Elkader City Council is considering annexation options

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By Willis Patenaude, Times-Register


The latest Elkader City Council meeting heavily focused on the topic of annexation after an educational session about the issue from Kyle Sounhein, an attorney at Lynch Dallas P.C. 


The subject is back in the public sphere after current council members, notably Tony Hauber, mentioned it some weeks ago at a previous meeting, though city administrator Jennifer Cowsert asserted  annexation is something that has been discussed among residents for years, mostly attached to the belief that “Elkader needs to grow.” 


The last time it was taken this seriously was in 2009, when an annexation study was done. The council decided not to pursue it, though, because it would’ve been almost entirely involuntary and the expense of paying off the utility extensions was determined to outweigh potential benefits. 


As for the current council, it was probably member Eric Grau who summed up the current pursuit best in an email exchange, stating, “Elkader has been shrinking in population for awhile now, so we have to find ways to make it grow again.” 


But what does annexation entail? Well, that depends on whether it is done voluntarily or involuntarily. According to the educational session provided by Sounhein, it starts with notices to property owners, the county board of supervisors, utility companies and non-consenting owners, which are followed by resolutions and public hearings held by the city. Two avenues emerge from this point, one being voluntary, or the “easy route,” as Sounhein labeled it, and the other being involuntary.


Voluntary annexation begins when property owners of territory adjoining city boundaries make an application to the city to be annexed. Public hearings would be held after that. 


The real crux of the debate revolves around city taxes and connection to city services. Under voluntary annexation, Sounhein explained Elkader has the discretion to include a provision for transitioning the annexed properties for the impending obligation of city taxes. 


As for the connection to services, under voluntary annexation, this is all governed by city ordinances and is paid for at the property owner’s expense. The property owner can no longer operate a private well, and they must connect to the public water supply within 120 days of annexation. Similarly, the property owner needs to connect to the sanitary sewer system within 60 days. 


However, voluntary annexation doesn’t have to be unanimous. The Iowa Code governing this process contains an 80/20 rule, which means “up to 20 percent of territory to be annexed may be involuntary,” though it is subject to city development board approval. 


During this discussion, council member Deb Schmidt uttered the off-the-cuff statement that there would be “no more good ole boys days,” in reference to annexed property owners needing to connect to city utilities. After the meeting, Schmidt explained the comment had been said “in jest,” adding that, “In the good ole boy days, it was decided with a hand shake and folks went forward…was that the best way to go? I say not necessarily, but it was the easiest.” 


Hauber wondered aloud about grandfathering in private wells, which was met with a quick “no” from Sounhein because it is not allowed. All ordinances must be followed. 


For involuntary annexation, the city begins by sending out public notices and holding public hearings, followed by filing a petition with the city development board. Approval is dependent upon several factors, including the city’s ability to provide municipal services and benefits the annexed territory currently doesn’t have. The annexation cannot create an island and the motive cannot be solely to generate revenue and increase the tax base for the city. There has to be the addition of potential economic benefit, growth and opportunity present with the involuntary annexation petition.  


Additionally, under involuntary annexation, the city is financially responsible for all connections to municipal services. This is what halted the idea back in 2009. Those connections must be completed within three years of July 1 of the fiscal year in which taxes are collected against the annexed territory. 


However, under involuntary annexation, the city can include tax exemptions not to exceed pre-determined amounts for up to 10 years to ease the burden. It can be as high as 75 percent in the first two years and decreases in increments of 15 percent over the course of 10 years, until it is just 15 percent in years nine and 10. 


When it comes to the impetus for pursuing annexation, Cowsert said, “I think, in general, many communities want to grow—that is a measure of success for them. They want to increase population and increase area. Due to our difficult topography, we are somewhat limited in where we can grow.”


But when it comes to support for annexation, most of the officials were silent, including Hauber, Peggy Lane and mayor Josh Pope. Indeed, only Schmidt and Grau responded to the inquiry, with Schmidt commenting, “I’m looking into all there is to the good and bad of annexation. City costs…a reason it would help the land owner, how it benefits getting a hotel or large manufacturers in town.” 


Grau was slightly more committal, stating, “In principle, yes…However, we have to consider it carefully as to whether the benefits exceed the costs.” Grau wavered more when it came to involuntary annexation, though, declaring, “Maybe. However, the costs with involuntary annexation are higher, so the benefits also have to be higher.”


One of the more debated topics was what other reason would there be to pursue annexation, especially if it ventured into being involuntary, other than generating more tax revenue? 


At the meeting, Schmidt mentioned the potential to “encourage growth,” while Grau, in a separate interview, mentioned providing a political voice. 


“Annexation gives residents and businesses that are within Elkader’s economic sphere a voice in city government. Those who live or whose business is outside the city limits can be substantially affected by actions of the city, but they have no participation in its affairs,” Grau said. “In addition, increasing the city boundaries would more nearly reflect the true and existing sociological, economical, cultural and physical boundaries of the city.” 


Cowsert noted how “More tax revenue benefits everyone...Additional areas to develop could provide new opportunities for housing or a different type of industry that would create jobs. It’s all things the council can look at.”


The council is tentatively scheduled to continue the discussion at its May 9 meeting.

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