June 12, 2007
RALEIGH – North Carolina needs to scrap forced annexation laws that violate democratic principles, help cities ignore their budget problems, and exclude minority neighborhoods. That’s the conclusion of a new John Locke Foundation Spotlight report.
“Forced annexation was supposed to promote sound urban development in areas that need municipal services,” said report author Daren Bakst, JLF Legal and Regulatory Policy Analyst. “Instead it has done the opposite. It has created a system in which cities ignore areas that need the benefits of annexation. Forced annexation is undemocratic, and there is no reason why the state’s annexation process has to continue trampling on civil rights, voting rights, and property rights.”
Forced annexation takes place when cities and towns acquire unincorporated areas next to their existing territory without the consent of residents who live in the targeted annexation areas. “This process has come under extreme criticism, in large part because of its treatment of individuals living in unincorporated areas,” Bakst said.
State legislators are considering a study of municipal annexation laws. The N.C. House Rules Committee scheduled a public hearing on the topic 5 p.m. today at the Legislative Building in Raleigh.
“The legislature has a chance to recommend and enact meaningful reform,” Bakst said. “The question is not if the laws need to be reformed, but how they should be reformed. A good place to start would be to focus on preserving the rights of North Carolinians.”
The current annexation system suffers from an inherent flaw, Bakst said. “The system ignores the rational behavior of municipalities to protect their own interest and the interests of their current residents,” he said. “Municipalities will annex areas only when there is some financial benefit and not a financial harm.”
That means economically disadvantaged areas that could benefit from municipal services will sit outside town limits, while elected leaders target neighborhoods that boost the city’s tax base, Bakst said. Studies have shown this selective annexation tends to hurt minority communities, he said.
Because cities and towns can select targets for annexation, they can hide their own budget problems, Bakst said. “When the N.C. League of Municipalities argues that forced annexation helps with bond ratings, it is admitting the economic rationale for annexations,” he said. “Adding an appealing unincorporated area becomes a bailout for a municipality that wants to fix its own poor financial condition. As long as that financial bailout mechanism is in place, cities can take unnecessary risks and make poor budgetary decisions.”
Meanwhile, the targeted homeowners pay more than just additional taxes, Bakst said. “To add insult to injury, individuals who are forcibly annexed have to pay ‘development fees’ for municipal water and sewer services,” he said. “These fees can cost thousands of dollars. If a municipality wants to forcibly annex an area, it should bear the costs of providing the infrastructure for these services.”
Beyond the financial burden, forced annexation violates fundamental rules of democracy, Bakst said. “Residents in areas to be annexed should have a voice in the process,” he said. “North Carolina’s annexation system should ensure whoever is making decisions on annexation is accountable to the people being annexed. Accountability will protect democratic principles and promote sound urban growth.
“Forced annexation needs to be eliminated immediately, and significant annexation reform needs to be adopted.”
Daren Bakst’s Spotlight report, “Flawed and Undemocratic: Forced Annexation Is Good for Municipal Leaders, But Bad for the Public,” is available at the JLF web site. For more information, please contact Bakst at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].