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Indiana Supreme Court Delineates “Subdivided,” “Reasonably Near Future” Terms in Annexation Statute

The Indiana Supreme Court’s recent opinion (“Opinion”) in an annexation case affirming the trial court’s order voiding an annexation ordinance adopted by the Town of Brownsburg (“Brownsburg”) provides guidance to municipalities on the “subdivided” and “reasonably near future” requirements in Indiana’s annexation statutes. The Opinion also clarifies the standards of review by courts regarding annexations. And the Opinion adds to the catalogue of required reading for municipalities seeking to successfully pass and defend annexation ordinances.

“Subdivided” Refers to Residential Subdivision

Brownsburg adopted an ordinance in 2013 to annex nearly 4,500 acres of property adjacent to the town. A group of affected landowners (“Fight Against Brownsburg Annexation”) remonstrated and argued the town did not meet the statutory requirements to annex the land. The trial court ruled in favor of Fight Against Brownsburg Annexation.

For Brownsburg to annex the territory, it had to prove:

  1. That the town had adopted a written fiscal plan showing that it can afford to provide services to those living in the proposed annexed territory;
  2. That the proposed territory is sufficiently contiguous to the town’s current boundaries, and
  3. That either
    1. the proposed territory is 60 percent subdivided in accordance with Indiana Code § 36-4-3-13(b)(2) (Note: Brownsburg admitted that the alternate population density and zoning requirements meeting the standards of I.C. § 36-4-3-13(b)(2) were not achieved.); or
    2. the town will use the land for development in the “reasonably near future.”

Brownsburg proceeded with the annexation believing the territory to be greater than 60 percent subdivided. Fight Against Brownsburg Annexation remonstrated and argued that, with approximately 77 percent of the annexation area consisting of agriculturally zoned land, it could not achieve the 60 percent subdivided requirement. The trial court ruled that Brownsburg did not meet the statutory requirements to allow for annexation, because it could not meet the 60 percent subdivided requirement.

The Indiana Supreme Court (“Court”) determined that legislators did not define “subdivided” in the municipal annexation statute, I.C. ch. 36-4-3, nor is an applicable definition found anywhere else in Title 36. This left the Court to analyze the plain meaning of the word, but they found the definitions don’t make sense in annexation cases because all land has been divided to some degree. Instead, the Court looked elsewhere in Indiana’s annexation statute for guidance.

The Court found the 60 percent subdivided requirement must refer to a residential subdivision because another criterion for annexation of “sufficiently urban” land refers to land zoned for commercial, business or industrial use. And, because land must have “urban character” to be annexed, the subdivided land cannot be agricultural. This leaves an interpretation that the law must refer only to formal, residential subdivisions, and not merely residential parcels or tracts of land. The Court noted another section of Title 36 refers to territory subdivided or parceled, but I.C. § 36-4-3-13(b)(2)(B), the section in question, does not.

Key Observations on “Subdivided”

The Court stopped short of providing a definition of “subdivided,” but shared three observations for courts and municipalities to consider in future annexation cases:

  1. Since all real property has been subdivided in some sense, “subdivided” in Section 13(b)(2) refers only to formally recorded, residential subdivisions.
  2. The only permissible unit of measurement is acreage and not the number of parcels or tracts of land.
  3. All acreage within the proposed annexation territory must be included in the ratio’s denominator. No acreage should be exempted or excluded.

“Reasonably Near Future” Means Within Four Years

Brownsburg argued that the annexation could proceed under the alternative requirement in I.C. § 36-4-3-13(c)(2), that the annexation territory is “needed and can be used by the municipality for its development in the reasonably near future.” The trial court found the town did not meet this requirement, and the Court agreed.

The legislature did not define “reasonably near future” in the statute, so the Court again looked for clues in Indiana’s annexation statute. The Court noted that under I.C. § 36-4-3-15(b), if a proposed annexation doesn’t satisfy the statute, the municipality is not able to annex that territory or any part of it for four years. Accordingly, the Court reasoned, that for courts to find that a municipality satisfied this section of the statute, the municipality must demonstrate that it needs and can use the land for development within four years of enacting the annexation ordinance.

Because the development dates of the projects identified by Brownsburg were at least five (5) years away, if not more, at the time Brownsburg adopted its annexation ordinance, the Court agreed with the trial court’s findings that Brownsburg did not prove developments would occur in the “reasonably near future” in accordance with I.C. § 36-4-3-13(c)(2).

Justices Clarify Standards of Review

One other important point emanating from the Opinion concerns the Court clarifying the standards of review by courts for annexation cases. The Court held that the negative-judgment standard does not apply in annexation cases and that the Trial Rule 52 “clearly erroneous” standard of review applies.

Brownsburg also argued in its transfer petition that the “substantial deference” courts owe municipalities regarding their policy choices also applies to legal questions. The town argued that it provides evidence that it has or hasn’t met the statutory requirements and that should suffice. Remonstrators shouldn’t be able to submit any evidence to contradict the sufficiency of the town’s evidence.

The Court soundly rejected this argument, finding the annexation statute does not support giving municipalities a “blank check” with its annexation ordinances. It is the role of the courts to ensure that a municipality doesn’t exceed its authority and that the municipality satisfied all statutory requirements. The statute requires courts to enter a judgment based on evidence that either the municipality or the remonstrator introduces and not to defer solely to the municipality’s evidence.

Conclusion

Annexation law seems to constantly be in flux, and Brownsburg’s experience provides valuable lessons to municipalities planning upcoming annexations. Annexations involve complicated matters from fiscal planning, municipal contiguity, urban characteristics and more, and the Opinion provides guidance on a small but vital sliver of these issues.

If you have questions about the Opinion and its impact on your municipality’s plans to annex territory, please contact Dave McGimpsey at DMcGimpsey@BGDlegal.com

  • Partner

    Dave is Chair of the Utilities and Environmental Practice Group. He counsels clients on regulatory and transactional matters involving businesses, real estate, utilities and energy. He advises clients on a broad range of issues ...

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