Annexation moratorium passed in Nashville may mean revenue loss

Gary B. Gray • Apr 25, 2013 at 9:06 AM

Legislation designed to reform Tennessee’s annexation laws succeeded in the House late last week and now awaits Gov. Bill Haslam’s signature which will put in motion a one-year moratorium on the annexation of any residential property or farmland across the state.

In addition, the bill the required Tennessee Advisory Commission on Intergovernmental Affairs, to conduct a comprehensive study of the issue and make recommendations to the General Assembly on how to better improve the process statewide.

The bill bubbled up mainly from two Tennessee counties, Hamilton and Washington. There has been a concerted effort here to push back on any Johnson City annexations not initiated by property owners. A majority of the County Commission strongly supports even stronger controls on the city’s annexation abilities.

Meanwhile, both County Mayor Dan Eldridge, and City Manager Pete Peterson attempted to convince legislators that the matter should be discussed and settled locally, not in Nashville. Both men also know all too well that a potential loss of revenue may result.

For example, the county keeps about 55 percent of the portion of total sales tax revenue generated in the city which, by law, goes toward education. With a new budget year approaching, the county school system currently is facing a roughly $500,000 projected shortfall.

Bo Watson, R-Hickson, sponsored the Senate bill. He represents District 11, which includes part of Hamilton County. The House bill was sponsored by Rep. Mike Carter, R-Ooltewah, who serves District 29, which also encompasses part of Hamilton County.

State Rep. Micah Van Huss, R-Jonesborough, is one of 13 House members who co-sponsored that bill.

“This originally started out as requiring a referendum for there to be an annexation,” Van Huss said Tuesday. “I definitely supported it. It’s obviously not as much as I wanted, but it is a victory. TACIR has told me they will return with a report in January. The bottom line is that peoples’ property was being taken without their say.”

State Rep. Matthew Hill, R-Jonesborough, a newly appointed TACIR member, said the bill was a victory for the people of Tennessee and that he was proud of Van Huss for championing the legislation.

“As a member of TACIR, I am excited to work towards annexation solutions for both city and county residents in the weeks to come,” Hill said.

Many believe the bill developed from an ongoing adversarial relationship between Johnson City and Washington County. Many rural county residents perceived the city’s annexation policy as too aggressive.

The bill does not repeal Public Act 1101, though it does amend it. The Act was created in 1998 and allows Johnson City and all Tennessee municipalities to annex land by ordinance that is contiguous with its Urban Growth Boundary. This happened recently in the Suncrest area and to a lesser degree in Gray, and the city’s action was consistent with laws contained in T.C.A. Title 6, Chapter 51.

The city still maintains the right to annex property contiguous to its Urban Growth Boundary, if the land is zoned business or commercial.

“I welcome the moratorium and am hopeful that the general assembly will ultimately reform annexation laws to protect all property owners,” Mark Larkey, a county commissioner, who along with Mike Ford and Roger Nave, represent Gray and District 7.

Eldridge traveled to Nashville when the bill called for a two-year moratorium. He suggested to legislators that if the moratorium could not be removed from the bill that a caveat be inserted that would allow cities and counties to have the option of negotiating remedies themselves.

“That would give both entities the incentive to work together,” he said. “That way we’re back to making decisions about local issues using local governments. What we’re talking about here is unintended consequences, such as reduced tax revenues and economic development.”

Peterson, who was not immediately available, has been no stranger in Nashville either. He said that the annexation laws on the books were a result of many years of economic development and growth and cities made huge investments in infrastructure improvements in anticipation those cities would grow into those boundaries.

Peterson labeled several of the bills introduced this session addressing annexation as “anti-city” and “anti-growth.”

Recommended for You