By Richard C. Kearney

  In December 1989, the City of Columbia, in a race against the census-takers, annexed 3350 acres of property to the northwest. Columbia officials were trying to push population figures comfortably over the 100,000 mark in order to qualify for certain federal grants-in-aid and to establish the City as a viable commercial center. The annexed land, situated in Richland and Lexington counties, came with some 6000 prisoners in a state correctional institution and around 800 students at Columbia Bible College [now Columbia International University]. The action also positioned the Capitol City to capture lucrative property tax and business tax revenues from Columbiana Centre, a huge shopping mall under construction in the area. In order to gain land contiguous with mall property, Columbia annexed a strip of land stretching five miles along the Broad River.

What seemed to Columbia officials to be a rational and logical step forward provoked a firestorm of shock and anger on the part of Lexington County officials and residents. Columbia Mayor Patton Adams was vilified for his "arrogance and insensitivity." One citizen from across the river testified at a public hearing that he feared that "I might wake up one morning and find myself in Columbia." During the next two months at least five lawsuits were filed and the State Supreme Court, the Governor, and the powerful State Budget and Control Board got embroiled in the legal and political controversy. As the dust settled in early 199O Columbia's blitzkreig annexation was in doubt and three of the four principal annexation methods in South Carolina were unusable. Much to the chagrin of the Greater Columbia Chamber of Commerce, which had been busily promoting a regional convention center and other cooperative endeavors, an outraged Lexington County Council threatened to withdraw from all cooperative ventures with Columbia, from the regional planning council to the Riverbanks Zoo.

Why did Columbia's annexation effort evoke such fear and loathing in Lexington County? In order to address this interesting question, one must examine annexation's legalities, limitations, and future in South Carolina.

Annexation is the major source of population growth for municipalities, and an important tool for managing urban growth. Since the mid-1800s, annexation has been used to increase the physical and demographic size of American cities by bringing unincorporated land into the city limits. Early state annexation laws were very expansive, permitting municipalities to avoid suburbanization by unilaterally pulling outlying, contiguous areas into their incorporated boundaries. By the turn of the century, however, several factors conspired to convince most states to enact more restrictive annexation laws. A growing hostility developed between spoils-ridden, corrupt city governments and increasingly prosperous, middle-class suburban enclaves. Suburbanites sought to gain loca1 control over land use and to keep their taxes low by incorporating as municipalities. The trend to incorporate by settlements in the urban fringe was accelerated by the concentration of displaced farm workers, poor foreign immigrants, and blacks in the central cities. Land use and zoning laws could be used to screen out these and other "undesirable" neighbors. By avoiding the clutches of the central cities, residents of suburban areas could also escape financial responsibility for the costs of running the city, even though many commuted there to work. Special purpose districts were created to provide services to suburban residents on an area-wide basis, thereby relieving small municipalities from the burden of funding a full array of urban services. Although several Sunbelt states liberalized their annexation laws during the growth boom of the 1970s, many states, including South Carolina, kept restrictive laws on the books.

According to the National League of Cities, South Carolina has perhaps the most restrictive annexation statute in the nation. Recent court decisions have further limited the annexation methods available to municipalities in the Palmetto State. The Three-Box method (petition by property owners, followed by an election with voting by property owners, residents in the city, and residents in the area considering annexation) was declared unconstitutional in 1978 by the U.S. Supreme Court because it permitted freeholders (property owners) to negate citizens' votes in favor of annexation. An attempt to resuscitate the Three-Box method by severing the freeholder's box was ruled illegal by a state circuit court in 1982.

In 1988 the General Assembly replaced the Three-Box method with a statute permitting 25% of the resident freeholders to request an annexation vote. This device joined two existing methods--the Majority Petition-Election method and the 75%-100% Petition Ordinance method--in providing municipalities with three major annexation alternatives. However, a February 1990 ruling during the Columbia annexation fiasco by federal district court Judge Karen Henderson declared the Majority Petition-Election method to be unconstitutional. Judge Henderson based her ruling on a Maryland case, Muller V. Curran, that declared illegal any method of annexation using property ownership as a criterion for initiating procedures that culminate in a popular vote. Granting property owners rights superior to those of renters or other citizens is a violation of the 14th Amendment to the U.S. Constitution. Because the 25% Petition-Election method also grants special rights to property owners, it is no doubt unconstitutional as well.

As a result of these court decisions, only one general annexation method is available to South Carolina municipalities today--the 75%-100% Petition Ordinance method. This approach permits a city council to annex by ordinance when 75% or more of the property owners controlling at least 75% of the assessed valuation of real property in an area request annexation. No election is held, so 14th Amendment rights are not trampled upon.

In addition to the 75%-100% Petition Ordinance approach, several specific-purpose annexation methods also continue to exist. These seldom-used methods apply to government-owned property; corporate, school, and church property; and to highways, streets, and cemeteries.

Municipal officials hope to convince the General Assembly to enact a more permissive annexation law in the next session of the legislature. Most South Carolina cities have placed annexation plans on the back burner until the legal (and political) environment becomes more settled.

The goals of Columbia officials were admirable in the recent annexation conflict, if not their tactics. Cities seek to expand their incorporated limits to encompass contiguous urbanized areas for several important and legitimate reasons. As noted, higher population numbers mean certain financial benefits in terms of grants and business activity. As a general principle, according to Howard Duvall, Director of Intergovernmental Relations of the Municipal Association of South Carolina, [Editor's Note: Mr. Duvall is now the Director of the Municipal Association] "Cities should be able to grow to their natural urban borders." This permits better growth planning, more efficient service provision, and greater fiscal stability for the city. In the absence of growth planning via annexation, private developers determine the whys and wherefores of urban growth. In the absence of municipal control of suburban areas through zoning requirements, according to Duvall, "We don't plan-we respond."

South Carolina is becoming an increasingly urban state. Around 50% of the people live in one of the Palmetto.State's six Metropolitan Statistical Areas. [Editor's Note: The percentage is higher now than in 1990 when this article was written.] A major problem is that city limits do not correspond to urban sprawl. In the absence of annexation, central cities tend to become ringed by small, incorporated communities. Middle-class families enjoy the suburban lifestyle, and lower property taxes, while commuting to the central cities such as Columbia, Charleston, and Spartanburg for jobs, entertainment, and cultural opportunities. If South Carolina follows national trends, our central cities may become increasingly poor and black. As low income people are concentrated in the cities, service needs become more costly (e.g., low-income housing, increased police and fire protection, improved street lighting, etc.) at the same time that the city's tax base is leveling off or declining from the exodus of upper-income people and firms.

Annexation of fringe areas can make tax and service boundaries congruent. Fiscal and service inequalities can be eliminated. More and better services can be extended into suburban areas, particularly law enforcement and fire protection. And in the long run the provision of services by the city may be more economical than service provision by small municipalities or special purpose districts. Cities are already in the business of providing water, sewer, police, fire protection, recreation, and other services. The infrastructure and administrative apparatus are in place, allowing suburban residents to realize economies of scale. Lower property and casualty insurance rates usually prevail in cities. Homeowners may additionally benefit from replacing wells with city water and septic tanks with sewers.

A more esoteric argument in favor of annexation concerns accountability in government. When special purpose districts proliferate in response to citizen demands for new services, government tends to become complex_, confusing, and non-responsive. Often citizens have no voice in the operations of special purpose governments or in appointing the boards or commissions that run them. Consolidation of services under a single city government permits greater accountability to citizens through elected city council members and a mayor.

It is the city's task to educate people on the advantages offered by annexation. Sometimes this is a long-term proposition. Cheraw, S.C. successfully brought 12 industries into the city limits and tax base by lobbying them for years and even postdating annexation petitions for the firms in order to give them sufficient time to prepare. Aiken and North Augusta used planning techniques to target certain areas for future annexation, then approached property owners to convince them of the advantages the city could offer. Aiken experienced moderate success, adding about five square miles to the city register since 1980. North Augusta was able to increase its incorporated area from seven square miles in 1980 to almost 17 in 1990.

Even in the broiling political climate of Columbia's annexation campaign, the Harbison Group, developers of the Columbiana Centre mall, realized it was in their best interests to cast their lot with the Capitol City. When Irmo sought to annex the mall property, the developers petitioned for annexation to Columbia. In fact, it was the Harbison Group's suit against Irmo's annexation drive that led Judge Henderson to throw out the Majority Petition-Election method. Gene Mills, Columbia's annexation coordinator, claims that "The bottom line was services." The mall's stores and restaurants could save money on water and sewer if they were situated within the city limits, as well as benefit from reduced insurance premiums because of Columbia's superior police and fire protection.

Higher quality and more economical services represent the strong suit of cities seeking to convince citizens in outlying areas to come into their incorporated boundaries. But on occasion, other arguments bear fruit as well. Like other cities, Aiken has stressed the service benefits of joining the city. However, according to Assistant City Manager Steve Thompson," Community pride has been our most successful argument-the prestige of living 'in' Aiken rather than 'near' Aiken." [Editor's Note: Mr. Thompson is now the City Manager of Aiken.] Some of the 21 South Carolina municipalities that control their own electric utilities have offered lower rates to industries agreeing to annexation.

The Municipal Association of South Carolina's "Guidelines for Municipal Annexation" outline specific strategies for tilting the odds in favor of annexation. A "positive approach" begins with an educational campaign that accentuates the advantages of coming into the city while helping prevent misinformation from discrediting the campaign. Annexation supporters should be identified and helped with printed information, technical assistance, and even financial aid in order to get a strong petition drive underway and to publicize the city's side of the story. The city should inventory all suburban services and determine availability, cost, and quality, in order to offer comparisons with what the city can provide. Public meetings should be held to disseminate the city's story and to formally invite outside residents to join the city in order to make it stronger and a better place in which to live. The mayor, council members, and other top officials should attend these informational meetings to answer questions and show their support. In all dealings, honesty and fairness should reign and information should not be withheld.

This policy has been adhered to by most cities, but Columbia has been an exceptionally slow learner. One year before Columbia's most recent foray into Lexington County, the City badly bungled an effort to annex residential and commercial property near Williams-Brice stadium. The fatal error was a failure to notify the commercial property owners of the annexation effort. The owners including the publisher of The State newspaper hired a local political consultant to lead a last minute assault that resulted in defeat of the annexation plan by the voters. [Editor's Note: Since this article was written the City of Columbia has not experienced the degree of negative publicity it did in the early 1990s with its annexation strategy.]

Where a positive approach fails, a "negative strategy" may be called for to make the pocketbook disadvantages of continued separation more evident. For example, fee differentials for services such as water, sewer, or fire protection can be enlarged to make outside residents pay more for services already furnished by the city. Columbia and North Augusta require any contiguous area tying into city water and sewer lines to agree to annexation. In some cases, city programs and services available to external residents can be discontinued in order to encourage a change in the minds of voters.

Of course, the city must weigh its own costs and benefits of annexing property. Owners of any property contiguous to a city may petition for annexation. If the property is undeveloped, a simple ordinance by council completes the process once a petition is presented. In the past, city officials have been casual and relatively perfunctory in such actions. However, property may be accompanied by substantial costs to the city. For instance, undeveloped land entering the city limits might be developed into subdivisions, requiring the city to expend large sums for water and sewer lines, roads, and extended police and fire services, unless some procedure places these financial burdens on the developer. Industrial property might bring with it hazardous wastes and attendant financial liabilities. The point is that cities should plan for annexation and be aware of the costs of adding new territory and citizens. Columbia again offers a useful example. The City recently calculated that several residential areas annexed in 1989 would require over $3 million in water and sewer projects while bringing in only $175,000 in new property tax revenues. Columbia now has added three planners to its staff and begun analyzing the potential costs of annexing nearby areas. Recently, Columbia turned down requests made by citizens seeking to incorporate the city.

For now, municipal annexation is proceeding at a slow pace in the Palmetto State as interested observers await state Supreme Court rulings related to Columbia's controversial actions last year. [Editor's Note: As of 1998, the legal system had still not disposed of all suits related to the Columbia-Irmo annexation dispute.] Several issues must be resolved. These include whether various parties have "standing" to sue Columbia (most apparently do not); whether municipalities can annex across county lines (they can and do--14 South Carolina cities straddle two counties and two cities occupy territory in three counties); the legality of "shoestring" or strip annexation of the type used by Columbia to stretch its borders to the lucrative shopping mall (apparently it is permitted so long as the property taken is contiguous, although the specifics of the Columbia case will determine the outcome of that particular action); and the legality of municipal annexation of property served by one or more special purpose districts (e.g., the Irmo Fire District has sued the City of Columbia; it stands to lose up to $508,000 in property taxes as a result of annexation).

Meanwhile, the constitutionality of all annexation approaches except the 75%-100% Petition Ordinance method and the assorted specific purpose methods is so seriously in doubt that few annexations are likely to occur in the short term. The 75%-100% approach is too constraining to be of great use. The Municipal Association is waiting for the ashes of Columbia's "sneak attack" to stop smoldering before taking its case for a new annexation law to the General Assembly. Most likely, annexation supporters will attempt to revive the 25% Petition-Election method by simply removing the freeholder requirement for triggering a petition and substituting 25% of the citizens in an area considering annexation to trigger an election. There is also some support for allowing annexation by ordinance in the case of unincorporated land surrounded by an existing city.

If the statutes are changed and made less restrictive, future annexation activity could be fueled by the fate of the new local option sales tax being voted on by all South Carolina counties this November. [Editor's Note: This particular measure failed but counties are authorized to adopt on a county by county basis a local option sales tax which must be used to reduce property taxes.] If it passes, at least 7l cents out of every sales tax dollar must be used to roll back property taxes. This will eliminate most city property taxes (except for schools) and effectively take the "double taxation" argument out of annexation fights (city residents now pay both city and county taxes). It will also mean that cities can benefit greatly from annexing outlying commercial areas and malls that generate property and business taxes. The shots fired over Columbiana Centre may have been just the beginning of a protracted assault by South Carolina cities on lucrative property at the city limits.

Kearney, Richard C. "Fear and Loathing Across the River: Municipal Annexation in South Carolina," The South Carolina Policy Forum Magazine, Vol. 1, no. 3 (July/September 1990): 7-11