Opinion ID: 886793
Heading Depth: 1
Heading Rank: 8

Heading: issues

Text: ¶ 56 Did the District Court err in concluding the City met the statutory annexation requirements of Title 7, Chapter 2, Part 47? ¶ 57 The Property Owners contend the City's Extension of Services Plan (Plan) specifically violates the requirements of § 7-2-4731(1)(a)(i), MCA; § 7-2-4731(1)(a)(ii), MCA; § 7-2-4731(1)(a)(iii), MCA; § 7-2-4731(1)(b), MCA; § 7-2-4731(1)(c), MCA; § 7-2-4732(1), MCA; § 7-2-4732(2)(b), MCA; § 7-2-4732(2)(c), MCA; § 7-2-4732(3), MCA; § 7-2-4732(4), MCA; and § 7-2-4733, MCA. The Property Owners' challenge is the same with respect to the five areas to be annexed. Although we address each statute specifically below, we note, as did the District Court, the Property Owners essentially wish to establish the City may not annex their properties unless the entire City pays for the extension of new water and sewer mains. As discussed more fully below, because the City has already planned and provided for sufficient water and sewer capacity for the annexed areas, because the City's policy to require private parties to pay for main extensions is allowable under § 76-3-510, MCA, and because the Plan sets forth how new mains can be provided, we hold the City's annexation Plan substantially complies with state statute. ¶ 58 We address the statutes out of numerical sequence, in order to more clearly present the parties' arguments.
¶ 59 Section 7-2-4731(1)(c), MCA, reads: Plans and report on extension of services required. (1) A municipality exercising authority under this part shall make plans for the extension of services to the area proposed to be annexed and shall, prior to the public hearing provided for in 7-2-4707 through 7-2-4709, prepare a report setting forth its plans to provide services to such area. This report shall include: .... (c) a statement setting forth the plans of the municipality for extending to the area to be annexed each major municipal service performed within the municipality at the time of annexation. The parties stipulated that the only municipal services at issue are water mains, sewer mains and roads, and that all other municipal services are adequately provided for in the Plan. ¶ 60 The Plan and the Addendum to the Plan (Addendum) document the extensive water and sewer mains and roads that already exist within the annexed areas. These water and sewer mains already exist in the annexed areas because the City has been extending its municipal services to properties outside its boundaries for over 80 years. Regarding anticipated municipal service needs for those properties within the annexed areas that do not have access to existing mains, the Plan states that construction of any new water or sewer mains will be paid for by the private party desiring the development. This has been the City's policy both within and outside City boundaries since 1977. The Plan also states the City has no plans to extend any new services into the areas to be annexed because the need for any additional water and sewer mains and roads will be initiated and driven by private demand and therefore cannot be predicted by the City. In addition, the Plan notes the City is not aware of any requests for and does not propose any capital improvements over the next five years that would be funded by a Special Improvement District (SID). Finally, the Plan notes that properties within the annexed areas that are currently served by their own wells and septic systems will remain on those systems until upgrades become necessary. ¶ 61 The parties stipulated the City's water plant and sewer plant capacities are already large enough to serve all properties in the annexed areas. In addition, the parties stipulated: It is a reasonable possibility that one or more individual properties within the five annexed areas, as a result of future development of individual property within those annexed areas, developed to densities authorized by present Whitefish zoning, will necessitate the extension of the Whitefish municipal water [and sewer] mains, within five years from the date of the annexation of the five areas. The parties also stipulated it would cost approximately $2.275 million to extend water and sewer mains to reach every property in all five of the annexed areas. ¶ 62 In holding the Plan meets the requirements of § 7-2-4731(1)(c), MCA, the District Court concluded: [A] substantial number of lots within the five areas to be annexed already receive City water and sewer, or else have private water and septic systems. Those lots which are not currently receiving City water and sewer may connect at any time, and the City water and sewer facilities have adequate capacity to service those additional lots. The City has no plans to extend services in those annexed areas, as the services presently exist or are not being requested. ¶ 63 The Property Owners assert that because the City stipulated there is a reasonable possibility construction of water or sewer mains will be necessary within the next five years, the Plan does not comply with § 7-2-4731(1)(c), MCA, when it states the City has no plans for the extension of these services. They argue a statement that present services are sufficient is not enough to meet the statute's requirements. The Property Owners also argue the statute does not exempt its requirement for a plan when part of the area to be annexed already receives municipal services, when part of the area to be annexed is on a private well or septic system, or for when no one is requesting additional service. The Property Owners essentially argue the City must, as a part of its annexation plan, specifically show how water and sewer mains will be extended to all unserved properties within the annexed areas. ¶ 64 The City argues the Plan conforms to § 7-2-4731(1)(c), MCA, because it states in the Addendum the City has no plans to extend services at this time in each area. The City also asserts the Plan conforms to the statute because the Plan also states that if properties are developed, the mains and streets will only be extended when private parties request and pay for an extension. The City notes its longstanding policy, in accord with § 76-3-510, MCA, that developers and property owners who wish to extend a main are responsible for its cost whether inside or outside City boundaries. The City also points out that because of the existing extensive urban development in the areas to be annexed, water and sewer mains are already in place through or beside much of each area. Regarding roads, the City notes the Plan states the City will assume maintenance of all existing roads in the annexed areas. Finally, the City asserts it cannot predict future extensions because as the Plan states, new mains and roads are initiated by private demand. ¶ 65 We hold the Plan substantially complies with § 7-2-4731(1)(c), MCA. Even though the City agrees it is reasonable to expect that private landowners in the annexed areas may develop their property so that water or sewer main extensions become necessary in the near future, the statute does not require the City to address each specific property within the annexed area. Rather, the statute requires the City to set forth the City's plans for the extension of municipal services into the area. In this case, the City's plan regarding new water and sewer mains and roads is that the City does not intend to undertake any new construction unless requested and paid for by a landowner. This approach, when considered along with the agreed fact that the City now has adequate water and sewer plants, substantially complies with the statute for a number of reasons. ¶ 66 First, the City's policy to require private parties to pay for new water and sewer mains and roads is permissible under § 76-3-510, MCA, which allows local governments to require developers to pay for the extension of capital facilities. Given this policy, the City does not initiate development, nor does the City finance development. Rather, such construction is only undertaken when a private property owner decides to request it and pay for it. Although the City can assist in the financing of construction by setting up a SID so local landowners can pay the costs over time, the Plan mentions the City is not currently aware of any requests for a SID. ¶ 67 Second, to the extent the City can influence the decisions of local landowners within the annexed areas on whether to develop their property such that new main extensions and roads are required, the Plan illustrates the City has already done so. The Plan includes the comprehensive City-County zoning applicable to land within one mile of the City boundary and the planning district applicable to land within four and one-half miles of the City boundary. The Plan also discusses the City's predictions and preferences regarding when and where growth will occur. This discussion addresses each possible development direction north, south, east and west of the City and also discusses the reasons for the existing development. ¶ 68 Third, because of the extensive development that already exists within the annexed areas in this case, this situation is distinguishable from annexation of a newly proposed subdivision. In the latter situation, the plans for the extension of services into the annexed areas would be coordinated with government approval of the subdivision itself as directed under Title 76. ¶ 69 Finally, as the parties stipulated, the City already has sufficient water and sewer capacity to serve each property in the newly annexed areas. This stipulation is critical because it indicates the City has in fact already addressed a very expensive component of extending new municipal services into the annexed areas. Therefore, no plan for expanding the City's overall water and sewer capacity is necessary in the Plan. ¶ 70 In sum, contrary to the Property Owners' argument, § 7-2-4731(1)(c), MCA, does not require the City to extend services. Rather, it requires the City to set forth its plans as to how new services will be extended to the annexed area so that the public is informed before the hearings required by §§ 7-2-4707-4709, MCA. The City's Plan in this case complies with § 7-2-4731(1)(c), MCA, because it properly sets forth the City's plans for the extension of new water, sewer, and road services.
¶ 71 Section 7-2-4732(2)(b), MCA, reads: [The Plan shall] provide for future extension of streets and of major trunk water mains, sewer outfall lines, and other utility services into the area to be annexed, so that when such streets and utility lines become necessary and are constructed, property owners in the area to be annexed will be able to secure such services, according to the policies in effect in such municipality for extending such services to individual lots or subdivisions. ¶ 72 The District Court held the Plan meets this statute because it sets out the City's policy to extend water and sewer mains only when the property owner pays the cost. The court also noted it would be unfair to current City residents if the City were to change this policy as the policy has always applied within City boundaries. ¶ 73 The Property Owners again argue the Plan fails to meet the statute. They argue the specific statutory language requires the Plan to provide plans for when future utility lines become necessary even if not currently necessary. The Property Owners again point to the stipulation between the parties that it is probable new water and sewer mains will be needed within five years. ¶ 74 The City argues the Plan complies with the statute because the policy for future extensions is in line with the current policy to require the property owner to pay for the extension. The City also argues because it has water and sewer capacity to serve the annexed areas and a grid of mains beside or through the annexed areas that can be accessed for future development, its Plan complies with the statute. ¶ 75 We hold the Plan substantially complies with § 7-2-4732(2)(b), MCA, because it says that future development will have to meet the current policies in effect for extension of services and the policy is stated. In other words, the policy for landowners inside and outside the City is that new water mains, sewer mains, and roads will be financed by the property owner requesting the construction.
¶ 76 Section 7-2-4732(3), MCA, reads: A method must be set forth by which the municipality plans to finance extension of services into the area to be annexed. If the area is serviced currently by adequate water and sewage services, streets, curbs, and gutters and no capital improvements are needed to provide adequate services stipulated by this section and 7-2-4731, the municipality must provide the area to be annexed with a plan of how they plan to finance other services to be included within the districtmainly, police protection, fire protection, garbage collection, street, and street maintenance services, as well as continued utility service. ¶ 77 The District Court held the Plan meets this requirement because the areas to be annexed are currently serviced by adequate water and sewer lines. The court also held the parties' stipulations indicated no capital improvements were needed. ¶ 78 The Property Owners argue the Plan fails to meet this requirement because no financing method is set forth and because, contrary to the District Court's holding, capital improvements will be needed in the future to extend water and sewer mains. The Property Owners assert the District Court mischaracterized the stipulations of the parties regarding existing services and ignored the fact that the parties also stipulated there is a reasonable possibility future development will require the extension of water and sewer mains. The Property Owners point out that the City stipulated the cost to extend water to all unserved lots in all five areas would be $966,713 and the cost to extend sewer to all unserved lots would be $1,308,387. The Property Owners also argue the City should not be able to rely on the fact that some of the newly annexed properties have their own septic systems or wells in order to avoid addressing plans for the extension of services to those properties that will need service in the future. ¶ 79 The City asserts sufficient financing methods are set forth in the Plan. First, the City points out the Plan provides that new extensions must be paid for by the developer or property owner. The City also notes it is also part of the Plan to provide for Late-comers Agreements which allow the City to partially reimburse developers' utility costs from other properties that connect to a new main extension within ten years. The Plan also allows for the formation of SIDs to spread the cost of a main extension over all the benefiting properties. The City argues it now has water and sewer capacity to serve the annexed areas even with new development. This capacity is currently funded by already established taxes and fees as set out in the Plan. Finally, the City asserts the Plan also sets out the current revenue sources for street maintenance. ¶ 80 We conclude the Plan substantially complies with § 7-2-4732(3), MCA. The Plan sets forth the City's plans for financing methods that sufficiently describe how needed improvements and extensions will be paid for in the annexed areas. Further, we will not disturb the District Court's decision that the annexed areas are serviced currently by adequate water and sewage services [and] streets and that no capital improvements are needed to provide the services stipulated by § 7-2-4732 and -4731, MCA, because the Plan makes clear the City has no plans to extend new services as discussed above.
¶ 81 Section 7-2-4732(4), MCA, reads: In this annexation plan, it must be clearly stated that the entire municipality tends to share the tax burden for these services, and if so, the area may be annexed without a bond issue under the provisions of this part. Section 7-2-4733, MCA, reads: Vote required on proposed capital improvements. Included within the plan must be methodology whereby the area to be annexed may vote upon any proposed capital improvements. Should a negative vote be cast by over 50% of the residents in the section or sections to be annexed in such election, the area may not be annexed. ¶ 82 The District Court held these two provisions must be read together. The court noted the Plan states the entire City will share in the tax burden for the services that will be provided. The court went on to hold that in this instance, because no new capital improvements were proposed in the Plan that would require a bond or a SID, no methodology for a vote was necessary. ¶ 83 The Property Owners argue the Plan does not comply with these sections. Essentially, the Property Owners argue that because the language of § 7-2-4732(4), MCA, requires a statement that the tax burden for municipal services is shared by the entire community, the City is responsible for paying for new sewer and water main extensions and new roads. As a result, the Property Owners assert the City's policy to require private parties to pay for new main extensions or roads must be void. Further, they argue the language of § 7-2-4732(4), MCA, prevents the City from using a SID to fund development because a SID is paid for only by those properties immediately benefited by the extended utility mains rather than the entire municipality. They assert the City is evading the law by not proposing any new capital improvements in order to avoid the statutory requirements. ¶ 84 In support of their arguments, the Property Owners misquote § 7-2-4732(4), MCA. Their brief states: The language of § 7-2-4732(4), MCA, requires that the `entire municipality must share the tax burden for the extension of water and sewer mains.' This quote is in error because the statute actually reads as set out above. ¶ 85 The City argues the Plan complies because for each of the areas to be annexed, the Addendum states the entire community tends to share the tax burden. The City asserts § 7-2-4732(4), MCA, allows annexation without a methodology for voting because no bond issue is necessary as no capital improvements were proposed. ¶ 86 We conclude the City's annexation Plan substantially complies with subsections 7-2-4732(4) and -4733, MCA. The Plan and the Addendum describe various funding sources and methods for financing each of the municipal services. The Plan and Addendum also describe the City's method of financing future extensions of water, sewer, and roads by following the policy that the developer or homeowner pays for the installation when needed. The Addendum also contains the statement for each annexed area: Nevertheless, the entire community tends to share the tax burden for City services. Further, the Plan states the City has no plans for specific capital improvements related to the annexations. ¶ 87 These statements in the Plan make it apparent nothing about the annexations requires special or new funding sources. Instead, all municipal services provided to the newly annexed areas, including water capacity, sewer capacity, road maintenance, police and fire protection, storm drainage, garbage disposal, recreation, and other services, will be paid for by the general tax burden shared by the entire community. Any new main extensions or roads must be paid for by the party requiring the new construction. The tax burden for the continuing cost of all municipal services extended under the Plan is to be shared by all City residents. Therefore, the Plan complies with § 7-2-4732(4), MCA, because it sets forth the City's plan for the extension of municipal services such that no special funding sources are required to accomplish the annexations. As a result, no bond issue was necessary to proceed with the annexation as allowed under § 7-2-4732(4), MCA. Further, no voting methodology was required pursuant to § 7-2-4733, MCA, because no capital improvements were proposed by the City. ¶ 88 We disagree with the Property Owners' argument that § 7-2-4732(4), MCA, requires the City and its current residents must pay for new main extensions for annexed residents because of the Plan's statement the entire municipality tends to share the tax burden. As mentioned, the Property Owners misquote § 7-2-4732(4), MCA. Must is used in the statute to indicate the Plan must contain the required statement in order to annex without a bond issue. Must is not used in the statute to indicate the City is required to pay for new main extensions. Such an interpretation would directly contradict § 76-3-510, MCA. ¶ 89 Rather, the statute requires a statement the municipality tends to share the tax burden for services. Tends as used in the statute gives the City latitude to decide to finance new construction for newly annexed areas in accordance with § 76-3-510, MCA, which allows the City to charge individuals for infrastructure needed to specifically benefit their property. Again, we will not interpret § 7-2-4732(4), MCA, in a way that invalidates the plain language of § 76-3-510, MCA. Further, the City's policy to require the party requesting a new main extension to pay for it does not conflict with this statute because, as the parties stipulated, the entire municipality still tends to share the tax burden of the overall water and sewer capacity of the system, which are expensive and continuing components of supplying water and sewer. ¶ 90 As to the Property Owners' argument that the City is purposefully subverting the statute by not planning capital improvements, this argument fails to recognize the City has acted within its legal authority. Perhaps in hindsight one could argue from a planning perspective the City should not have extended services to properties without annexing them. Or perhaps the City should not annex without forming a SID so that all the newly annexed properties must pay for new main extensions to be installed immediately upon annexation even if such are not currently needed. However, hindsight does not guide our review. We only review whether the City's actions substantially complied with the statute such that its annexation Plan properly informs the public how the extension of services into the annexed areas will be both planned and financed. We hold that it does.
¶ 91 Section 7-2-4732(1), MCA, reads: Contents of plan for extension of services. (1) Specifically, the plans for the extension of services shall provide a long-range plan for extension of services and the acquisition of properties outside the corporate limits. This plan must show anticipated development a minimum of 5 years into the future, showing on a yearly basis how the municipality plans to extend services, develop and add sections to the city. ¶ 92 The District Court concluded the City's Plan was in compliance stating: [The Property Owners' position] flies in the face of present-day city expansion. [Their] position ignores the fact that development and resulting annexation are driven by property owners, not by the cities. Whitefish is no longer Stumptown, when the City initiated development; now it is the landowner, who, wishing to maximize investment in land, is developing the land and thereafter seeking municipal services. Further, as noted above, the services in the form of water, sewer, and roads already exist in all the areas to be annexed. There is no extension of services which can occur, beyond the individual landowner or developer paying to connect with the existing utilities. ¶ 93 The Property Owners argue there is no long range plan in the Plan and no statement showing anticipated development five years into the future. They assert the District Court improperly exempted the City from this unambiguous requirement and that the court's holding ignores the statutory directive. The Property Owners also argue that if the statute no longer fits the times, it is up to the Legislature to change it, not the District Court. ¶ 94 The City asserts the Plan conforms to § 7-2-4732(1), MCA, because it discusses factors likely to influence growth over the next five years by including sections entitled Economic Conditions and Trends, Physical Growth Trends, Impediments to Growth, Growth Stimulants, Prevailing Growth Patterns, and a map of the Projected Growth Area. The City also argues the Plan identifies three contemplated annexations that will occur within five years. Finally, the City argues the District Court correctly noted development and annexations are currently driven by property owners, not cities. ¶ 95 We hold the City's Plan substantially complies with § 7-2-4732(1), MCA, because it does include careful consideration of future needs. Inter alia, the Plan details two additional areas that will likely be annexed within five years. In addition, the part of the Plan discussing growth patterns by direction from the City mentions the City's preferred growth areas and notes where water and sewer mains would be most easily extended to facilitate new growth. This section also mentions that although the City anticipates growth, much of the growth that is expected to occur beyond the limit of current City services will most likely occur after more than five years has passed. The Plan also discusses anticipated growth influences over a period longer than five years. Finally, the Plan makes clear the City, in conformity with a long existing policy, will not extend its services unless such is paid for by the developer. Therefore, again, to the extent the City can make long range plans without knowing the plans of private landowners, the Plan does so. ¶ 96 The District Court is wrong to the extent its holding implies the City can ignore the statutory mandate because the times have changed. However, because the Plan itself substantially complies with the statute in this instance, we will affirm.
¶ 97 Section 7-2-4732(2)(c), MCA, requires the Plan to set forth a proposed timetable for construction to extend streets, water, sewer, or other utility lines if such extension is necessary. The District Court held that no timetable was required because no new utility extensions were necessary. The court noted its agreement with the City that private development determines when extensions will occur and also noted the City has water and sewer capacity to meet the needs of the annexed areas. ¶ 98 The Property Owners argue a timetable is not in the Plan contrary to the plain language and that because the City acknowledges there will likely be development in the future, the Plan must have a timetable. They assert that even though development will be fueled by private entities, the City has an obligation to predict both the location and timing of this development. They point out the Plan is an informational document for the public that can be changed as predictions change. ¶ 99 The City asserts a timetable is only required when extensions are necessary. The City asserts because it has no plans for new water or sewer services or for new roads, extensions are not necessary and therefore a timetable is not necessary. The City argues it cannot predict future development by private parties more than it already has. ¶ 100 We hold the Plan does comply with § 7-2-4732(2)(c), MCA, because no timetable must be included in the Plan when no extensions are necessary. Further, as mentioned, to the extent the City can predict or direct the timing of growth, the Plan does so by referring to the City's zoning requirements, by discussing factors influencing growth patterns, and by discussing possible growth directions outside the City.
¶ 101 Section 7-2-4731(1)(a)(i), MCA, requires the Plan to include a map or maps showing the present and proposed boundaries of the municipality. ¶ 102 The Property Owners argue the Plan does not include a map of the present and proposed boundaries because the maps of the proposed boundaries are not in the Plan itself. The City asserts maps of the City are in the Plan and the proposed boundaries are shown on maps in the Addendum which includes a detailed statement for each specific area to be annexed. ¶ 103 We hold the Plan complies with § 7-2-4731(1)(a)(i), MCA, because the Plan includes maps of the City and because maps with a proposed annexation boundary for each annexation area are attached to the Plan in the Addendum so that any member of the public who wishes to know the proposed boundaries can easily determine such by reference to the Addendum.
¶ 104 Section 7-2-4731(1)(a)(ii), MCA, reads the Plan shall include a map of: the present streets, major trunk water mains, sewer interceptors and outfalls, and other utility lines and the proposed extension of such streets and utility lines as required in subsection (1)(c). ¶ 105 The Property Owners assert there is no map meeting these requirements. The City asserts the Addendum maps show the existing streets, water mains, and sewer mains. The City also argues it did not have to show any proposed streets or utility mains on its maps because it is not proposing any as the areas to be annexed are already fully developed urban areas. ¶ 106 We hold the Plan complies with § 7-2-4731(1)(a)(ii), MCA, because the maps in the Addendum show the present streets, water mains, and sewer mains for each area to be annexed. Further, the Plan complies because no new streets or utility mains are proposed as discussed above.