Proposed Municipal Annexation Reform Legislation

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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    SECTION 1. IC 36-4-3-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) A municipality may not promote or collect signatures on an annexation petition filed under this section.
    (a) (b) If the owners of land located outside of but contiguous to a municipality want to have territory containing that land annexed to the municipality, they may file with the legislative body of the municipality a petition: 
        (1) signed by at least:
            (A) fifty-one percent (51%) of the owners of land: 
                (i) in the territory sought to be annexed; and 
                (ii) that is not exempt from property taxes under IC 6-1.1-10 or any state law; or
            (B) the owners of seventy-five percent (75%) of the total assessed value of the land for property tax purposes that is not exempt from property taxes under IC 6-1.1-10 or any state law; and
        (2) requesting an ordinance annexing the area described in the petition provided one (1) of the following: 
            (A) The resident population density of the territory sought to be annexed is at least three (3) persons per acre.
            (B) The territory sought to be annexed is zoned for commercial, business, or industrial uses.
    (b) (c) The petition circulated by the landowners must include on each page where signatures are affixed a heading that is substantially similar to the following:
    "PETITION FOR ANNEXATION INTO THE (insert whether city or town) OF (insert name of city or town).".
    (c) (d) Except as provided in section 5.1 of this chapter, if the legislative body fails to pass the ordinance within one hundred fifty (150) days after the date of filing of a petition under subsection (a), the petitioners may file a duplicate copy of the petition in the circuit or superior court of a county in which the territory is located, and shall include a written statement of why the annexation should take place. Notice of the proceedings, in the form of a summons, shall be served on the municipality named in the petition. The municipality is the defendant in the cause and shall appear and answer.
    (d) (e) The court shall hear and determine the petition without a jury, and shall order the proposed annexation to take place only if the evidence introduced by the parties establishes that:
        (1) essential municipal services and facilities are not available to the residents of the territory sought to be annexed;
        (2) the municipality is physically and financially able to provide municipal services to the territory sought to be annexed;
        (3) the population density of the territory sought to be annexed is at least three (3) persons per acre or the territory sought to be annexed is zoned for commercial, business, or industrial uses; and
        (4) the territory sought to be annexed is contiguous to the municipality.
If the evidence does not establish all four (4) of the preceding factors, the court shall deny the petition and dismiss the proceeding.
    (e) (f) This subsection does not apply to a town that has abolished town legislative body districts under IC 36-5-2-4.1. An ordinance adopted under this section must assign the territory annexed by the ordinance to at least one (1) municipal legislative body district.

    SECTION 2. IC 36-4-3-5.1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5.1. (a) This section applies to an annexation in which owners of land located outside but contiguous to a municipality file a petition with the legislative body of the municipality:
        (1) requesting an ordinance annexing the area described in the petition; and
        (2) signed by one hundred percent (100%) of the landowners that reside within the territory that is proposed to be annexed.
    (b) Sections 2.1 and 2.2 of this chapter do not apply to an annexation under this section.
    (c) The petition circulated by the landowners must include on each page where signatures are affixed a heading that is substantially similar to the following:
    "PETITION FOR ANNEXATION INTO THE (insert whether city or town) OF (insert name of city or town).".
    (d) The municipality may:
        (1) adopt an annexation ordinance annexing the territory; and
        (2) adopt a fiscal plan and establish a definite policy by resolution of the legislative body; after the legislative body has held a public hearing on the proposed annexation.
    (e) The municipality may introduce and hold the public hearing on the annexation ordinance not later than thirty (30) days after the petition is filed with the legislative body. Notice of the public hearing may be published one (1) time in accordance with IC 5-3-1 at least twenty (20) days before the hearing. All interested parties must have the opportunity to testify at the hearing as to the proposed annexation.
    (f) The municipality may adopt the annexation ordinance not earlier than fourteen (14) days after the public hearing under subsection (e).
    (g) A landowner may withdraw the landowner's signature from the petition not more than thirteen (13) days after the municipality adopts the fiscal plan by providing written notice to the office of the clerk of the municipality. If a landowner withdraws the landowner's signature, and the resident population density of the territory sought to be annexed after any and all landowner signature withdrawals is at least three (3) persons per acre or the territory sought to be annexed is zoned for commercial, business, or industrial uses,  the petition shall automatically be considered a voluntary petition that is filed with the legislative body under section 5 of this chapter, fourteen (14) days after the date the fiscal plan is adopted. All provisions applicable to a petition initiated under section 5 of this chapter apply to the petition.
    (h) If the municipality does not adopt an annexation ordinance within sixty (60) days after the landowners file the petition with the legislative body, the landowners may file a duplicate petition with the circuit or superior court of a county in which the territory is located. The court shall determine whether the annexation shall take place as set forth in section 5 of this chapter.
    (i) A remonstrance under section 11 of this chapter may not be filed. However, an appeal under section 15.5 of this chapter may be filed.
    (j) In the absence of an appeal under section 15.5 of this chapter, an annexation ordinance adopted under this section takes effect not less than thirty (30) days after the adoption of the ordinance and upon the filing and recording of the ordinance under section 22 of this chapter.

    SECTION 3. IC 36-4-3-9 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 9. (a) A town must obtain the consent of both the metropolitan development commission and the legislative body of a county having a consolidated city before annexing territory within the county where a consolidated city is located.
    (b) A town may not annex within an area that extends one (1) mile outside the corporate boundaries of a second or third class city. A town may annex within the area that extends:
         (1) more than one (1) mile; and
         (2) not more than three (3) miles;
outside the corporate boundaries of a second or third class city, if the annexation by the town does not include territory that extends more than one (1) mile outside the corporate boundaries of the town.
    (c) Subsection (b) does not apply to:
         (1) a town that proposes to annex territory located in a different county than the city; or
         (2) an annexation by a town that is:
             (A) an annexation under section 5 or 5.1 of this chapter; or
             (B) consented to by at least fifty-one percent (51%) of the owners of land that is not exempt from property taxes under IC 6-1.1-10 or any other state law in the territory the town proposes to annex provided one (1) of the following: 
                (i) The resident population density of the territory sought to be annexed is at least three (3) persons per acre.
                (ii) The territory sought to be annexed is zoned for commercial, business, or industrial uses.
    (d) In determining the total number of landowners of the annexed territory and whether signers of a consent under subsection (c)(2)(B) are landowners, the names appearing on the tax duplicate for that territory constitute prima facie evidence of ownership. Only one (1) person having an interest in each single property, as evidenced by the tax duplicate, is considered a landowner for purposes of this section.
    (e) Each municipality that is known as an included town under IC 36-3-1-7 is also considered a town for purposes of this section.

    SECTION 4. IC 36-4-3-11 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 11. (a) Except as provided in section 5.1(i) of this chapter and subsections (d) and (e), whenever territory is annexed by a municipality under this chapter, the annexation may be appealed by filing with the circuit or superior court of a county in which the annexed territory is located a written remonstrance signed by:
        (1) at least sixty-five percent (65%) fifty-one percent (51%) of the owners of land that is not exempt from property taxes under IC 6-1.1-10 or any other state law in the annexed territory; or
        (2) the owners of more than seventy-five percent (75%) in assessed valuation of the land that is not exempt from property taxes under IC 6-1.1-10 or any other state law in the annexed territory.
The remonstrance must be filed within ninety (90) days after the publication of the annexation ordinance under section 7 of this chapter, must be accompanied by a copy of that ordinance, and must state the reason why the annexation should not take place.
    (b) On receipt of the remonstrance, the court shall determine whether the remonstrance has the necessary signatures. In determining the total number of landowners of the annexed territory and whether signers of the remonstrance are landowners, the names appearing on the tax duplicate for that territory constitute prima facie evidence of ownership. Only one (1) person having an interest in each single property, as evidenced by the tax duplicate, is considered a landowner for purposes of this section.
    (c) If the court determines that the remonstrance is sufficient, it shall fix a time, within sixty (60) days of its determination, for a hearing on the remonstrance. Notice of the proceedings, in the form of a summons, shall be served on the annexing municipality. The municipality is the defendant in the cause and shall appear and answer.
    (d) If an annexation is initiated by property owners under section 5.1 of this chapter and all property owners within the area to be annexed petition the municipality to be annexed, a remonstrance to the annexation may not be filed under this section.
    (e) This subsection applies if:
        (1) the territory to be annexed consists of not more than one hundred (100) parcels; and
        (2) eighty percent (80%) of the boundary of the territory proposed to be annexed is contiguous to the municipality.
An annexation may be appealed by filing with the circuit or superior court of a county in which the annexed territory is located a written remonstrance signed by at least seventy-five percent (75%) of the owners of land in the annexed territory as determined under subsection (b).

    SECTION 5. IC 36-4-3-13 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 13. (a) Except as provided in subsections (e) (d) and (g) (e) at the hearing under section 12 of this chapter, the court shall order a proposed annexation to take place if the following requirements are met:
        (1) The requirements of either subsection (b) or (c).
        (2) The requirements of subsection (d) (c).
    (b) The requirements of this subsection are met if the evidence establishes the following:
        (1) That the territory sought to be annexed is contiguous to the municipality.
        (2) One (1) of the following:
            (A) The resident population density of the territory sought to be annexed is at least three (3) persons per acre.
            (B) Sixty percent (60%) of the territory is subdivided.
            (C) (B) The territory is zoned for commercial, business, or industrial uses.
    (c) The requirements of this subsection are met if the evidence establishes the following:
        (1) That the territory sought to be annexed is contiguous to the municipality as required by section 1.5 of this chapter, except that at least one-fourth (1/4), instead of one-eighth (1/8), of the aggregate external boundaries of the territory sought to be annexed must coincide with the boundaries of the municipality.
        (2) That the territory sought to be annexed is needed and can be used by the municipality for its development in the reasonably near future.
    (d) (c) The requirements of this subsection are met if the evidence establishes that the municipality has developed and adopted a written fiscal plan and has established a definite policy, by resolution of the legislative body as set forth in section 3.1 of this chapter. The fiscal plan must show the following:
        (1) The cost estimates of planned services to be furnished to the territory to be annexed. The plan must present itemized estimated costs for each municipal department or agency.
        (2) The method or methods of financing the planned services. The plan must explain how specific and detailed expenses will be funded and must indicate the taxes, grants, and other funding to be used.
        (3) The plan for the organization and extension of services. The plan must detail the specific services that will be provided and the dates the services will begin.
        (4) That planned services of a noncapital nature, including police protection, fire protection, street and road maintenance, and other noncapital services normally provided within the corporate boundaries, will be provided to the annexed territory within one (1) year after the effective date of annexation and that they will be provided in a manner equivalent in standard and scope to those noncapital services provided to areas within the corporate boundaries regardless of similar topography, patterns of land use, and population density.
        (5) That services of a capital improvement nature, including street construction, street lighting, sewer facilities, water facilities, and stormwater drainage facilities, will be provided to the annexed territory within three (3) years after the effective date of the annexation in the same manner as those services are provided to areas within the corporate boundaries, regardless of similar topography, patterns of land use, and population density, and in a manner consistent with federal, state, and local laws, procedures, and planning criteria.
    (e) (d) At the hearing under section 12 of this chapter, the court shall do the following:
        (1) Consider evidence on the conditions listed in subdivision (2).
        (2) Order order a proposed annexation not to take place if the court finds that all of the conditions requirements set forth in clauses subsections (b) and (c) are not met. (A) through (D) and, if applicable, clause (E) exist in the territory proposed to be annexed:
            (A) The following services are adequately furnished by a provider other than the municipality seeking the annexation:
                (i) Police and fire protection.
                (ii) Street and road maintenance.
            (B) The annexation will have a significant financial impact on the residents or owners of land.
            (C) The annexation is not in the best interests of the owners of land in the territory proposed to be annexed as set forth in subsection (f).
            (D) One (1) of the following opposes the annexation:
                (i) At least sixty-five percent (65%) of the owners of land in the territory proposed to be annexed.
                (ii) The owners of more than seventy-five percent (75%) in assessed valuation of the land in the territory proposed to be annexed.
            Evidence of opposition may be expressed by any owner of land in the territory proposed to be annexed.
            (E) This clause applies only to an annexation in which eighty percent (80%) of the boundary of the territory proposed to be annexed is contiguous to the municipality and the territory consists of not more than one hundred (100) parcels. At least seventy-five percent (75%) of the owners of land in the territory proposed to be annexed oppose the annexation as determined under section 11(b) of this chapter.  
    (f) The municipality under subsection (e)(2)(C) bears the burden of proving that the annexation is in the best interests of the owners of land in the territory proposed to be annexed. In determining this issue, the court may consider whether the municipality has extended sewer or water services to the entire territory to be annexed:
        (1) within the three (3) years preceding the date of the introduction of the annexation ordinance; or
        (2) under a contract in lieu of annexation entered into under IC 36-4-3-21.
The court may not consider the provision of water services as a result of an order by the Indiana utility regulatory commission to constitute the provision of water services to the territory to be annexed.
    (g) (e) This subsection applies only to cities located in a county having a population of more than two hundred fifty thousand (250,000) but less than two hundred seventy thousand (270,000). However, this subsection does not apply if on April 1, 1993, the entire boundary of the territory that is proposed to be annexed was contiguous to territory that was within the boundaries of one (1) or more municipalities. At the hearing under section 12 of this chapter, the court shall do the following:
        (1) Consider evidence on the conditions listed in subdivision (2).
        (2) Order a proposed annexation not to take place if the court finds that all of the following conditions exist in the territory proposed to be annexed:
            (A) The following services are adequately furnished by a provider other than the municipality seeking the annexation:
                (i) Police and fire protection.
                (ii) Street and road maintenance.
            (B) The annexation will have a significant financial impact on the residents or owners of land.
            (C) One (1) of the following opposes the annexation:
                (i) A majority of the owners of land that is not exempt from property taxes under IC 6-1.1-10 or any other state law in the territory proposed to be annexed.
                (ii) The owners of more than seventy-five percent (75%) in assessed valuation of the land that is not exempt from property taxes under IC 6-1.1-10 or any other state law in the territory proposed to be annexed.
            Evidence of opposition may be expressed by any owner of land in the territory proposed to be annexed.
    (h) (f) The most recent:
        (1) federal decennial census;
        (2) federal special census;
        (3) special tabulation; or
        (4) corrected population count;
shall be used as evidence of resident population density for purposes of subsection (b)(2)(A), but this evidence may be rebutted by other evidence of population density.

Overview

Indiana and Idaho are the only two states that allow involuntary municipal annexations. This poor public policy has resulted in unwelcome annexations by Indiana cities and towns that “stockpile” hundreds, and oftentimes thousands, of acres of farm land that are not needed for development in the reasonably near future. These predatory and illogical annexations are taxpayer unfriendly because remonstration under the existing Indiana Code is so difficult and costly.

Indiana municipal annexation law includes a good deal of Hoosier common sense as demonstrated by the Indiana Code 36-4-3 provisions summarized next.

(a) Territory sought to be annexed may be considered "contiguous" only if at least one-eighth of the aggregate external boundaries of the territory coincides with the boundaries of the annexing municipality.

(b) A municipality may not annex territory that is inside the corporate boundaries of another municipality.

(c) A municipality may adopt an annexation ordinance only after the legislative body has held a public hearing not earlier than sixty days after the date the ordinance is introduced.

(d) A municipality may adopt an annexation ordinance not earlier than thirty days or not later than sixty days after the legislative body has held the public hearing.

(e) A municipality’s legislative body must adopt a written annexation fiscal plan that meets specific requirements.

(f) If the owners of land located outside of but contiguous to a municipality want to have territory containing that land annexed to the municipality, they may file with the legislative body of the municipality a petition signed by at least fifty-one percent of the owners of land in the territory sought to be annexed or signed by the owners of seventy-five percent of the total property tax assessed value of the land.

(g) Expedited annexations may take place if one hundred percent of the owners of land located outside but contiguous to a municipality file a petition with the municipality’s legislative body requesting an ordinance annexing the land.

(h) A town may not annex within an area that extends one mile outside the corporate boundaries of a second or third class city.

(i) A written annexation remonstrance must be filed with the circuit or superior court of the county in which the annexed territory is located within ninety days after the publication of the annexation ordinance.

(j) Only one person having an interest in each single property, as evidenced by the tax duplicate, is considered a landowner for purposes of remonstrance.

(k) If the court determines that the remonstrance is sufficient, it shall fix a time within sixty days of its determination for a hearing on the remonstrance.

(l) If the territory sought to be annexed is contiguous to the municipality, the court must order a proposed annexation to take place if the resident population density of the territory sought to be annexed is at least three persons per acre or if the territory is zoned for commercial, business, or industrial uses.

It is unfortunate that the good aspects of the Indiana municipal annexation law are offset by the five taxpayer unfriendly provisions analyzed next that allow the current involuntary annexation abuses.

(1) Whenever territory is annexed by a municipality, the annexation may be appealed by filing with the circuit or superior court of the county in which the annexed territory is located a written remonstrance signed by at least sixty-five percent of the owners of land in the annexed territory or signed by the owners of more than seventy-five percent in assessed valuation of the land in the annexed territory. The sixty-five percent threshold in this provision needs to be changed so that an annexation may be appealed by filing a written remonstrance signed by at least fifty-one percent of the land owners. Since a super majority is not required for land owners to initiate an annexation, a super majority should not be required to remonstrate against an unwelcome annexation.

(2) If the territory to be annexed consists of not more than one hundred parcels and eighty percent of the boundary of the territory proposed to be annexed is contiguous to the municipality, an annexation may be appealed by filing with the circuit or superior court of the county in which the annexed territory is located a written remonstrance signed by at least seventy-five percent of the owners of land in the annexed territory. The seventy-five percent threshold in this provision needs to be changed so that the described annexation may be appealed by filing a written remonstrance signed by at least fifty-one percent of the land owners. A super majority should not be required to remonstrate against any unwelcome annexation.

(3) If the territory sought to be annexed is contiguous to the municipality, the court must order a proposed annexation to take place if sixty percent of the territory is subdivided. This provision must be removed from the Indiana municipal annexation law. It is not right, for example, for 400 acres of farm land to be involuntarily annexed if 600 acres of adjacent land is subdivided and awaiting residential development.

(4) If at least one-fourth of the aggregate external boundaries of the territory sought to be annexed coincides with the boundaries of the municipality, the court must order a proposed annexation to take place if the territory sought to be annexed is needed and can be used by the municipality for its development in the reasonably near future. This nebulous provision must be removed from the Indiana municipal annexation law. The term “reasonably near future” is not defined, and municipalities abuse this loophole to gobble up farm land without any specific and realistic development plans.

(5) The court must order a proposed annexation not to take place if the court finds that all of the following conditions exist in the territory proposed to be annexed: (i) police, fire protection, street, and road maintenance services are adequately furnished by a provider other than the municipality seeking the annexation; (ii) the annexation will have a significant financial impact on the residents or owners of land; and (iii) the annexation is not in the best interests of the owners of land in the territory proposed to be annexed. The cost of remonstrance court proceedings can be reduced greatly by removing this provision from the Indiana municipal annexation law. The law should be changed so that the court must order a proposed annexation to take place if the resident population density of the territory sought to be annexed is at least three persons per acre or if the territory is zoned for commercial, business, or industrial uses – if one of these two requirements is not met, then the court must order a proposed annexation not to take place.

The proposed legislation to implement the preceding five municipal annexation reforms can be found below. The crux of these reforms is that involuntary annexations take place only if (a) the resident population density of the territory sought to be annexed is at least three persons per acre or (b) the territory is zoned for commercial, business, or industrial uses. Annexation remonstrance costs for both municipalities and remonstrators will be lessened dramatically.

Some supporters of municipal annexation reform may feel that these proposed reforms do not go far enough. These folks are encouraged to recognize that the Indiana General Assembly prefers to see the Indiana Code changed by evolution rather than revolution. It is recommended that municipal annexation reform advocates support the legislation proposed in this E-mail Update as a good starting point with the understanding that additional reforms can be included if the political climate appears favorable.