Philomath City Manager Chris Workman sees it as a fairness issue.
Going before the city council Dec. 11, Workman recommended the annexation of 24 properties into the city limits. Combined, the properties add up to 24.52 acres of land and would bring $4.1 million of assessed property value into the city.
"This isn't a land grab, it's not a money grab," Workman said. "There are some properties that are clearly getting all the benefits of being in the city that aren't and there's kinda this problem property we've had some issues with."
At the direction of the city council through 2017-2021 strategic planning process, city staff identified properties that fit one of three annexation designations — islands, delayed agreements and those that fit into three specific criteria.
"I think this is interesting ... it's in our strategic plan and we directed staff to look at this and this is a follow-through on that," city council member Doug Edmonds said. "I think it's just good housekeeping to periodically go through and check what's going on in your city."
The city council approved the process to move forward to a Jan. 22 public hearing before the planning commission. The city planned to mail notices to property owners.
If it moves beyond the planning commission, another public hearing would occur at the Feb. 12 city council meeting.
Twelve of the 24 properties fall under island annexations.
"Property islands are created when surrounding properties are annexed into the city, leaving one or more unincorporated county lots completely surrounded by city lots," Workman explained in a written summary to the council. "These islands have access and receive the same benefits as neighboring properties — public safety, public library, bus service, nuisance enforcement, public parks and other quality of life benefits, but they don't help pay for them by way of property taxes."
Workman defined a lot of the services that those types of property owners are receiving as "nonexcluable" — which means they can't be excluded from those benefits just because they don't pay city property taxes.
"You can't keep somebody that doesn't pay property taxes to not have the benefit of having the bus service run two or three blocks from their house, or eliminate them from going to public parks because they're open to everybody," Workman said. "So that's what creates this free-rider problem where even though you live in the city and you don't pay property taxes, you still get all the same benefits without having to pay for them."
The city adopted municipal code in 2003 to establish a procedure for annexing island properties, which includes the public hearing process, giving written notice to affected property owners and putting out to a vote of the people.
Two of the 12 properties are currently hooked up to city water and sewer — The Woodsman and a nearby residence, both on the west end of Main Street. Seven of the 12 properties are industrial or commercial and located on either Main Street or Landmark Drive.
"Every city deals with these islands," Workman said. "Developments come in different ways at different times and it's not uncommon to have cities that get these little islands that get formed. And every few years, you've just got to go through and clean them up and that's why there's a whole section in our code and in most cities' municipal code to allow them to annex these properties into the city."
For commercial and industrial properties, they would become annexed into the city immediately upon the passage of an ordinance following passage in an election. But if it's residential, the city would bring those properties in no sooner than three years out and no later than years out from the date the annexation was approved.
"You basically give the property owner who's using the home as a residence a minimum of three years to make decisions if they want to sell the property or whatever provisions they need to make," Workman said. "It's not like one day you're paying taxes."
An exclusion would be if the property is sold to a new owner. In those cases, property taxes would be assessed at that time.
Senate Bill 1573, which specifically prohibits cities from sending annexations to a vote of the people prior to approval does not apply to island annexations.
"They'll each have their own ballot title, all be voted on individually," Workman said. "The ordinance adopting that can be blanket ... approve them all at once as voted upon in the election. But if can specify specific properties and specific dates they'll come in."
Mailings to property owners were supposed to go out Dec. 15. If the issue moves through the planning commission and city council public hearings, there would be a vote at the Feb. 12 meeting on a resolution approving ballot titles in preparation for the May 15 primary election.
If any annexations are approved, they would go into an ordinance that would be adopted June 11.
Delayed annexation agreements were used before the city's current code provisions adopted in 1998 required voter approval to extend city services outside the city limits. Prior to that time, when a property outside the city limits needed city water or sewer services but was not able to annex into the city, a delayed annexation agreement was proposed.
The agreements often granted the extension of water or sewer to the property in exchange for the owner agreeing to annex into the city upon request, Workman said in his summary to councilors.
This situation applies directly to Allen Lahey, who owns property through Oregon Sequoia LLC on North Seventh Street. The three lots in question — each of them vacant — add up to 7.36 acres with an assessed value of $176,547.
Lahey has been a frequent visitor to city council meetings requesting action to extend water service to his property. The city argues that it is not legally bound to provide it and those discussions often end with city attorney Jim Brewer telling Lahey that we have "to agree to disagree" and that he can go through the court system if he chooses.
One of the issues involves a statement in a staff report involving Lahey's application for a partition of his property in 2008 that Workman said incorrectly stated, "Water and sewer are not located on the subject property, but are available upon request under the delayed annexation agreement."
Workman told councilors, "If he's relied on that information and made decisions because of that information in that staff report that he cited, really what the city is out of is an annexation (application) fee."
Lahey would not be able to stop the city from bringing his property in, Workman said, by the existence of the delayed annexation agreement.
The third type of annexations presented by Workman are by "non-unanimous triple majority consent petition." The properties in question are all located on Cooper Lane just off South 15th Street.
"Cooper Lane, back in '92, they were having problems with private sewer and water and they came to the city and requested that we extend city water and city sewer to that street," Workman said. "The city agreed to do that, we did, they connected, some of them signed delayed annexation agreements, some did not."
Workman said he could not find in city records why those agreements were not collected from some property owners.
"The city was granted an easement for the actual street from Benton County, so we could do the work in the street," Workman added.
The city owns the 18-foot-wide road, which became a separate tax lot, and is one of the nine properties proposed for annexation under this provision. Four of the properties have delayed annexation agreements and all have city water and sewer. Four other properties do not and of those, one has city water and sewer, one as city sewer only and the other two have neither but are vacant lots.
Workman said the Cooper Lane properties pass the triple majority test: It has a greater number of properties in favor of annexation, the properties in favor have a larger total area and they have a greater total assessed value than those properties opposed to annexation.
The nine properties would go through the same public process as the others.
"I think it would be good governance on the part of the council to move forward with the process and have the public hearing and see what the public says," Workman said. "And then the council can always back away from it or move forward with it at that time."