Annexation analysis

Ashley Smith · Wednesday, April 26, 2017
On April 18, the West Liberty City Council met with Vanessa Fixmer-Oraiz and Steve Long of HBK Engineering in a council work session on West Liberty’s recent annexation study.

Long and Fixmer-Oraiz presented a draft of the study, which analyzed the costs and benefits of increasing West Liberty city limits to include surrounding areas to the north and southwest.

The engineering firm used a variety of sources in completing the study, including West Liberty’s 2016 Comprehensive Plan update, existing water and sewer lines, and public opinion regarding housing options in West Liberty.

The draft explained that contributing factors to current public opinion include “an aging housing stock, a lack of housing diversity, a cost of homeownership that is unattainable for young families, and rehabilitation costs for landlords and homeowners alike.”

During the presentation, Long explained that there are two ways that the city can annex surrounding land.

Voluntary annexation is the most popular option, said Long.

“There’s only a couple cases where we have not seen voluntary annexation in the state of Iowa,” he said.

In a voluntary annexation, at least 80 percent of the landowners must agree to the annexation.

According to Long, the other option is involuntary annexation.

Six different entities can request an involuntary annexation, including City Council, County Board of Supervisors, regional planning authority, or the City Development board. Annexation can also be requested by 5 percent or greater of the City’s electors, or by electors in the area proposed for annexation.

In the draft study, HBK noted that “these types of annexations can be contentious and emotional, and are not very common in the Iowa landscape.”

In either case, annexation of any areas outside of City limits must be adjoining, with a common boundary for no less than fifty feet. No “islands” may be created by the annexation.

The annexation study was completed using a two pronged approach for cost-benefit analysis, said Fixmer-Orais.

First, the process used current property tax information for areas located outside the city, and replaced them with the increased City tax rate. This showed an increase in property tax costs to the homeowner, as well as an increased tax base for the city of West Liberty.

Next, the study analyzed the change in premium utility fees that residents outside city limits currently pay. Incorporation into the City would result in a decreased cost in utility fees to landowners, who are currently paying a premium County fee. At the same time, this reduction would result in a loss of revenue for the City.

In these calculations, the firm used current municipal service fees and tax property data from the fiscal year 2016-2017.

With a larger tax base, the city would also receive additional funds from the state in the form of Road Use Tax Funds (RUTF). The study did not take into account potential costs and benefits of the future curbside recycling program.

One area recommended for annexation consideration is the area southwest of the city, including Hormel’s Acres, Country Heights, Terrace Ridge and Elder Ridge. The area consists primarily of single-family homes and duplex townhomes, with an average taxable property value around $218,000.

According to HBK’s presentation, landowners in the southwest area could see a monthly increase in property taxes as low as $20 per month for owners of an undeveloped parcel of land.

Households valued under $200,000 might see a monthly tax increase up to $100, while owners of large houses with values near $400,000 could see an increase of $200 per month.

“The average annual household savings for utilities would be upwards of $600, which would help to balance out the tax increase,” said Fixmer-Orais.

“The premium if you’re living outside of city limits for water and sewer is almost two times more than if you move to the city,” she said.

Residents of the southwest area excluding Country Heights would experience an average annual savings for $670 for water and sewer utilities, according to the study.

Residents of the Country Heights development would save, on average, $330 annually per household for water. However, Country Heights does not receive city sewer services, which municipal code requires, said Fixmer-Orais.

According to city’s contracted engineering firm Veenstra and Kimm, Inc., connecting the Country Heights development to municipal sewer services would require the installation of a lift station along with main and collection sewer lines. The project could cost over $600,000.

The recent discovery of significant leaks in the water lines within Country Heights adds another $100,000 to the infrastructure required to bring the area up to city code.

According to the study, annexation of this area could place a cost burden of nearly $800,000 in repairs onto West Liberty residents. The annual net gain that the City would receive from annexation is approximately $164,000, which would take over four years to pay for the projected repair debt.

“I think the time will come that residents of Country Heights may want to annex in because of the condition of the pipes and sewer systems out there,” said council member Melody Russell.

“It would eventually be beneficial to them,” she said.

Meanwhile, the area north of the city holds opportunity for growth as well. Currently, the area is primarily undeveloped land.

“We think we could get around 400 parcels, assuming they are single family, in that area,” said Long. “Of course, there are infrastructure costs. Some would be born by the developers, and some would be born by the city,” he said.

According to the study, developers typically pay for roadway and stormwater infrastructure.

The study estimated a price-point for each house at $200,000 to match the nearby Akers Subdivision. At that rate, annexation of the northern area could generate $25.8 million worth of taxable property within city limits.

This increase in tax base could provide revenue for amenities that residents requested in the Comprehensive Plan Update, including an expanded trail system, sidewalk connectivity, increased parks and improved playgrounds.

Dave Dvorak, the majority landowner in the northern area proposed for annexation, attended the work session presentation.

“I’m open to working with the city,” he said.

Some council members noted that the current annexation planning coincides with the school board’s long-range facility planning study to increase the size of some district buildings.

“It’s full now,” said council member Joey Iske of the high school building.

“If building is a couple years away, they’re going to be really crowded in there. If we get some new development going on, the schools need to be brought in on this decision because I think they’re already busting at the seams,” she said.

Fixmer-Orais agreed that if 400 new homes were built on the north side in the near future, school enrollment would increase dramatically.

City Manager Lawrence McNaul emphasized the need for lower income housing in West Liberty.

“There needs to be low to medium housing to meet the needs of families, since the southwest area is primarily medium to higher level income,” said McNaul.

“The north area could potentially feature lower income housing and the southwest side could be more on the higher end,” he said.

Mayor Robert Hartman asked what the next steps in the annexation process should be.

“If the council wants to entertain an idea to see the voluntary process, what would that look like?” asked Hartman.

“Start hosting some informational and public meetings to see who is interested in annexation,” advised Fixmer-Orais.

“You can use this study as a talking point,” she said.

HBK Engineering has been hired by communities in the past to host public informational meetings, said Fixmer-Orais, but sometimes city committees choose to host the meetings themselves.

“Whatever entity is going to do it, that’s the first step,” she said.

The study emphasized that voluntary annexation is the best pathway forward. It stated that “annexation should be pursued only when the majority of landowners and households in the southwest area are in favor of being incorporated.”

In the study, HBK also suggested a city-sponsored property tax abatement process over a ten-year period, allowing landowners and households enough time to gradually adjust their budgets.
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