When municipal growth clashes with property owners, the result is annexation headaches

A 644-acre swath of rural Hancock County land is at the heart of a contentious annexation battle that illustrates what municipalities say is the need to get control of property before development happens. The case also brings to light what may be a shift in the judiciary’s attitude toward remonstrators.

The town of Fortville passed an ordinance in July 2013 proposing the annexation of the mostly agricultural area. The municipality’s police department already patrols the area, which also receives water services for fire protection from Fortville.

Kile

Still, the landowners balked. They remonstrated and at trial showed Fortville had no specific plans for developing the proposed annexation territory and no real estate developers had expressed any interest in the land.

Fortville countered saying local growth would be spurred by the growth in neighboring Fishers. At present, the Hancock County community has no control over how the land would be developed, and the parcels could be rezoned without input from the town.

Hancock Circuit Judge Richard Culver concluded Fortville failed to meet the statutory requirement that the annexed section be developed in the “reasonably near future.”

Culver’s September ruling in Certain Fortville Annexation Territory Landowners v. Town of Fortville, 30C01-1310-MI-1832, came just weeks after remonstrators in other annexation fights secured victories.

Farmers in Boone County proved in Rural Petty Township Landowners v. Town of Whitestown, Indiana, 29D01-1308-MI-008547, that a proposed annexation by Whitestown would have a significant financial impact by causing their tax rates to nearly double. And businesses and homeowners secured a rare win at the Indiana Court of Appeals when the panel affirmed the trial court’s decision in The City of Sullivan v. North American Latex Corp., et al., 77A01-1401-PL-11.

Attorneys representing the property owners in the three lawsuits said remonstrators still have a hard road. They are underdogs in annexation battles, having to organize and respond quickly to a proposal that a municipality likely spent a significant amount of time crafting. They also have to pay attorney fees and court costs out of their own pockets.

Compelling need

Kent Frandsen, attorney at Parr Richey Obremskey Frandsen & Patterson LLP in Lebanon, represented the remonstrators in the Whitestown case. He said cities and towns should be allowed to annex areas of land despite landowners’ wishes to the contrary when the municipalities need to grow.

However, he does not think communities should be able to gobble up rural land with no intention of providing services.

He pointed to the Whitestown annexation attempt as an example of a town having no compelling reason to claim the farmland. He sees the move as a trend among municipalities to warehouse large areas of rural land, primarily to get the parcels before another city or town lays claim.

The Boone County town has appealed the ruling to the Court of Appeals. Should the appellate court reverse the trial court’s decision, Frandsen sees the potential for the ramifications to ripple across the state.

“If this stretch of land can be annexed, then any stretch of land in Indiana will not be safe from involuntary annexation,” Frandsen said.

Like Fortville, Whitestown did not present any specific projects or opportunities for development of the area during the trial. But Whitestown argued, in part, the annexation might prompt an extension of the Ronald Reagan Parkway and having the land incorporated could possibly give it more control over the planning for the roadway.

Special Judge Steven Nation of Hamilton Superior Court 1 was not convinced. He ruled the town’s contention of the parkway being built into the area was “too remote and speculative to justify annexation at this time.”

Sebastian Smelko, of counsel at Bingham Greenebaum Doll LLP, cautioned against requiring cities and towns to have plans ready to launch once the annexation is complete. He is not representing any parties in the annexation cases discussed in this article.

Municipalities need to position themselves for economic development, and annexation is part of that positioning, Smelko said. He acknowledged frustration arises when utilities, subdivisions or businesses do not arrive quickly, but forcing communities to provide immediate plans for the areas to be annexed would reduce their ability to respond to developers’ needs.

Controlling future growth is what the city of Martinsville was doing when it sought to annex 3,000 acres surrounding the community. Barnes & Thornburg LLP partner Nicholas Kile was on the team of attorneys that successfully represented the municipality at the Court of Appeals in Certain Martinsville Annexation Territory Landowners v. City of Martinsville, 55A01-1402-MI-64.

Martinsville, according to Kile, wanted get control of the acreage surrounding a coming interchange off I-69 to ensure the land is “developed in the right way.” The city laid claim to other sections so it could control the levy on the White River and so it could have the land needed to build an additional road to mitigate the access that will be lost once I-69 arrives.

Remonstrators lost at trial and then lost on appeal in October. The Court of Appeals dismissed the Martinsville lawsuit because the remonstrators did not file a motion for a stay of the trial court’s decision before the annexation became final.

Pendulum swing

Kile said the recent decisions in favor of the remonstrators indicate a pendulum swing in the courts. Over his career, he has observed shifts in the courts’ receptiveness between municipalities and landowners. He said judicial temperament seems to have shifted to being a bit more sympathetic to landowners. The strongest evidence of this may be a case involving Sullivan, Indiana.

The city of Sullivan attempted to annex more than 1,100 acres near U.S. 41. The road had been built in the 1970s and retail and restaurants had popped up along with the highway to the west of the town and some industrial developments, including the Sullivan County Community Hospital, to the north. Between these developed areas and the city was residential land.

The Sullivan case, Kile argued, should have been decided for the city because it already provides services.

The hotly contested issue was the fire protection services. For many years, the city of Sullivan and Hamilton Township had jointly run the fire department, plaintiffs’ attorney Jeffrey Boyll of Wilkinson Goeller Modesitt Wilkinson & Drummy LLP in Terre Haute said. This joint fire station was in city limits, and the city claimed it provided the fire protection.

However, the remonstrators highlighted to the court how the township played a key role in protecting the unincorporated area, including providing 25 percent of the fire trucks.

The Sullivan Superior Court ruled in favor of the remonstrators and the Court of Appeals affirmed.

Statutory right

In 1999, the Indiana General Assembly gave landowners the ability to remonstrate against an involuntary annexation. Indiana Code 36-4-3-13 details the elements property holders have to prove in court.

During the upcoming session, the Legislature will likely look at annexation again. The Interim Study Committee of Government has held hearings on the issue and is expected to make recommendations at its Oct. 22 meeting.

Jonathan Hughes, associate at Bose McKinney & Evans LLP, said the statutes currently in place do a good job of balancing the interests of the municipalities and the landowners. It is generally in the best interest of the public for municipalities to be able to grow and expand their services. At the same time, the public has an interest in ensuring cities and towns do not grow at a rate that is unchecked.

Hughes was part of the legal team that represented the municipalities in the Whitestown and Fortville cases. He did not comment specifically on either case.

Any time the statute is changed, Hughes said some of the legal history is lost and may make applying the law more difficult.

Stephen R. Buschmann, attorney at Thrasher Buschmann & Voelkel P.C., represented the landowners in the Fortville and Martinsville disputes.

He advocates doing away with involuntary annexation altogether by requiring municipalities to get approval from 51 percent of the landowners before moving forward; or, in the alternative, allow the remonstrators to succeed if either 51 percent of the parcel owners or of the assessed value file petitions.

Kile agreed that remonstrances should be easier but only if the municipality is not providing services. Conversely, if the annexation territory is being served, then a remonstrance should be very difficult.

More than addressing parts of the statute, Kile thinks now is the time for the Legislature to undertake comprehensive reform of annexation laws. Legislators have been passing laws that are a reaction to court cases, he said, which has created a patchwork of statutes.•