Overview: annexation law and policy in Wisconsin

Throughout history, many wars have been waged over the ownership of land and self-governance. Many of these conflicts have involved competing nations, armed with a vast array of troops and destructive weaponry. However unaware to many of us, similar conflicts occur at the local level on a daily basis. Although these local conflicts do not involve troops or weapons, they are often equally as volatile and contentious as the conflicts that occur on a national level. The cause of this strife is the issue of annexation and the imbalance of power between Wisconsin’s local government family — towns, cities and villages.

Because annexations have a significant impact on the rights of individual landowners and developers, it is important for REALTORS® to have a general understanding of some of the related issues and proposed solutions. Accordingly, this article is intended to provide a brief overview of some legal and policy issues related to annexations.

What is annexation?

Generally speaking, “annexation” is the process used by cities and villages to increase their size through the acquisition of additional land. In most cases, the land which the city or village seeks to acquire is contiguous to the city’s or village’s existing boundaries, but currently within a neighboring town’s jurisdiction. Once a city or village annexes land, the city or village is required to extend public services to the citizens of an annexed area, such as providing police and fire protection and issuing appropriate licenses and permits to qualified residents.

Why do cities annex land?

The primary reason cities annex land is to increase their tax base. Because property taxes are the primary source of revenue for local governments, cities and villages have a strong financial incentive to expand their boundaries. By increasing its tax base, a city or village will have a greater bonding capacity due to its increased valuation. In addition to the financial benefits, annexation increases the size and population of a city or village which allows the city or village to raise its level of political influence, its prestige, and its ability to attract desirable commercial development.

What are the types of annexation?

As outlined in Wis. Stat. § 66.021, there are three common methods that a city or village can use to annex town lands: direct annexation, annexation by referendum, and annexation of certain town islands.

The most common method of annexation is a direct annexation, whereby at least 50 percent of the resident voters and owners of property located in the territory to be annexed must sign a petition. An annexation by referendum is similar to a direct annexation, except that the annexation must be approved by the residents within the annexed territory through a referendum election, rather than by signing a petition. The annexation of town islands is a procedure that is used only for parcels of town land that are (a) surrounded by a city or village, and (b) are 65 acres or less or contain 100 residents or less.

Section 66.024 of the Wisconsin Statutes provides a fourth type of annexation, annexation by court-ordered referendum, which allows the city or village to bypass many of the standard procedural requirements by asking a court to order a referendum on the issue of annexation. This type of annexation is generally used by a city or village that wants to require annexation as a condition of connecting unincorporated territory to its sewage treatment plant when the DNR has ordered connection pursuant to Wis. Stat. § 281.43(1).

How does the annexation process work?

The annexation process is generally triggered by a city or village after determining that it needs to acquire more land in order to expand its economic base. However, in many cases, the process is triggered by a landowner or developer who wants to either connect to municipal sewer or develop the land at a higher density than permitted by the town or county.

After determining which land it would like to annex, the city or village must go through a series of procedural hoops, including:

  • Publishing a Notice of Intent to Circulate an annexation petition, which informs the local officials of affected towns, cities and/or villages that an annexation is being considered and identifies the parcel sought to be annexed.
  • If the land is located in a county with a population of 50,000 or more, submitting the notice to the Wisconsin Department of Administration (DOA), which will determine if the annexation is against the public interest. Although the determination by the DOA is not binding upon the annexing municipality, it must be reviewed by the governing body before it takes final action.
  • Obtaining the approval of at least 50 percent of the resident voters and owners of property located in the territory to be annexed. The approval requirements, however, vary depending on the type of annexation.
  • Notifying the town clerk where the property is located.
  • Adopting the annexation through an ordinance by a two-thirds vote of the entire city council or village board.

Each of these requirements has a specific time frame and format, which is strictly interpreted by Wisconsin courts. If a city or village misses a deadline or fails to meet the substantive requirements for notice or obtaining signatures, they must begin the annexation process over.

Pros and cons of annexation

During the course of any annexation attempt, certain arguments, both pro and con, invariably surface. Some of the arguments are based on fiscal policy, such as, “the annexing city can provide additional services to the new area.” Others are based on an effort to maintain the status quo, such as, “the community to be annexed may lose its individuality and rural character.”

The following is a list of arguments that may help REALTORS® when assisting clients during annexation proceedings. Please note, however, the validity of these arguments will depend on the underlying facts surrounding each situation and, therefore, should be carefully considered.

Advantages of annexation

  • Availability of additional services, such as sewer, water, ambulance, mass transit and snow removal.
  • Increased real estate values and marketability, as more improvements and urban utilities are made available.
  • Provides suburban residents with a voice in the government of the larger community in which they live. Town residents can be substantially affected by the actions of large, neighboring cities, but they are unable to participate in its affairs.
  • Reduces utility rates, since utility surcharges to unincorporated territory, if applicable, would be lifted.

Disadvantages of annexation

  • Increase in taxes, due to an increase in services that some residents do not want.
  • Greater urbanization and loss of “rural character.”
  • More restrictive ordinances, regulations and licensing requirements.
  • Will become part of a large bureaucracy that is less accessible to the people.

Why is annexation such a big problem?

Originally, the town form of government was established to provide a minimal level of services for residents within rural areas. If a city or village needed to expand its boundaries, they virtually had free reign to annex as much town land as desired. However, in recent years, towns have become more populated and have established more advanced forms of government. In fact, many towns throughout the state have a bigger population, a greater tax base, and provide more services to their residents than neighboring villages.

As towns have become larger and more sophisticated over the years, so too has their frustration with current annexation laws. Towns feel that cities and villages have too much authority to annex town land, which prevents towns from planning for their own futures. Many towns are unwilling to engage in planning or provide services for their residents, fearing that an annexation will undermine these efforts. Finally, towns, like cities and villages, rely on property taxes as their principal source of revenue. Therefore, when a city or village annexes town land, a portion of the town’s tax base is eliminated.

For more information, contact Tom Larson at 608-241-2047.

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