 (Vandeveer): Provides for a special election in the city of Forest Lake after the annexation of the
township on the question of whether to expand the city council to seven members.
11. H.F. 1297 (Dernpsey) / S.F. 1471 (Viokerman): Revisor's bill making technical changes reflecting the
transfer of authority from the Municipal Board to the Office of Strategic and Long -Range Planning.
12, H.F. 1320 (Lindner) 1 S.F. 1225 (Limmer): Permits Hassan Township to form its own economic development
authority.
13, H.F. 1620 (Howes) 1 S.F. 2210 (Tornassoni): Provides an orderly annexation agreement is binding upon all
parties to it, enforceable in district court, and its terms cannot be preempted by other annexation statutes.
14. H.F. 1888 (Ozrnent) 1 S.F. 2209 (Scheevel): Places a moratorium on all contested -case annexations and
annexations by ordinance initiated on or after March 15, 2001.
15. H.F. 2144 (Holsten) 1 S.F. 2074 (Bachman): Limits the annexation of urban towns to two procedures: 1) by
joint agreement, or 2) by concurrent detachment/annexation of land between cities.
16. H.F. 2167 (McElroy) 1 S.F. 2003 (Vickennan): Provides standards for primary and secondary planned urban
areas.
17. E.F. 2482 (Olson) 1 S.F. 1342 (Bachman): Requires an annexation election in the annexed area and
supermajority (75%) vote for all contested annexation cases.
Prepared by Flaherty Sz Hood, P.A, . 444 Cedar Street, Suite 1200, Saint Paul, N'[N 55101 • 651 -225 -8840
Coalition of Greater Annesota Cities
2001 Annexation Update
Annexation Cases Decide.d•in 2000/2001
ALJ has authority to hear and decide annexation cases. McNamara vOffice of Strategic and
Lang Range Planning (CO -00- l 704), Minnesota Court of Appeals, Ma y 22, 2001.
In 1999, School District No. 831 and 200 residents each petitioned for annexation of ro e � in the
p p
Town of Forest Lake to the City of Forest Lake. Shortly thereafter, the Town Board petitioned to
incorporate the Town into the City of Forest Shores. In March 2000, after a contested case hearing, an
Administrative Law Judge (ALT) denied the Towns incorporation petition and ordered the entire Town
annexed to the City. Several Town residents appealed the decision to district court and to the Court of
Appeals contending that the ALJ did not have jurisdiction, the order was contrary to law, the annexation
denied newly annexed residents' constitutional rights to participate in city council elections, and resulted
p � I d
in unconstitutional taxation of newly annexed residents.
The Minnesota Court of Appeals affirmed the district court's order, holding that:
1. An AD has the statutory authority to hear, and grant, contested annexation petitions.
2 . The presentation of an annexation plan is only one of several factors to be considered in ordering
an annexation - the lack of a plan does not necessarily prevent annexation.
3. Evidence that it is in the best interests of the local community, the county, and the state to annex
a township is sufficient to support the denial of township incorporation and the ordering of
annexation of a township to a municipal entity.
4. Township residents do not have a constitutional right to vote on an. order for annexation.
5. Following annexation, an election must be held to protect the constitutional right to be g overned
by a representative body.
6. Where a general election was held within a reasonable time after annexation and voters were able
to write in the candidate of their choice, the constitutional right to elect a .p articular candidate and
obtain a representative government has not been violated.
7. Where taxes imposed by a city are proportional to increased services provided to an annexed
area, the residents' constitutional right to due process has not been violated.
Annexations by ordinance are appealable. Rockford Township v. City of Rockford (CO-99-1775),
Minnesota Court of Appeals, April 1 I , 2000.
The City of Rockford, seeking to acquire land to benefit a business located within the City, accepted a
petition by owners of land in Rockford Township for the annexation of 60 acres. When the Township
refused to agree to an orderly annexation, the City gave the required 30 days' notice of its intent to annex
2000/2001 Cass
Page 2
by ordinance the 60 acres, as well as an additional 20 acres purchased from the same landowners. The
Township issued no objections, so the City issued two ordinances on March 30, 1999, annexing both
parcels.
The Township protested to the Minnesota Municipal Board. The Board approved both City ordinances,
stating as to the first that the Board had "limited authority in approving annexations by ordinance" and
that the Board had "misgivings as to whether legal and/or technical abutment had been achieved." In
August 1999, the Township brought an action for declaratory judgment. The district court granted the
City's motion to dismiss, which the Township appealed.
The Minnesota Court of Appeals affirmed the order to dismiss, but held that Minnesota Statutes, Section
414.07, which specifies the grounds and methods of appeal for a decision of the Municipal Board or its
successor, applies to annexations by ordinance. The Court noted that Section 414.07 does not set out the
standards or procedure for the Municipal Board's approval of annexations by ordinance. The Court also
noted that, "the board apparently has concluded that it does not have the authority to inquire, through
hearings or otherwise, into the propriety of an annexation ordinance. Because neither party challenges
the board's interpretation of the approval requirement, we need not determine whether the board's
conclusion is correct, but we invite the legislature's attention to the absence of standards."
No right to a hearing for an annexation by ordinance. Gilbert v. Minnesota Office of Stratecric and
LonO Ranee Piannin - (C8-01O378), District Court, Olmsted County, May 8, 2001.
Prepared by Flaherty & Hood, P.A. $ 444 Cedar Street, Suite 1200, Saint Patil, MN 55101 e 651-225-8840
The City of Rochester sought to annex by ordinance an area of Rochester Township, roughly 917 acres
in size, landlocked within the Rochester city limits. The City scheduled a public hearing on the
annexation for October 2, 2000. The Township and appellants appeared at the hearing and spoke against
the annexation. Following the hearing, the City Council adopted an ordinance annexing the area. The
appellants objected to the Office of Strategic and Long -Range Planning, claiming that Planning was
required to apply contested case hearing criteria in considering an annexation by ordinance and that
evidence received at the City's hearing failed to document compliance with the relevant criteria found in
the annexation statute. The Director of State Planning approved the annexation ordinance on December
27, 2000 and a number of township residents appealed.
The appellants claimed that the Planning Office's approval was based on an erroneous theory of law;
namely, that the Office should have granted a hearing on the issue of annexation and applied the 14
criteria outlined in Section 414,031, the contested -case annexation statute. The District Court disagreed
and granted summary judgment in favor of the Planning Office and the City of Rochester. The District
Court held that the Planning Office has n.o duty or authority to conduct an independent review of an
annexation by ordinance, or to refuse to issue an order for annexation. The Office may only issue an
order approving the annexation by ordinance once it has received this from the annexing city. The
Planning Office may consider and receive more inforrmation about the annexation, but it is not required
to do so.
Coalition ofGreate, iinnesota Cities
2001 Annexation Update
VIEWSEMISSMOStair
Oppose Reinstating the Annexation Election
Reinstating the annexation election requirement wilt:
• Give township residents a veto power to stop appropriate annexations and make
the statutory contested annexation hearing process meaningless.
End. future dialogue on cooperative orderly annexation, planning and service
� p � Yee
agreements between cities and towns by giving towns complete bargaining
strength.
Continue to unfairly tax city residents to pay for city services used by town
residents resulting from urban development in townships.
Undo the unprecedented compromise agreement' between cities, towns and
counties that resulted in a new, fair boundary adjustment process.
Undo nine years of progress that has occurred since the election requirement
was repealed by the Legislature.
Continue the costly pattern of environmental problems created by urban
development on septics and wells and retroactive service delivery.
Abandon sound state policy that urban development occur in cities where
services can be provided cast - effectively and rural development occur in
townships where municipal services are not needed.
Prepared by Flaherty & Hood. P.A. • 444 Cedar Street, Suite 1200, Saint Paul, MN 55101 0 651 -225 -8840
Coalition ofGreaterMinnesota Cities
2001 Annexation Update
total Government Structure in Minnesota
Minnesota's Rank Among Other States
in Most Population
Minnesota's Rank Among Other States
in Most Number of Local Government Units
Minnesota's Rank Among Other States
in Most Number of Townships
Counties
Cities
Townships
School Districts
Special Districts
TOTAL
Minnesota Local Government Units by Type:
21 st
_7
l st
87
854
1,794
360
406
3,501
H.wMuc r ' • ' `' e # is
Source: U.S. Census Bureau, Statistical Abstract af'the United States: 2000, pages 23 -24, 299.
Prepared by Flaherty e&' Hood, P.A. • 444 Cedar Street, Suite 1200, Saint Paul, MN 55101 • 651 -225 -8840
Compared to other states with similar population, Minnesota has the highest number of
governmental units, For example:
State Population Counties Municipalities Townships Other Total
.Alabama 4.4 million 67 446 0 618 1 ,131
Arizona 4.8 million 15 87 0 535 63 7
Colorado 4.1 million 62 269 0 1,535 1,869
Kentucky 4.0 million 119 434 0 813 1,366
Louisiana 4.4 million 60 30? 0 105 467
Maryland 5.2 million 23 156 0 241 420
Missouri 5.5 million 114 944 324 2,034 3,416
Minnesota 4.8 million 87 854 1,794 766 3,501
S. Carolina 19 million 46 269 0 401 716
Tennessee 5.5 million 93 344 0 504 940
Washington 5.8 million 39 275 0 1,498 1,812
Wisconsin 5.3 million 7? 583 1,266 1,138 3,059
(oalition of Greater ..unnesota Cities
2001 Annexation Update
State and Township Govemme Su
Source: U.S. Census Bureau, Statistical Abstract of the United States: 2000, page 299.
States with Operating States with No or Inoperative
Township Governments (2O) Township Governments (3O)
Connecticut 149 Alabama
Illinois 1,433 Alaska
Indiana 1,008 Arizona
Kansas 1,370 Arkansas
Maine 467 California
Massachusetts 307 Colorado
Michigan 1,242 Delaware
Minnesota 1,794 Florida
Missouri 374 Georgia
Nebraska 455 Hawaii
New Hampshire 221 Idaho
New Jersey 243 Iowa
New York 929 Kentucky.
North Dakota 1,341 Louisiana
Ohio 1,310 Maryland
Pennsylvania 1,546 Mississippi
Rhode Island 31 Montana
South Dakota 956 Nevada
Vermont 237 New Mexico
Wisconsin 1,266 North Carolina
Oklahoma
Oregon
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wyoming
1 In only seven states (Indiana, Massachusetts, Michigan, Minnesota, New Jersey, Rhode Island, and South Dakota) do all
townships operate as actively functioning governmental units. Most of the twenty listed states have more townships than shown
here, but one or more of those townships are inactive according to U.S. Census survey criteria.
2 Several of these states have townships, but in most cases they are subdivisions of counties with limited duties and so do not
operate as actively functioning governmental units according to U.S. Census survey criteria.
Prepared by Flaherty & Hood. P.A. $ 444 Cedar Street. Suite 1200. Saint Pau[. NFN 55101 • 651-225-8840
Coalition of Greater Minnesota Cries
2001 Annexation Update
Coalition of Greater dnnesota Cities
2001 Annexation Update
basics ofAnnexation
What is annexation?
Annexation is the way in which land is brought into a city so that needed municipal services can be
provided. This land may already be developed or may be expected to be developed as residential,
,
commercial, industrial or governmental property.
What is state annexation and and use policy?
A discussion of annexation law should begin with the olio statement contained in the
p Y annexation
statutes found in Chapter 414, which provides as follows:
"The Legislature finds that: (1) sound urban development and preservation of
agricultural land and open spaces through land use planning is essential to the
continued economic growth of this state; 2 _ m:unici al government most
efficiently provides gpverumental services in areas inter sivel r d evelo ed, fog°
residential, commercial, industrial and governmental purposes; and townshi
aover'nrn.ent r rovides CI efficiently i rovides overnmental services in areas used or
develo i ed for agricultural o :. en s . ace and rural residential . ur a oses the
public interest requires that municipalities be formed when there exists or will likely
exist the necessary resources to provide for economical and efficient operation;
aexation to existing rnuplitisj of unincor orated areas unable to
su Iv munici al services should be facilitatedq and (5) consolidation (5) 1�dation of
municipalities should be encouraged.. , ." (M.S. § 414.01) [Emphasis added.]
In short, state annexation and land use policy provides that :.
1. Urban areas should be in cities;
2. Rural areas should be in townships;
3. Areas needing municipal services should be annexed; and
4. Lesser government through the consolidation or merger of municipalities should be
encouraged.
This policy is sound, and is based on two principles: urban areas should be in cities where services
and infrastructure already exist and where such services can be extended cost-effectively and
efficiently. Townships are best equipped to provide services to rural agricultural areas since they
often do not have the staff or infrastructure to provide the level of services demanded by citizens .
y ns �n
urbanizing areas without duplicating available city infrastructure or services.
Annexation Basks
Page 2
What are the types of annexation available under the law?
Currently, three forms of annexation are available under state law:
1. Automatic Annexation by Ordinance Automatic annexations may be accomplished without
an expensive hearing by a city under specific and narrowly defined circumstances.
Examples include: where a property owner petitions for annexation and his property is 60
acres or less, a city owns land, or a city completely surrounds a township area. Provided a
city has met certain notice and public hearing requirements, it may enact an ordinance and
annex the area automatically under each of these methods. The CGMC supports this type of
annexation because it completes a simple boundary adjustment quickly, efficiently, and cost -
effectively.
2
Negotiated/Orderly Annexation Negotiated 'annexation is the orderly annexation agreement
process where a city and township negotiate an agreement containing terms and conditions
for immediate and/or future annexations, extension of municipal services, and future growth.
With the repeal of the election requirement in 1992, cities and townships now have an
incentive to work together to negotiate sound orderly annexation agreements that provide for
future community growth.
3. Contested -Case Hearing Annexation Contested -case hearing annexation is trial -type
annexation where a boundary adjustment is in dispute and cannot be settled. This makes it
necessary for each party to present its case before a neutral decision -maker who, in turn, will
apply the statutes to the evidence and render a binding decision for the parties.
With the sunset of the Minnesota Municipal Board on June 1, 1999, a new process for
contested -cases exists. This process requires mediation first followed by a hearing if the
dispute cannot be settled. The process requires a hearing, the consideration of fact, evidence
and testimony, and a decision based upon specific statutory criteria and standards. Some of
the criteria governing .contested -case a vexations include the consideration..of evidence
related to the pattern of development, future growth, environmental problems, service
delivet,y and needs, fiscal impacts, and effect on adjacent school district and communities.
Based on this criteria, annexation may be ordered if CO the area is urban or suburban or
about to become so, (2) the proposed action is necessary to protect the public health, safety,
and welfare, or (3) annexation is in the best interest of the property proposed for annexation.
Why ::do ddties.annex Witt?
To remain healthy, cities must • be allowed to grow. Cities that expand their boundaries can organize
for economic growth create jobs for the entire region and provide needed municipal services in a
cost-effective and efficient manner. Cities that expand their boundaries also can clean up problems
caused by poor or no land -use planning and to improve future land use planning. Without
annexation, cities are locked within existing boundaries, which results in urban decay, while the
suburbs and townships on their borders flourish by taking advantage of the services available from
Annexation Basks
Page 3
the city. The long -term result is stagnation of the city and the continuation of sprawl at the
p expense
of the entire region.
Some of the benefits of annexation include the following:
1. Costs of urban services fairly distributed among all who benefit;
2. City organized for economic growth;
3. Good land use plan wing to preserve agricultural land and stop sprawl;
4. City services provided more efficiently, cost - effectively and without duplication; and
5. Protection of the environment and natural resources.
What are some typical examples bfannexation?
Residential Example
A homeowner in the township wants to join the city in order to stop septic system leakage into the
groundwater and avoid having to install a costly replacement system.
The developers of a new subdivision want to connect to city sewer in order to p revent future
pollution problems caused by urban development on individual septic systems.
1
Homeowner
New Subdivision
Annexation Basics
Page 4
industrial Example
An industry wants to expand and needs city sewer, water, and fire services. Expansion space is
only available in the township.
Planned Expansion
Existing Industry
What do property owners think of annexation?
Currently, businesses and homes that are developed on the fringes of cities benefit from many city
services, but are not required to pay city taxes unless they are annexed. This places an unfair tax
burden on city residents who must pay for the additional services demanded by urbanizing township
areas. The question is one of tax fairness. Those that receive city services should pay for the full
level of city services provided just as city residents do. Many property owners want to join cities so
their homes or businesses can receive city services, including police and fire protection, and sewer
and water services. Other property owners do not want to join cities and pay the increased taxes
needed to fund the increased services required from township urbanization.
How do cities and townships differ in their views of annexation?
In general, Greater Minnesota cities favor annexation and Greater Minnesota townships oppose it.
Cities favor annexation because it promotes the economic vitality and environmental health of the
entire community. Townships oppose annexation because it will result in a loss of tax base for the
township. Many township residents oppose annexation because they will be required to pay
increased property taxes and assessments to fund the services they receive.
What are the effects of years ofbad annexation & land-use laws in Minnesota?
Restrictive annexation and land -use laws have prevented cities from engaging in efficient, long-
term regional land -use planning by making appropriate planning, orderly annexation, and service
extensions difficult and divisive. As a result, many townships continue to develop as urban areas
without proper planning and provision of municipal services. Such activities hinder regional
economic growth, encourage urban sprawl, foster the wasteful duplication of services, and result in
environmental degradation, destruction of farm land and significantly higher costs to retroactively
provide municipal services when environmental problems inevitably occur.
Prepared by Flaherty & Hood. P.A. o 444 Cedar Street, Suite 1200. Saint Patil. MN 55101 • 651 - 225 -8840
Coalition of Greater Minnesota Cities
2001 Annexation Update
1. Automatic
annexation by ordinance (414.033)
— 4- ordered service extension (414.0335)
s of anne
2. egotiated
—I-orderly annexation (414.0325)
tion
3. Contested
—4-unincorporated land—city/town (414.031)
concurrent detachment—city/city (414.061)
Prepared by Flaherty & Hood, P.A. • 444 Cedar Street. Suite 1.200, Saint Paul, MN 55101 • 651-225-8840
1.
Coalition of Greater Minnesota Cities
2001 Annexation Update
Land is owned by the city
Land is completely
surrounded by land within
city limits
�. Land is 60 acres or less,
unsewered, or sewer
facilities are not available,
and the city receives a
petition from all
landowners in area
4. Land is approved by a plat
for subdivision into
residential lots averaging
21,780 sq. ft. or less and
area is within two miles of
a city
5. Land is 60% or more
bordered by the city and 40
acres or less and there is
no timely objection by
town board
6. Land is platted, or, if
unplatted, does not exceed
200 acres, a majority of
property.owners petition
for annexation, and there is
no timely objection by
town board.
Annexation by Ordinance
414.033
Automatic upon approval of
ordinance:
Upon proper notice and public hearing, if applicable, a city may
declare an area abutting a city annexed by ordinance if:
Hearing required:
Land is 60% or more
bordered by the city and .
40 acres or less and there
is a timely objection by
town board
Mediation
MP shall set date for
hearing in accordance
with 414.031
F
See flow chart for
414.031, Annexation
by MP Order
Prepared by Flaherty & Hood, P.A. • 444 Cedar Street, Suite 1.200. Saint. Paul, MN 55101 • 651 -225 -8840
Hearing required:
Land is platted, or, if
unplatted, does not exceed
200 acres, a majority or°ity of the
property owners petition for
annexation, and there is a
timely objection by town
Coalition of Greater Minnesota Cities
2001 Annexation Update
Annexation by Ordinance Process
Section 414.033
1. Law: Minnesota Statutes, Section 414.033 provides that unincorporated rp property abutting a
municipality may be annexed by filing an ordinance so providing with Minnesota Planning's
gs
Municipal Boundary Adjustments Office.
. Automatic Forms of Annexation by Ordinance: A municipality ma b ordinance, y, by Hance, declare land annexed
and the affected township has no right to object thereto under the followin g circumstances;
a. The land is owed by the municipality;
b. The land is completely surrounded by land within the municipal limits
c. The land abuts the municipality, is 60 acres or less the municipality receives a petition � p on for
annexation from all property owners within the area to be annexed, and the area to be
annexed is not presently served by public sewer facilities or ublic sewer facilities are P s re not
otherwise available; or
d. After August 1, 1995, the land to be annexed has been approved by a preliminary plat PP Y P ary p or final
plan for subdivision to provide residential lots that average 2 I , 78 0 square feet or less � sin area
and the land is located within two miles of municipal limits.
3. Notice and Public Hearing Requirement: Except where land is municipally owned, y a vned, in order to annex by
ordinance using the above automatic procedures, the municipality must meet the following notice nonce and
public hearing requirements prior to adoption of an ordinance:
a. Notice At least 60 days before a petition is filed, the etitioner must municipality
st notzfy the rnun�cipality
that the petitioner intends to file a petition for annexation.
b. Electric Service At least 30 days before a petition is filed for annexation, the municipality
. pal�ty
must notify the petitioner that the cost of electric utility service to the petitioner may change
if the land is annexed. The notice must include an estimate of the cost impact of any change
p y an�e
in electric utility services, including rate changes and assessments, resultin g from the
annexation.
c. Public Hearing Before a municipality may adopt an ordinance, the municipality must
p y hold a
public hearing and give 30 -days written notice by certified mail to the townships affected P ff cted by
the ordinance and to all landowners within and contiguous to the area to be annexed.
414.033
Page 2
4. Procedure for Arinexation by Ordinance: The following should be filed by the annexing
municipality with Minnesota Planning when seeking to annex by ordinance using one of the above
automatic annexation procedures:
a. Filing of ordinance An annexation ordinance must be filed with Minnesota Planning, the
township, the county auditor, and the Minnesota Secretary of State.
b. Filing fee A filing fee of $5.00 per acre (min. fee of $100; max. fee of $600).
0. Cover letter A cover letter addressed to the executive director of Minnesota Planning's
Municipal Boundary Adjustments Office. The cover letter should identify all documentation
filed with Minnesota Planning.
d. Ordinance The City's annexation ordinance. Contents of the ordinance will vary by. type of
procedure. In developing an ordinance, you should consult the statutes and your legal
counsel. The following are basic provisions that should be included in most annexations by
ordinance:
1. The ordinance should contain a heading similar to the following:
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF ANNEXNG
LAND LOCATED IN THE TOWN OF
COUNTY, MINNESOTA, TO THE CITY OF
COUNTY, MINNESOTA,
PURSUANT TO MINN. STAT. § 414.033, SUBD. , PERMITTING
ANNEXATION BY ORDINANCE 5-
2. The ordinance should specify the reasons the city is petitioning for
annexation, i.e., land is owned by city, land is surrounded, etc.
3. The ordinance should contain a statement that the property to be annexed is
unincorporated and abuts corporate limits.
4. The ordinance should contain a statement that the property to be annexed is urban or
suburban or about to become so and the reasons for this conclusion.
5. The ordinance should contain a complete and accurate legal description of the
property to be annexed.
6. The ordinance should state the number of acres to be annexed.
7. The ordinance should state the population of the area to be annexed.
8. Except for annexation of municipally owned land, the ordinance should specify that
the city has held a public hearing on the matter and the date, and that the city has
provided 30 days written notice by certified mail to the town and to all landowners
within and contiguous to the area to be annexed.
414.033
Page 3
9. For annexation by ordinance under the 60 -acre provision, the ordinance should
specify whether the area to be annexed lies in a flood p lain or shoreland area.
10. Except for annexation of municipally owned land, and unless otherwise agreed the
annexation ordinance should specify 1) if the annexation becomes effective on
or
before August 1 of a levy year, the municipality may levy on the annexed area
beginning with that same levy year; or 2) if the annexation becomes effective �. e after
August 1 of a levy year, the town may continue to levy on the annexed area for that
levy year, and the municipality may not levy on the annexed area until the year following
levy year. The annexation ordinance should also state that in the first following
y
the year when the municipality can first levy on the annexed area and thereafter,
property taxes on the annexed land shall be paid to the municipality, but the
municipality shall make a cash payment to the town for the period and in accordance
with the following schedule:
i. In the first year following the year the municipality, could first levy on the
annexed area, an amount equal to 90% of the property taxes distributed to the
town in regard to the annexed area in the last year the property taxes from the
annexed area were payable to the town;
ii. In the second year, an amount equal to 70 %;
Ill , In the third year, an amount equal to 50%;
iv. In the fourth year, an amount equal to 30%; and
v. In the fifth year, an amount equal to 10 %.
11. The ordinance should contain a statement that annexation is final on the date the
ordinance is approved by Minnesota Planning.
eo Boundary maps The annexation ordinance must be filed with a corporate rp e boundary map
showing the property proposed for annexation and its relationship to corporate boundaries.
fo Plat maps Any plat maps for the area to be annexed must also be filed with the ordinance.
Prepared by Flaherty & f -food. P.A. # 444 Cedar Street. Suite 1200, Saint Paul. MN 55101 s 651 -225 -8840
Coalition of Greater Minnesota Cities
2001 Annexation Update
Ordered Service; Annexation by Ordinance
474.0335
After an MPCA hearing, MPCA orders cooperation by contract between city
and town pursuant to §115.49 to abate a pollution problem.
taking either of the following actions:
Automatic annexation:
During 90-day period following the MPCA order, city may resolve the matter
Adopt an ordinance to annex
the area designated in the
MPCA order and file the
same with MP .
MP may review and comment
on the ordinance but shall
order annexation within 30
days of receipt.
Intergovernmental service
contract:
Negotiate, draft, and execute
an intergovernmental service
extension contract between
the city and town to provide
service to the area designated
In the MPCA order.
Prepared by Flaherty & Hood, P.A. • 444 Cedar Street, Suite 1200, Saint Paul, MN 55101 • 65I -225 -3$40
2
Coalition of Greater nnesota Cities
2001 Annexation Update
Cooperation by (ontract Process
Sections 115.49 and 474.0335
l Step 1 - Section 115.49 Authority, MPCA has the authority to order cooperation ty ooperat�on by contract
between a city and township for two mutually exclusive purp oses:
a. To provide for areawide waste management and treatment; OR
b. To prevent, control or abate pollution.
Step - Section 11 5.49, subd. 1 H earing required. "If the agency dete
� y rm.ines after a hearing on
the subject matter that cooperation between two or more municipalities is necessary to provide
ary o provide
for area wide waste management and treatment .., or to revent control, or abate o
p � pollution, it
may adopt a resolution so declaring and determining whether it will be feasible to secure such
cooperation by contract between the municipalities concerned."
3. Step 3 - Section 115.49, subd. MPCA order to coo erate by contract. `` determines
the a deterrn�nes
that procedure by contract will be feasible, it may issue an order so declaring, setting forth g orth the
general purposes and terms of a proposed contract . , . and directing the municipalities concerned
ncerned
to formulate and execute such contract within agency times as the a specify g Y ma y p ec fy in the order,
but not less than 90 days fromm the date of mailing copies of the order ...."
4 , Step 4 .. Section 414.0335 o plan to rnunici all re uired to _provide service. direct e .� ice. In dzrcet response
to the Winona Winona Township matter decided by the MPCA in 1996, the Legislature in
enacted the following provision giving a municipality the option to enter into a contract for
or
annex the area it is ordered to serve:
"If a determination .,. is made, that cooperation by contract is necessary and feasible b
�y tween a
municipality and an unincorporated area ..., the municipality required to provide or extend
q
through a contract a governmental service to an unincorporated area, during the statutory f
g ry �o�da�
period ..., may in the alternative to formulating a service contract ..., declare the unincorporated
area described in the pollution � .p
p ion control a determination letter or order annexed to the
municipality by adopting an ordinance ...."
5. Step 5 m Section 115,49, subd. 2 Municipalities fail to annex or contract, "If a contract ... is
not made within the time therein specified, the agency may refer the case to the commissioner
The commissioner may then formulate a contract in accordance with the agency's order.... and
nd
execute the same in the name of each municipality concerned ...."
Prepared by Flaherty & Hood, P.A. • 444 Cedar Street, Suite 1200, Saint Pain, MN 55101 • 651 -225 -8840
City and town draft and execute joint
resolution designating an area as in need
of orderly annexation.
City and town submit joint resolution to MP.
Thereafter, a proceeding for annexation of any
portion designated may be initiated by:
City submits
resolution to
MP
,'mediation
Coalition of G Cities
2001 Annexation Update
MP accepts joint resolution.
Town submits
resolution to
MP
ti
Hearing
d
Orderly Annexation
414.0325
City and town
submit joint
resolution to MP
MP on
its own
motion
. If MP hearing is required, MP sets date.
MP considers statutory criteria.
{ MP rzay approve if:
area is urban or suburban and services are available;
}
necessary to p
rotect public health, safety, and welfare; or
•
p
annexation is in best interest of area.
MP issues order for annexation of designated area.
City and town draft and execute joint reso-
lution designating an area as in need of or-
derly annexation, stating conditions, and
providing for MP review and comment ju-
risdiction only.
City and town submit joint resolution to MP for
30 day review and comment.
MP orders annexation in accordance
with joint resolution.
If MP hearing is not required
MP may deny if the annexation conflicts with any
provision of the joint resolution.
Prepared by Flaherty & Hood, P.A. • 444 Cedar Street, Suite 1200, Saint Patel, MN 55101 0 651-225-8840
If MP denies annexation, no proceeding
may be initiated for two years from date of
MP order.
J
Coalition of Greater ..,innesota Cities
2001 Annexation Update
Orderly Annexatiort. Agreement Terms
Section 414.0325
1. Basic orderly annexation agreement terms The following is a brief outline of the orderly annexation
agreement terms that should be included in a properly drafted joint resolution for orderly annexation;
a. Identification of parties The parties to the joint resolution should be clearly identified,
b. Recitals The joint resolution should state the reasons for designating an area(s) for immediate
or future orderly annexation.
c. Description of subject area(s) For each area that is designated as in need of orderly
annexation, the joint resolution should include a legal description' of the designated area(s).
Maps showing the area(s) and their relation to current city limits must also be attached as
exihibits.
f* Population The population of the area should be stated in the joint resolution.
g o Minnesota Planning review and comment jurisdiction only The joint resolution should
state that the joint resolution provides for annexation of a designated area, no consideration by
Minnesota Planning is necessary, no alteration of the agreed upon boundaries is appropriate,
. �- p
all conditions for annexation have been stated in the joint resolution, and that Minnesota
Planning may review and comment, but shall, within 30 days of receipt of the joint resolution,
order the annexation.
h. Mechanism triggering annexation For each orderly annexation area, the joint resolution
should clearly state the triggering event that initiates an annexation. Numerous mechanisms
can be used to trigger an annexation; these will depend on your negotiations. Examples of
events triggering annexation may include reaching a specific date, before development occurs
in a designated area, a pollution problem, or property owner petition for municipal services.
L Property owner initiated annexation Prior to 1997, property owners could seek annexation
of their property, even where the terms of an orderly annexation agreement governing the
area did not provide for such an annexation. This provision was repealed in 1997 thereby
eliminating these annexations unless specifically provided for in an orderly
annexation agreement. The joint resolution should contain a provision providing for roe r
p p �
owner initiated annexations.
d. Definition of terms Key terms as used in the joint resolution should be defined.
e. Acreage of subject area The acreage of the area to be annexed should be stated in the joint
resolution.
Adoption of regulations The joint resolution should require both parties to adopt
regulations giving full effect to the terms of the joint resolution.
4'i4.03Z5
Page 2
k. Disputes and remedies The joint resolution should establish a procedure for disputes that
may arise as a result of the interpretation of terms contained in the joint resolution. This may
include designation of mediation or arbitration or another mechanism to resolve conflicts,
1. Term The joint resolution should clearly state the term of the agreement.
m. Modification or amendment The joint resolution should state whether modification of the
agreement is appropriate and establish the circumstances by which such modification is to be
accomplished.
n. Severability clause Continuation of the agreement and negotiation of replacement terns
should be provided in the event a term is found invalid or unenforceable.
0. Governing law The joint resolution should state that Minnesota law governs the
interpretation of the agreement.
P. Notice If the joint resolution requires notices to be given, the resolution should state to
whom and in what manner notice is to be provided.
q. Effective date The joint resolution should designate the date upon which the agreement
becomes effective.
r4 'Signatures The joint resolution should be executed by the appropriate municipal officers
from each respective governing body.
2. Other possible orderly annexation agreement terms Here are other orderly annexation agreement terms
that may be .included in an orderly annexation agreement:
a4 Tax provisions A joint resolution could include any of the following:
i. Tax phase-in The tax rate of the annexing municipality may be increased in equal
proportions over a number of years (not to exceed six years) until it reaches the tax
rate of the annexing municipality.
ii. Rural service district The agreement could include the creation of a rural service
district where areas that do not receive all municipal services would pay a lower tax
rate, based on the proportion of services the area receives.
iii. Tax pay back The agreement could include payments to the township, similar to
those required for annexations by ordinance (Section 414,033, subd. 12). For
example, the municipality could make payments to the township over a five year
period equal to 90 percent, 70 percent, 50 percent, 30 percent, and 10 percent,
respectively, of the property taxes distributed to the town. Any pay back plan is
governed by the provisions of Section 414.036 and must be in equal payments over at
least two but less than six years from the date of annexation.
b. Municipal services The timing and provision of municipal services (sewer, water, fire
protection, etc.) may be stated in the joint resolution.
414.0325
Page 3
c. . Assessments A term that sets out assessment policy, financial assistance, etc. for major
service improvements may be included in the joint resolution.
d. Zoning, subdivision, and land use Terms related to the applicable zoning, subdivision
g
regulations and land uses in the subject area(s) may be stated in the joint resolution.
e. Moratorium on urban, non-farm development A term prohibiting all urban, non -farm
development in an area designated for orderly annexation may be included in the joint
resolution. In this situation, urban, non -- farm development would trigger annexation and
extension of service to the property seeking to develop.
f. Joint planning board A term establishing a joint planning board to exercise land use
control may be included in the joint resolution.
Note: Numerous provisions may be included in a joint resolution for orderly annexation. The
terms of such agreements depend upon the negotiations of the parties and will bind the
parties to the negotiated terms and conditions. The above outline is intended to rovide
guidance regarding p
egarding the terms that may be included in an orderly annexation agreement. The
outline is not intended to encompass all terms that may be included therein. To determine
the terms that will best meet your city's objectives, you should consult an attorney 1 Y m y and
applicable state statutes and rules before negotiating and drafting such an agreement.
Prepared by Flaherty & Hood. P.A. • 444 Cedar Street, Suite 1200, Saint Paul. MN 55101 • 651-225-8340
Coalition of Greater Minnesota Cities
2001 Annexation Update
Annexation by
Proceeding initiated by submitting any of the following to MP:
Resolution of annexing city
Resolution of annexing town
Petition of 20% of property owners
Joint resolution of city and town
MP or its designated representative hears evidence and considers statutory criteria.
Approve
MP may approve if:
area is urban or suburban
annexation is necessary to protect
public health, safety, and welfare; or
annexation is in best interest of area
MP orders annexation.
If proceeding initiated by joint resolution,
election of new municipal officers is required.
innesota Planning (MP) Order
414.037
Upon receipt of resolution, MP sets hearing date.
frote
Mediation
1
MP shall deny if:
the increase in
revenues for the city
bear no reasonable re-
lationship to the value
of benefits conferred
upon the town.
Deny
Prepared by Flaherty & Hood, P.A. • 444 Cedar Street, Suite 1200, Saint Paul, MN 55101 • 651- 225 -8840
MP may deny if:
annexation to an-
other municipality
would better serve
the area; or
remainder of town
would suffer undue
hardship.
Coalition of Create, ]innesota Cities
... .:...
2001 Annexation Update
Decision standards for contested annexations
Section 414.031
Approval standards Based upon the statutory factors listed in section 414.031, subd. 4 M
may or its designated decision - maker, after hearing order a.r
y. y annexation if:
1.. It fmds that the subject area is now, or is about to become, urban or suburban in
character; or
. It finds that municipal government in the area proposed for annexation is re-
quired to protect the public health, safety, and welfare; or
3. It finds that annexation would be in the best interest of the subject area.
Denial standards The decision -maker must also apply the following additional standards
when considering a contested annexation request:
1. The decision-maker shall deny the annexation if the increase in revenues for
the annexing municipality bears no reasonable relation to the monetar y value of
benefits conferred upon the annexed area.
2. The decision -maker inay deny the annexation if: ,
a. Annexation to an adj acent Municipality would better serve the interests
of the residents of the property; or
b. The remainder of the township ould suffer undue hardship.
. p
tatut ry criteria for coin ste annexations
Section 414.031
Annexation criteria Minnesota Planning or its designated decision maker must consider
evidence regarding the following criteria:
1. Population, households, and growth area;
2. Quantity of land and natural physical features;
3. Degree of contiguity of boundaries;
4. Pattern of development, planning, and land uses and impact of proposed action;
p
5. Present transportation network and potential transportation issues;
6. Land use controls and comprehensive planning;
7. Level of services and impact of proposed action on delivery;
8. Existing or potential environmental problems and impact on those problems;
p
9. Plans for providing needed government services;
10. Fiscal impacts (including tax capacity, debt, and local tax rates);
1 I . Effect of proposed action on adjacent school districts and communities;
12. Adequacy of town government to deliver services to subject area;
13. Analysis of whether government services can best be ro-
rovided through the
p g p
posed action or another process; and
14. In cases of partial township annexation. ability of remainder of town to continue
or feasibility of another boundary adjustment procedure.
J p
Prepared by Flaherty : Hood, P.A. • 444 Cedar Street, Suite 1200. Saint Paul. MN 55 101 • 651 -225 -8840
oaIition of Greafier►d,Ennesota Cities
2001 Annexation Update
tions for Resolving Sewer Service Iss
I. annexation Options: Long-term Orderly Growth approach
a. Annexation by ordinance Annex by ordinance properties seeking sewer
service that petition the cityfor annexation.
b. Orderly Annexation Agreement Enter into an orderly annexation
agreement with the township annexing areas that will be provided sewer
service now or in the future.
0. Ordered Service Extension MPCA ordered service extension to resolve
a pollution probletnrequiring extension of service allowing either
annexation by ordinance or a sewer extension and interconnection
contract.
d. Contested Case Hearing File acontested -case hearing to annex and
provide sewer service to urban or suburban areas of the township needing
services.
Sewer Contract Options: Short-term Uncontrolled Growth Approach
Joint powers agreement providing for joint financing, provision and
Prepared by Flaherty & Hood, P.A. • 444 Cedar Street, Suite 1200, Saint Paul, MN 55101 o 651-225-H40
a. Sewer Extension Agreement Enter into a direct sewer extension and
service contract with the township.
b. Joint Powers Agreement Similar to sanitary sewer district, enter into a
governance of sewer service to the township.
s;,
Coalition of G Cities
2001 Annexation Update
Orderly Annexation Agreement
Orderly annexation agreement A Joint agreement between the City and Township roviding
for the terms and conditions for immediate and/or future annexations. Such an agreement could
provide for a variety of terms including providing for the annexation of roP e � as sewer
p
extensions occur providing for the immediate annexation of larger areas proposed to be sewered
with provision of sewer service to follow, or an agreement providing for the extension of sewer
first with annexation of the sewered areas to occur within a specified p eriod of time.
Pros
1.
Joint, cooperative agreement - builds community relations.
Allows cities to capture needed tax base in order to fund services.
3. Cities which expand are the healthiest and best positioned for economic growth.
4. Helps control urban growth since townships will understand that if urban growth
takes place and sewer service is needed, annexation will also occur. Provides an
incentive for townships to maintain their rural character.
5. Promotes tax fairness consistent with the policy that those receiving city services
should be within corporate limits and share equally in the cost of p roviding all
services in the same manner as current city residents.
6. Allows cities to manage and maintain proper control over extension and g rowth of
city municipal services.
7. Provides flexibility with respect to terms which may be included in the agreement.
8. Provides certainty to property owners and townships regarding when annexation
and extension of services will occur.
9. A properly drafted agreement will also make boundary adjustments automatic and
thereby avoid the need for costly and divisive Minnesota Planning hearings.
Cons
1. Proper drafting is critical. It may be time consuming and difficult to negotiate
acceptable terms.
Townships may not be interested in long - term agreements g
lann n for future
P
growth, orderly annexations and service extensions.
Prepared by Flaherty & Hood, P.A. • 44-4 Cedar Street, Suite 1200, Saint Pau, WIN 53101 • 651-225-8840
Coalition of Greater Minnesota Cities
200T Annexation Update
Sewer extension through an interconnection contract, joint powers agreement or
establishment of a sanitary sewer district Joint agreements providing for the extension of
sewer service from the city to the township through the interconnection of a township sewer
collection system to the city's system without annexation of township areas.
Pros
1. Costs for only extension and sewer collection system in the township borne
entirely by the township.
City receives direct wastewater treatment service fees and other payments
associated with conveyance and treatment of sewage.
Cons
Sewer C.ntract/Joint P ers Agreeme t
l . Loss of ability to annex property because services have already been provided
thereby removing any incentive for township residents to seek annexation.
Unfair to current taxpayers since it allows townships to pick and choose the
services which it wants without having to fund the other services which current
taxpayers within city boundaries must pay for and which in many cases township
residents already take advantage of.
3. Does not allow city to capture needed tax base to remain healthy. Loss of ability
to annex threatens the city's ability to position the community for economic
growth contributing to the decay of the core urban areas.
4. Loss of tax base will concentrate poverty in the urban core and place the tax
burden to provide services on those with the least ability to pay while wealthier
suburban areas take advantage of those services.
5. Sewer contract fees will only cover sewer services and will not help the City
maintain its viability or provide other services such as police, park and rec., etc,
6. Once service is extended, it becomes much more difficult to control future
extensions and future urban growth in townships since it gives an incentive for
urban growth to occur outside cities continuing the pattern of urban. sprawl.
Provides for the potential future growth of a suburb on the city's border,
duplicating services and negatively impacting the long - term growth of the city.
Prepared by Flaherty & Hood. P,A. • 444 Cedar Street. Suite 1200, Saint Paul, MN 55101 • 651- 225 -8840
Deciding whether a city, township,
or group of residents should
pursue one option over another is
not always a clear or strai htfor-
y g
ward job. A careful look at the
economics and politics of a com-
munity and its surrounding area is
necessary before starting any type
)f agreement or restructuring
nitiative. For example, a city or
: ownship whose governments do
lot have a friendly relationship
nay have a hard time keeping
annexation discussions on track.
iuch arrangements are possible,
)ut may take a lot of patience,
ompromise and diplomacy. By the
ame token, a city and township
hat do not see each other as a
hreat and share compatible visions
f growth may easily reach agree -
lent on development and environ-
iental needs, as well as service -
zaring contracts, To begin pursu-
ig any of these agreements, it is
nportant to think about any
msitive issues that might stop a
ty, township or group of residents
om achieving a cooperative
- rangement, or government or
Dundary restructuring. Anticipate
7oblems before they begin.
: ;MF:5 ' R crf' ES ! MAY X96
Q . what are the specific requirements for pursuing an intergovernmental
cooperative arrangement or boundary restructuring?
Financial
,= Extended services
0 Expand or secure development
S) Regional development
Q . What evidence or research might support or detract from a change or new
agreement?
Previous research
F Similar agreements
Experience of other communities
. what are some potential financial benefits or drawbacks of the agreement
or boundary change?
011 Tax base
g` State aids
• Licensing fees and fines
County revenues
Q . Who shares the view that a change is needed? Who opposes the view that a
change is needed?
• Residents
z City officials
• Township officials
rF.
e Local business
Ei County officials
what might the legal, administrative and consultant costs of pursuing a
change be?
Legal fees
y' Consultant fees
.
} Administrative costs
Volunteers
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i�.3 1Ci�.� .�. -,. . • 'G:_ {.._ Jy.: �:'''�' 5..� ffP'S' 1.�::s'... iJyi'eY�F L...rr'� =_': �y��.:: w. 7tii�fw. �Kw- ]��'c'����Ss:...'�'.•rK -�Yi. ��'.w ✓.. -ti v..c.._rd4 ���'i =: F: T � -- k..'�.�Y�r�':?i3 "- %vX'?:
Important initial questions
Before beginning or during the early stages of restructuring a boundary or
sharing responsibility for services, it is important to consider some questions.
These questions will help communities and individuals define their needs; collect
necessary information; and decide whether the change is politically, economically
and environmentally suitable. The questions may also identify appropriate options
for particular situations. Answering these questions does not require hiring a
consultant, however, they will take research, effort and time. The answers will help
you decide whether or not restructuring or cooperation is the best idea, and
identify potential supporters and critics. Eventually, professionals may be required
for legal, engineering, environmental and other technical advice.
I. Intergovernmental
cooperation
Many cities, townships and counties
begin cooperative arrangements to save
costs and promote efficiency. Most
arrangements involve only two govern-
ments, but there are also agreements
among many governments. Intergovern-
m.ental cooperation may range from
formal joint powers agreements to
unwritten understandings. In this
discussion, intergovernmental coopera-
tion is divided into three categories:
joint powers agreements, intergovern-
mental service agreements, and
intergovernmental transfer agreements.
A. Joint powers
agreements
of the types of joint powers agree-
ments--- shared power and service
contract—shared power agreements are
the most common, Under shared power
agreements, governments jointly share
responsibility for providing a service.
With service contracts, one or more
governments contract with another
government for a service.
ra,.'3a.: �- ...�..- +....:n:�S: { T'....�:"_..'�rt:.:.a- .YY.:c��C ?771='.: =m �.ce.: ::.:? ". "..:i; ^..r•�:..'�:.ig:L:A =� �csirv�.o::.t :.a�u....�,. r.,...�. -.��
ti a EA
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5 ':s qz • � ' a . � w n s a . emu 7 � - ��x�.•� ''7 : � s. Mil am NM
is R�- if9e3 , F,S :�i "s: ' i 2 a `" g, ?W.� 2a :ar ,r.i`f Y'� �ni fv
p ..,.-,--....z.,,,,, ,..AS:r•',fre;�,,.` .� s:1'3`. AL'S ''—.' n.-�7ISas— .,S2e�r...tie". ,„,..,„v!.' „3`7 � --,,, ,,,.. '. 'see .- '•4::,,o...'r"L,•.,
A group of township residents is concerned about
failing septic systems. They worry about contamination
of their drinking water and environmental degradation 11
ii
of the area. They are looking for options other than
repairing their systems. 1
The governments entering into a .
joint powers agreement must both have
the legal power to provide a service. For
example, a township cannot enter into a
joint agreement to provide a service it is
not legally allowed to provide. Although
the law states that there must be a
commonality of powers, it allows for two
important exceptions. One, although a
county may not have the authority to
provide a service to itself, it may provide
that service to a government that does
have the authority. Two, a government
may enter into an agreement with
another government to provide any
service it is authorized to provide for
itself.
Studies show that joint powers
agreements are used by cities, townships
and counties across Minnesota for a
variety of reasons. Governments with
large populations use joint powers
agreements more often than those with
small populations. Smaller governments
tend to use fewer formal agreements.
whatjointpowers agreements
require
The Joint Exercise of Powers Act
includes a series of requirements for
Request that the township contract for services with a
neighboring city
Township might levy a special assessment to cover the cost of
having a city provide the additional service.
Homeowners buy nearby land and construct new septic system 1 1
Homeowners would be responsible up front for the financing of II
purchase urchase and development, and would not likely recoup the
investment when the houses are sold.
Y
Pursue annexation of affected area to bordering city
Homeowners ask for annexation into the city, or petition the
Minnesota Municipal Board.
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joint powers agreements. These
requirements are often unclear. It is
important that attorneys drawing up
these types of agreements are well-
versed in the law and court rulings
concerning it.
(7 Basic requirements for the agree-
went. The purpose of the agree-
ments, or what government power
will be exercised jointly. How the
purpose of the agreements will be
accomplished or how the power will
be exercised.
Representation on the board. If the
agreement calls for use of a joint
board, it must be made up of
representatives of each party to the
agreement.
Funding and resources. The agree-
ment may provide for disbursement
from public funds to carry out the
purpose of the agreement. Strict
accounting of all funds must be
outlined in the agreement. As in
most cases of joint cooperation in
which efficiency and cost - saving are
key objectives, each party will have
find out how much it would pay for
the service without the agreement,
and whether potential headaches
.0 [• 6:75,
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A group of city or township residents feel that its tax
burden is too high for the benefits received. Or, a city
council or town board might want to address this problen
before residents attempt to take action.
L I Service sharing agreement
Ask city council or town board to consider sharing agreement
rin city or township, with neighboring ty p, or contract with county or
q private contractor.
.Annex ad ditional land
If a city annexation of additional land to extend tax base an
options for future development.
€ Merge with a b ordering city or township
Merger with a bordering city or township in order to achieve
greater economies of scale. Bns
Both townships and cities should
explore issue with residents and neighboring township.
fl Detachment from taxing entity
Detachment from a city or a township that is taxing heavily.
Lower the level of service
Lower the level (quality or quantity) of service.
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services.
�7E• ttY*m' : v d
ti'Y: i F
1 Ir W
and loss of control still makes the
agreement worthwhile. Governments
providing a service have to find out
whether providing that service to
another government will lower the
average cost to its own citizens. In
addition, the law states that the
agreement must provide for the
disposition of any property or assets
acquired as the result of an agree-
ment. After the agreement has been
completed, these resources must be
returned to the parties to the
agreement in proportion to their
contributions.
Application of other laws. In
addition to following the Joint
Exercise of Powers Act, local govern-
ments must climply with all other
provisions of law concerning
intergovernmental cooperation. In
other words, an agreement reached
under th.e Joint Powers Act does not
exempt governments from the
procedural requirements of any
other law.
0 Terminating an agreement. Ajoint
powers agreement can include a
specific termination date, such as five
years from the date signed, or a
ri
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A company would like to expand. However, the site on
which it wants to expand is located in a township. The
company refuses to expand unless it receives municipal
provides the services the company requires
This would require considerable and possibly prohibitive
investment on the part of the townshi Coo e ation may be
Y way p p
the onl the township could provide services. Y
Township contracts with a bordering city for the services
Bordering city annexes land
Land is annexed into bordering city that can extend services
to the area.
Business moves
The business moves to another location where it can get the
services it requires.
specific ending date. Or, the agree-
ment can continue indefinitely and
be terminated through specific
provisions included in the agree-
ment. A combination of the two is
possible as well.
To begin an agreement you should:
Identify common problems
f Identify present arrangements
3 Analyze each option individually
• Consider costs and savings carefully
for each option
Y Consider important non -cost issues
Keep the public informed
Be flexible in negotiations
Be patient working with other
governments
Some of the government services
and functions performed under
joint powers agreements include:
• Public safety and law enforcement
>x Environment
C& General government
e Parks, recreation and miscellaneous
services
OP Transportation
• Health and human services
•
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B. I me rg overn ment 1
service agreements
Intergovernmental service agree-
ments may be written agreements
between two or more cities or town-
ships, among cities and townships,
between counties, or with counties,
cities and townships. These types of
agreements may also be informal. For
example, they may be decades -old
understandings between cities or
townships, or oral agreements to share
equipment or swap responsibilities. The
discussion on joint powers agreements
also pertains to intergovernmental
service agreements.
C. intergovernmental
service transfer
agreements •
Under these agreements, a govern-
ment may transfer to another govern-
ment total responsibility for providing a
service. For example, cities and town-
ships in a county may transfer to the
county the responsibility for solid waste
disposal. The county will then charge
the cities for the service, The discussion
of joint powers agreements also pertains
to intergovernmental service transfer
agreements.
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Due to a decline in population, a township or city can
no longer afford to provide services and may be faced
with a loss of state and federal aid.
Merge with a city
A city might consider consolidation with another city.
A township might consider annexation to a neighboring city.
Merge with another township
A township might consider merging government functions
with a neighboring township. Talk to the county and other
townships.
Contract with another government for services
A city or township might pursue a service agreement with
P g l' �'
another city, township or the county.
Dissolve
A city or township could pursue dissolution.
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•
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6
11
11
Co
Under Minnesota law, consolidation
can be accomplished through two
different processes. The older and
better -known process is through the
Minnesota Municipal Board. A recently
developed process is through the Board
of Government Innovation and Coop-
eration. In general, there are only a
couple consolidations undertaken each
year in Minnesota. However, some cities
have explored the issue without
formally working with the Minnesota
Municipal. Board or the Board of
Government Innovation and Coopera-
tion. Before committing to what can be
a long and politically charged process,
these cities can commission feasibility
studies to gauge their chances of success
and conduct straw polls of residents to
measure local support.
Two or more municipalities may seek
to consolidate into one city. The only
initial requirement is that each munici-
pality must abut at least one of the
included municipalities. Consolidation
of cities is often sought in an effort to
improve the delivery of services, reduce
costs, and enhance planning in an area.
Some cities believe they are already very
integrated and that consolidation is a
natural next step.
Yl'
,�.dva�►.ta es amp disadvantages of local intergovernmental cooperation
eS Disadvantages
A`d man# � � Reaching and mainfaining an agreement
.
O Efficiency and reduction of costs
' lower costs When politics and community sentiments differ, reaching a
Cooperating on providing services can potentially law p difficult. For exam le, all parties may agree
p consensus can be di p
per unit or person. Efficiency and reduced costs are the most � � is necessa • however, they may
p that police protection ry�
common reasons governments seek to cooperate. rte widely on how much protection is needed.
® �.irnifed government restructuring d�sag Y
Cooperating
often avoids the time - consuming, costly and ® Unequal partners
ent restructuring. is more powerful than other parties, it may
politically sensitive issues of governm If one party g era regiment`s conditions.
Cooperation also helps avoid the creation of special districts, influence the a
p • Coordination and planning 0 Local self and control
Through cooperation, governments can develop policies ,
es for the Some cities and townships may feel their identity and
coordination helps independence threatened by intergovernmental cooperation.
area and work an common problems. Such caor p • • cities and towns lose some control over what
. •mize costly externalities that can fallow when levels of In addition, e control o }� avern-
communities. Cooperation can also lead to joint planning for me
to m�n� y g g
n neighboring takes place within their boundaries. And, alt
services and enforcement are different among g g � ment officials may lose control, they are still held responsible
Y
d the re uired resources. for the delivery of services,
future services an a
0 Expanded services
Cities and towns receive services they would otherwise not
have. Cooperation makes those services financially and
logistically possible.
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111 v,
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i `1•� .Sw �J?_i� ?.cif ' 1 r,•i
1 --
rin consolidation may wonder which option, consolidation
Cities considering Y
through the Minnesota Municipal Board or the Board of Govern ment lnnova-
ton and Cooperation, • would work best for them. They are advised to consider
both options Lions because there are some important differences.
Work through the Municipal Board if:
® idation could be controversial and you want to keep the process on
Consul both cities, but
For example, the initiative has the support of residents of
track. Fo p
the city council of one city is opposed.
• Consolidation would not be opposed and you want the process to move
quickly. For example, two cities already cooperate a great deal and see
consolidation as a natural next step. after it
O . • a referendum on the
The cities want to hold question of consolidation aft g
is studied and its impact weighed.
The cities want ® ' ' to follow a more structured path toward consolidation.
Board of Government innovation and Cooperation Work through the Boa if: it slowly
' ' are not sure the
• The cities a e they want to consolidate and want to explore
• The cities do not often cooperate on much, but are willing to consider greater
.
cooperation,
• The cities want to control what is studied and considered and to be able to
stop the process at any time
O The city or cities will be consolidating with a township or county.
..
Under both processes, cities are eligible for grants and aid from the Board of
Government Innovation and Cooperation.
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3i
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•
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!"ivy
o w,
iG�.�
III. Detachment
Although it is not common, it is
possible for property situated within a
municipality to be detached from the
municipality. The same is true with
respect to townships. Detachment
efforts are usually started by residents
who do not like the pace of develop-
ment in their city or township, or who
object to taxes for services they do not
enjoy or would rather not use. These
areas are usually rural.
Detachment from a township is
discussed and decided upon within the
township. No action by the Minnesota
Municipal Board, or the state, is
required. In the case of detachment of
land from a city, state law lays out a
specific process that must be followed
and gives jurisdiction over such detach-
ments to the Municipal Board.
In the last few years, there have been
approximately 13 detachment files
opened with the Municipal Board, The
board approved more than two - thirds of
these detachments. Requests for
detachment were denied in cases where
the land was needed for further city
development and detachment would
unduly affect the city.
Conditions required for detachment
In order for property to be detached
from a municipality, the property in
question must:
• Be located within the municipality;
I Abut the municipal boundary;
I Be rural in character; and,
/ Not be developed for urban residen-
tial, commercial or industrial
purposes.
Possible Municipal Board decisions:
Order detachment if:
1 The required number of property
owners have signed the initiating
petition;
• The property is rural and not
developed for urban residential,
commercial or industrial purposes;
I The property is within the bound-
aries of the municipality and abuts a
boundary;
• The detachment would not reason-
ably affect the symmetry of the
detaching municipality; and,
The land is not needed for reason-
ably anticipated future development.
•
Y ,ry hs
t .. + �
r� fir. .� ` .r 4•
Y� `4 �Y. 'F
1 � r.. #
Deny detachment if the board finds
that the remainder of the municipality
cannot continue the functions of
government without undue hardship.
Decrease the size of the property to
be detached and include only a part of
the proposed area to be detached.
IV. Annexation
Orderly annexation is an agreement
between a city and a township providing
for the eventual annexation of a portion
of township land to a city. Since 1990,
there have been approximately 84
orderly annexation files opened with
the Minnesota Municipal Board.
Orderly annexations usually start with
an agreement between a city council
and town board that designates land as
eligible for orderly annexation. This
agreement is translated into a joint
resolution that is adopted by both the
city council and town board and then
filed with the Municipal Board. More
than one township may participate in
orderly annexation procedures and,
thus, adopt the joint resolution. The
resolution allows the Municipal Board
to order annexations from townships as
development occurs or is about to
occur. What a township and city are
usually saying is that the demands of
development make annexation neces-
sary in the future and it makes sense to
begin planning for those annexations.
Annexations by ordinance are by far
the most common form of annexation
and boundary adjustment. Essentially,
annexation by ordinance requires the
approval of an ordinance by the city
that wishes to annex the land. A group
of residents may petition the city for
annexation by ordinance, or the city
can start the process itself. This type of
annexation has been controversial in
recent years. Townships feel that the
process leaves them vulnerable to
excessive territory losses. During the
early 90s, more than 4,000 acres were
annexed yearly through annexation by
ordinance. With the loss of that land,
townships lost tax base and control of
development in their area.
Annexation by board order is a way
to control annexations when other
methods are not desired. For example,
when an orderly annexation agreement
is not in place, when annexation by
ordinance is contested, or when one or
more parties believe this is the only way
to accomplish the annexation because
of potential controversy. The initial
requirement for annexation of unincor-
porated land to a municipality is simple
and straightforward: the land must abut
the municipality to which it will be
annexed.
In deciding whether to order an-
nexation by board order, the Municipal
Board considers the following factors:
• Population growth
• Natural terrain
Present development
• Existing or potential environmental
problems
Fiscal data including net tax capacity
• Effect on adjacent communities
= Adequacy of current services
E: Effects on governmental aid
1- ._
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w �al sC- +tia3 }7 3.r2i'.ari
0 Hubert H. Humphrey institute of Public
Affairs, University of Minnesota
(612) 625
League of Minnesota Cities
(612) 281 - 1200 or (800) 925 - 1122
!j Metropolitan Council
(612) 291 - 6359
Minnesota Association of Townships
(612) 497 - 2330 or (800) 228 - 0296
Minnesota Attorney General's Office
(612) 296 - 6196
Minnesota Department of Planning
(612) 296 - 3985
Minnesota Extension Service
(An office is located in every county)
Minnesota Municipal Board
(for restructuring questions)
(612) 296 -2428
rl State of Minnesota's Board of
Government Innovation and
Cooperation
(612) 282 - 2390
State of Minnesota's Board of
Mediation Services
(612) 649 -5421
•
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is
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•
v. Dissolution
Statutory cities that no longer serve
as cities may be dissolved. Home rule
charter cities must revert to statutory
city status to dissolve. The dissolved
city's land is divided among bordering
townships. Townships may also be
dissolved and the land is either ab-
sorbed by a neighboring township or
townships, or becomes unorganized
territory of the county. The dissolution
of a city or township is uncommon and
may happen in one of three ways:
One -third of those residents who
voted in the last election may
petition the Municipal Board for a
special hearing and election on the
question of dissolution;
If a city fails to hold municipal
elections for two consecutive years, as
is required by law, and has outstand-
ing unpaid bonds or bills, any debt
holder may secure the dissolution of
the city in an effort to receive
payment;
a; The Minnesota Supreme Court may
dissolve a city that was incorporated
through an invalid process.
This article was reproduced with the
permission of the Minnesota Extension
Service, University of Minnesota.
Complete copies of the publication,
Choices for Change: Local Government
Cooperation and Restructuring in Minne-
sota (BU -6541) copyright 1995, are
available from MES Distribution Center,
University of Minnesota, 1420 Eckles
Avenue, St. Paul, MN 55108 -6069.
Telephone (612) 625 -8173. r
Beth Walter Honadle is a professor
in the Department of Applied Econom-
ics at the University of Minnesota.
Patricia Weir Love is a former graduu
ate research assistant in the Depart-
ment of Applied Economics at the
University of Minnesota and is
currently a community economic
development consultant, working with
the Rushford /Rushford Village
consolidation commission.
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