The Herald Bulletin

Morning Update

Anderson Annexation

March 9, 2013

Anderson annexation: Other key questions

ANDERSON, Ind. — The City of Anderson is proposing to annex more than 20 square miles of property, most of it giving the city more access to Interstate 69 to the southwest and a smaller portion on the northeast side of the city. Here are answers to 19 other key questions about the annexation:

Question 2: How would personal and business property taxes be affected?

Business and property taxes are set under state law. The rates are set according to this schedule: residential — 1 percent, commercial — 2 percent, industrial — 3 percent. Annexation will not affect those rates. According to the city’s fiscal analysis, many properties in the proposed annexation areas have already reached their property tax caps. (See accompanying chart on property tax rates).

Question 3: What is the difference between non-capital and capital services, and what does the law require?

Municipalities must meet specific legal requirements for providing services, including costs, how services will be financed and organization. These are detailed in the city’s fiscal plan. Non-capital services include police and fire, and road and street maintenance, as well as other services. These must be equivalent in scope and quality to the service current Anderson city residents receive. If the annexations are adopted, Anderson plans to add eight police officers and eight firefighters.

Capital expenses include construction of streets, sewers, lights and storm water facilities. These must be provided to annexed areas within three years. The city proposes building a new fire station (with room for a police substation) in the southwest annexation, and extending County Road 400 South. In addition, the city has proposed buying two new fire tanker trucks. The city’s fiscal plan estimates that four additional police officers would cost $395,424 in 2015, the first year annexation would be in effect. Lease payments for patrol cars would be $26,000 annually; the lease payment for a fire department tanker truck would be $70,000.

In the southwest annexation, police costs would be identical; however, the addition of eight firefighters would cost $724,500 (salaries and operating costs). A new fire station would be bonded over 15 years at an estimated annual cost of $280,000, according to the city. A police substation would be located in the fire station.

Question 4: What could Anderson expect to pay in legal fees defending against remonstrances?

The city may handle any remonstrance in-house without having to pay outside legal fees. However, a final decision about resources to battle litigation depends on the type and scope of legal issues that might be presented.

Question 5: How would the makeup of Anderson City Council change?

Anderson is a second-class city, and its city council is comprised of nine members under Indiana law. Six are elected from specific districts; three are elected at-large. People in the northeast annexation would be included in council district 1, represented by Councilman Russ Willis. In the southwest annexation, people would be incorporated into council district 3, represented by Councilwoman Pamela Jones. If annexation is successful, council district boundaries would be adjusted to equalize population, a process known as redistricting. The Democrat-majority city council would control that process.

Question 6: How would Anderson rezone the area; what would farmland be zoned?

Each area would be rezoned to reflect the current and best use of land in the affected area. Agricultural production is allowed on farmland currently within Anderson city limits, with the exception of livestock production. Anderson does not currently have an agricultural zoning classification, per se. However, the Municipal Development Department would work with the necessary boards and commissions to amend the zoning code to add that land use.

Question 7: Will voters have a chance to weigh-in on the annexation efforts?

Yes, but perhaps not to the extent they would like. After an annexation ordinance is introduced, the city is required to hold a public hearing. If an annexation ordinance is adopted, property owners in the affected area have the right to oppose (or remonstrate), against its implementation. There is no right under Indiana law for affected property owners to vote an annexation up or down by referendum.

Question 8: Why not annex south of I-69?

Anderson could annex land south of the interstate. However, the proposed annexation areas were selected to meet statutory requirements while ensuring the city’s ability to provide services as required by state law and maximize the economic development potential for Anderson and Madison County. In the southwest annexation area, for example, the city has already invested $13 million in infrastructure improvements to supply Nestle with the large amounts of electricity, sewer and water service necessary to support its industrial output.

Question 9: How will livestock, outdoor burning and mowing of weeds be impacted?

The city will accommodate existing livestock operations through the creation of an agricultural zoning classification. Outdoor burning and weed mowing will be addressed through the existing zoning code.

Question 10: Will new residents take on Anderson’s bonds and debts, and will current Anderson residents be hit with existing bonds or debts in the annexation areas?

Under Indiana law, current city residents are not responsible for city debts. The city as a corporation is responsible for general obligation debt. But Anderson does not have any. City utilities are responsible for their own bonds and debt as operating units of the city government, or corporation. Likewise, the Anderson Redevelopment Commission and Economic Development Commission each are responsible for debts created through tax increment financing districts. The city would have to assume some debt obligations on a prorated basis in the proposed annexation areas.

Question 11: How do the insurance ratings of fire and police service in the affected townships compare to Anderson’s ratings, and how do such ratings affect insurance premiums?

Insurance companies use a variety of methods to determine fire loss risks. The Insurance Services Office (ISO) is a private nonprofit group that grades and assigns a numeric value called the Public Protection Class (PPC) number ranging from 1 — 10, with 1 being the highest and 10 the lowest rating, to a fire department or district. Insurance companies may subscribe to ISO services and pay fees to the group, using the PPC number to establish fire insurance premiums. A lower PPC number can result in lower fire insurance premiums. Anderson’s rating just improved to a 3, and those companies that use ISO may lower insurance premiums for their customers. Not every company uses ISO. Some set premiums based on loses within specific zip codes. And some companies, State Farm, for instance, use the ISO grade in Indiana, but not in Illinois. Executives at ISO will not release a list of companies that subscribe to their service. That means the only way to figure out if you might save money through annexation is to check with your agent. 

Question 12: Are Lapel, Pendleton, Ingalls or another community likely to try annexing either of the areas?

It is possible that another municipality might attempt to annex territory, as long as the municipality is able to satisfy the statutory requirements. The question of why Lapel doesn’t move to challenge Anderson’s attempt to extend city limits down to I-69 exit 214 arose during the recent special Lapel Town Council meeting. During that meeting, town council President Gary Shuck said Lapel doesn’t have the financial resources to annex that much land.

Question 13: How can the city of Anderson expect to develop the southwest annexation area along I-69 when much of the property along I-69 currently in Anderson is undeveloped?

Proximity to Indianapolis is an important consideration in the southwest annexation, according to Mayor Kevin Smith and his economic development team. Because of infrastructure that already exists in and around the Flagship Enterprise Center, that part of the county is particularly attractive to the owners of certain manufacturing, logistics and distribution facilities. In addition, the ability to place a “Welcome to Anderson” sign along I-69 four miles from the leading edge of Hamilton County’s commercial, industrial and residential development, which is moving north, would be “a powerful marketing tool,” interim Anderson Economic Development Director Greg Winkler said.

Question 14: When was Anderson’s last big annexation, what area did it take in, and how long did it take to happen?

Anderson’s last significant annexation — and largest at 36.3 square miles — occurred in 1957 during the administration of Mayor Ralph Ferguson. Then, as now, the proposal was controversial. It took seven years for legal challenges to work their way through Indiana courts. Those challenges all were rejected, and the annexation eventually took effect in 1964. Generally, that annexation expanded the city’s boundaries to Cross Street on the north, out to Rangeline Road on the east, south to 67th Street, and out to Layton Road on the west — essentially what we now know as the City of Anderson.

Question 15: How would the inclusion of the two annexation areas impact Anderson’s demographics?

The two proposed annexations would increase Anderson’s population by about 7 percent, according city estimates. The makeup of the city’s new residents would be substantially similar to the demographics that currently exist in the city. According to the most recent census estimates, 80.9 percent of Anderson’s population is white, 12.8 percent is African American, 3.9 percent is Hispanic or Latino, and 2.4 percent is some other race.

Question 16: What can Anderson learn from other recent annexation attempts in Indiana?

Other nearby communities, including Carmel, Fishers, Pendleton, Noblesville and Westfield, have annexed significant amounts of property over the past decade. Annexation is always a difficult and contentious and emotional issue, city officials say. “To the degree that emotion can be removed from the conversation, logic will prevail at the end of the day,” Winkler said.

Question 17: Once an area is annexed, is it possible to later leave the municipality?

Yes. A mechanism does exist under Indiana law for “disannexation.” If a municipality does not provide police, fire and other noncapital services within one year after an annexation takes effect, or capital improvements within three years as required, any person who pays property taxes may file a complaint against the municipality in court. A judge may grant relief if one of several conditions exist, such as a failure to provide police or fire service as required by the original fiscal plan. Remedies could include barring the municipality from collecting taxes, damage awards, requiring the municipality to file a revised fiscal plan, or disannexation.

Question 18: Why did the Smith administration choose to annex two areas at once, rather than doing them piecemeal?

Mayor Smith says multiple issues drove the decision to pursue the northeast and southwest annexations simultaneously. One, is stabilizing the city’s population. Another is fierce competition for available land along the I-69 corridor that businesses favor for economic development. Each time another community such as Pendleton or Ingalls annexes property, Anderson’s ability to attract new business becomes more challenging.

Finally, Smith says he’s opposed the Mallard Lake Landfill for 20 years or more. “As a community, we’ve been waiting for someone else to resolve this for us, and I just don’t think that’s a reasonable risk that Anderson should take.”

Question 19: What geographic rules apply to annexation?

There are specific rules that must be followed for an annexation to occur. (See the accompanying breakouts about how to annex and how to remonstrate for more details). State law allows a second-class city like Anderson to cross county lines if the county commissioners in both counties agree. This could occur, for example, if a company the size of Nestle wanted to build a manufacturing facility along I-69 somewhere near the exit 214 interchange, city officials said.

Question 20: Are school districts, and their ability to grow, impacted by annexations?

School districts are their own entities established under state law. As a result, school district boundaries are not affected by annexations. A separate legal mechanism exists in Indiana for school districts to expand and grown.

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Anderson Annexation
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