Opinion ID: 1104071
Heading Depth: 1
Heading Rank: 8

Heading: Financial ability to provide municipal services.

Text: ś 36. The Neals argue that, while the City has the bonding capacity and probably has the cash on hand to fund the improvements, the City's financial outlook is not good. The Neals base this conclusion on deficits in the general fund for five years, a decrease in the City's assessed value, decrease in the City's reserve fund balance and a population decline. Further, the Neals cite to their city planner's assessment that the City is in a financial condition that must wait on development and that the City would not have the financial ability if the City had to provide water and sewer to all its citizens, which it is not currently doing at this time. ś 37. The chancellor stated: The evidence presented clearly revealed that the City of Winona has the financial ability to provide the services and make the improvements set out in its ordinance of annexation. Winona has reserves in both its general fund and enterprise funds sufficient to meet the obligations of this proposed annexation. Coupled with the small size of the proposed annexation and the fact that Winona presently provides services either to the annexation area (fire protection) or to adjacent lands (police protection) even the objectors do not seriously contend that Winona lacks the financial ability to serve the are it seeks to annex. See: In re Extention of Corporate Boundaries of the Town of Mantachie, 685 So.2d 724, 728 (Miss.1996) Matter of Extension of Boundaries of City of Columbus, 644 So.2d 1168, 1171 (Miss. 1994) City of Greenville v. Farmers, Inc. 513 So.2d 932, 935 (Miss.1987) Matter of Extension of Boundaries of City of Ridgeland, 388 So.2d 152, 156 (Miss. 1980) Extension of Boundaries of City of Biloxi v. City of Biloxi, 361 So.2d 1372, 1374 (Miss.1978) In re City of Gulfport, 179 So.2d 3, 6, 253 Miss. 738, (Miss.1965). The dissent notes that the City has had deficits for the past five years. However, as the Neals note in their brief and the chancellor also noted in his finding, this issue is not seriously contested. The Neals admit that the City probably has the bonding capacity and ability to fund the improvements. In addition, the testimony below shows that the City met many of the factors to consider whether an area has the financial ability for the annexation. ś 38. The factors to consider on whether there is reasonable financial ability for the annexation which may or may not include: (1) present financial condition of the municipality; (2) sales tax revenue history; (3) recent equipment purchases; (4) the financial plan and department reports proposed for implementing and fiscally carrying out the annexation; (5) fund balances; (6) the City's bonding capacity; and (7) expected amount of revenue to be received from taxes in the annexed area. Town of Mantachie, 685 So.2d at 728; City of Meridian, 662 So.2d at 611; Extension of Boundaries of City of Ridgeland, 651 So.2d at 558; City of Columbus, 644 So.2d at 1171; City of Greenville v. Farmers, Inc., 513 So.2d at 935; In re Extension of Boundaries of City of Ridgeland, 388 So.2d 152, 156 (Miss.1980); In re Extension and Enlargement of the Mun. Boundaries of the City of Biloxi, 361 So.2d at 1374; Bridges v. City of Biloxi, 253 Miss. 812, 178 So.2d 683, 685 (1965); In re City of Gulfport, 253 Miss. 738, 179 So.2d 3, 6 (1965). City of Macon, 854 So.2d at 1039-40. ś 39. The chancellor found that the City had the financial ability to provides the services and make improvements set out in the annexation ordinance. He based this conclusion on the fact that the City had reserves in the general and enterprise funds to meet the obligations to the proposed annexation area. In addition, he noted that the annexation area is small and the City either already provides services to these areas, such as fire protection, or that the City already provides services to adjacent areas of the proposed annexation area such as, police protection. Substantial credible evidence at the hearing supports the chancellor's finding of reasonableness for this indicium. ś 40. The Mayor testified that the City has the financial ability to make improvements such as sanitary sewers and water, and that these improvements are in the budget. She further stated that services in the ordinance of annexation are also in the services and facilities plan. This is part of the City's five-year plan, and the Mayor believes that the City can meet these obligations. In addition, Benita Smith (Smith), the city clerk, testified regarding the City's financial status. The proposed water expansion to the annexed property is about $50,000, and the proposed sewer costs are about $29,000. Smith stated that there is not a problem with funding the roughly $80,000 in expenditures for water and sewer lines. The City had $700,000 in reserve from the water and sewer enterprise fund for the improvements. This money comes from a user fee associated with the services and not from ad valorem taxes. The City's assessed values were over $16 million in 1999; $17 million in 2000, and $20 million in 2001. Theses figures were based on valuation differences and not additional taxable property. In addition, Smith stated that the City is currently working within its budget and does not need the proposed annexation areas in terms of maintaining financial stability. In fact, the City had only one outstanding equipment debt of $200,000 at the time of the hearing in addition to some money borrowed, not from a bond, for the police department building. Smith believed the City's bonding capacity to be approximately $2.5 million. Smith testified that the City can meet its financial obligations, has not been operating on a deficit, and pays for itself. ś 41. As for the fire protection, the department already provides fire services to this area. The County has an agreement with the City to protect the area in the proposed annexation area. Adding the Winona Elevator Property and the other land to the City limits will give this land priority fire protection over the County lands. The Chief of Police of the City, Johnny Hargrove, stated the police already patrol near the property and if the Neal property became part of the City then the police department would not need any more employees or equipment to patrol this area. ś 42. We find that the chancellor's findings for this indicium were supported by substantial credible evidence and were reasonable.