Discussion:
The City of Shakopee and the Jackson Township entered into an Orderly Annexation Agreement on July 22, 2002, pursuant to Minn. Stat 414.0325, designating certain real property for annexation.
Orderly annexation allows for both parties to provide for long term planning for their respective communities and allows the City of Shakopee to specifically plan for certain capital improvements that may be necessary to serve areas to be annexed.
The City of Shakopee and Jackson Township formed a steering committee in 2016 to revisit the original agreement to ensure that it served the long term plans for both and in preparation of the 2040 Comprehensive Plan, there was adequate discussion on what areas may be annexed.
The Township hired its own consultant to develop a map that identified a phasing plan for the Township. The City used that map to provide preliminary concepts for how the areas could be served by sewer and SPUC reviewed the plans to see how water service could also be provided.
Through the process, there were lengthy discussions on how the Township could preserve the character of its existing subdivisions. Those subdivisions are now in an Exhibit and the City will not annex those areas until 2050 unless requested by the Township and approved by the City. Properties in the Township that have current working wells and septic systems will not be required to hook up to City services until their systems fail, however, they will pay whatever the current rate and charges are at that time for city services. This applies largely to properties where new City infrastructure may pass by a property that may serve a new nearby subdivision or commercial development.
Also, over time with the loss of commercial property through annexation into the City, the Township would lose significant tax revenues from commercially zoned property.
Currently the City pays the Township two years of Township tax revenues for any property annexed into the City. To put those amounts into focus, the D.R. Horton parcel payments was just over $3,000. Two recent annexations, a single family house and another house with commercial property, the payment to the Township was just over $1,000.
After several months of discussion the City and the Township has agreed to a new formula for payments to the Township for property that is annexed into the City. The taxable value for the Township properties will be fixed at the January 1, 2017 values and the City will pay seven times the Township's taxes for any property annexed into the City. The January 1, 2017 values would increase 3% annually, not compounded. All parties agreed that this was a fair way to compensate the Township for lost revenue.
If property values were not to increase over time in the Township to match the three percent factor and the Township substantially increased its levy, the City could choose not to annex property into the City and/or also renegotiate the OAA with the Township. This is the circuit breaker that protects both parties from increasing levy's from the Township. One of the Township's largest expenses is for fire protection that is contracted to the City. The current rate structure actually lowered the fees to the Township, and theoretically, as more value is created in the City by property value growth and annexation and development in the Township, that cost should not substantially increase given the current formula.
As part of the new agreement, the Township agrees to reduce the adjacency requirement for annexation from 50% to 25% and to allow areas to be annexed if certain percentages of other areas have been annexed. Because of roads and parcel shapes, without this change, it would have been difficult to annex much of the Township.
Annexations will largely occur based on market demand. The City has received funding from the CDA as part of the 2040 Comprehensive Plan to develop a specific plan for the commercial corridor in the Township, currently guided in the County as reserve. This is a future commercial growth area for the City for business and industry. This agreement will allow that specific area to annex into the City in an orderly fashion and allow the City to deliver services to the area.