The City Council adopted the current Annexation Policy on April 10, 2006, and the current Limits of Annexation Map on June 8, 2009. The Annexation Policy requires the City to review and consider updates to the policy and map whenever the Capital Improvements Plan is revised. Council approved the 2012-2016 Capital Improvements Plan at its March 28, 2011, Council meeting. Amendments to the Annexation Policy and Map were not ready at that time but staff is bringing these items forward as soon after the CIP adoption as practical. To provide guidance on Annexation Policy and Map amendments, an Annexation Committee, consisting of representatives from the Parks, Recreation and Public Lands, Police, Fire, Public Works, Transit, Administration, and Planning Departments, and Billings School District 2, was created. The Committee has met six times from October 2010 through April 2011 to discuss revisions to the Policy and Map, and City Code. The Committee followed the direction of the Council on using the Annexation Policy as its central guide for managing expansion and on the City’s ability to serve the areas located within the Limits of Annexation area. The Committee is presenting the Council with its recommendations in the form of two resolutions to revise the Annexation Policy and Limits of Annexation Map. The Committee is presenting its recommendations for changes to the City Code in a seperate memo at this same meeting.

Staff considered the need to align the Annexation Policy and City Code to be consistent with application of the Annexation Policy in the future. In making its recommendation on expanding the Limits of Annexation Map Red Area, staff considered the ability to serve areas outside the existing City limits based on existing resources, effects on City residents, and programmed improvements. The proposed revisions to the Policy and Map reflect these considerations and attempt not to favor one department’s ability to provide service over another department’s limitation.

Annexation of property to the City of Billings will increase the City’s tax base. At the same time, the City will bear the cost of additional service requirements. The Annexation Policy and the Limits of Annexation Map are management tools to help balance this cost-to-benefit ratio. The Annexation Committee's recommendations for changes to the Limits of Annexation Map also consider the benefits and costs to the City.

While there has been little annexation activity in the last few years, the City of Billings has annexed more than nine square miles since 1999 (32.8 to 41.9 sq. mi.). Many of those annexations required a considerable outlay of City funds to ensure acceptable levels of service to the annexed properties and to maintain the levels of service within the existing City limits. As these properties developed, the cost of providing certain services exceeded the revenue generated by the development. For this reason, the City Council asked staff to draft an Annexation Policy that would limit annexations to areas that could be served without incurring additional costs. The adopted policy established two limits of annexation when last updated. The red area (2009-2014) coincides with the immediate five years covered by the CIP and defines an area where annexation petitions may be supported in the short term. The second time period, designated as orange (Long Range Urban Planning Area), covers areas where City services may be extended but would require additional analysis and funding to support those services.

Annexation Policy Amendment Recommendation
The Annexation Committee is recommending several changes to the Annexation Policy. The Policy was last updated in 2006. Some of the changes involve language updates to better align the Policy with language on the Limits of Annexation Map and some new language to better explain the process for requesting a map amendment. The significant change to the Policy is the inclusion of a requirement that an Urban Planning Study (UPS) be completed by the applicant prior to the City Council considering the map amendment. The purpose of the UPS is to provide detailed information to City staff about the potential impacts to City services that the additional property may have if it is eventually annexed into the City. It helps ensure that the City does not expand the Limits of Annexation Map Red Area beyond its capabilities to provide services. As part of the Annexation Policy amendments, the elements of an acceptable UPS are spelled out in the Policy (See attached Resolution with the proposed Amended Annexation Policy).

Limits of Annexation Map Amendment Request
Staff received one request from the agent of a property owner to include property in the 2011-2015 Limits of Annexation (red). The property is recommended for inclusion in the 2011-2015 classification. The basis for the recommendation is detailed below:

The "Cross Roads North" property is legally described as C/S 2776 and Lots 4A and 4B of Berquist Subdivision. This 14.75-acre property is located north of the existing American Pharmaceuticals facility as well as several commercial businesses at the northwest corner of Pemberton Lane and Highway 87 in the Billings Heights. It is zoned Community Commercial and is currently in the Orange Long Range Urban Planning Area designation on the Limits of Annexation Map and outside of the City Limits. Staff supports reclassifying this property to Red on the Limits of Annexation Map because the Water District of Billings Heights can supply water and the City can provide sewer service, it is easily accessible for other City services that already serve the property directly to the south and is a minor extension of commercial development in this immediate area. Five Mile Creek also creates a significant service barrier to the north and is a riparian area that can be better protected if municipal services are available and septic systems and wells are prevented in close proximity to it. This expansion of the Red Area would terminate at the Creek and be a clear northern terminus for City services in this area at this time.

Below are comments regarding this map amendment request provided by the various City Departments through the Annexation Committee. Overall, City staff support including this property in the Red Area on the Limits of Annexation Map:

Public Works: Prior to the CIP update processes that was just completed, City Public Works reviewed the need to upgrade the existing 5-mile lift station in this area to better accommodate current and future sewer demand. The upgrades to this lift station will be reconstructed in fiscal year 2012 and so this aligns well with the future plans to develop the subject property. With the lift station upgrade and with existing sanitary sewer in Pemberton Lane, this property may be served with sewer service. Other site development, stormwater, and traffic issues and impacts will be addressed after this property is annexed into the City and development is proposed. However, Public Works found that it is able to provide its services for the subject property of all development and service requirements are met.

The Fire Department and Parks Department did not have any concerns with this expansion. Fire can serve the property as it does the existing commercial development in this area, and since it is commercially zoned, there should be no impacts to parks.

MET Transit was supportive of this change and suggested that a bus shelter be considered in the future on Pemberton Lane at the south end of the commercial area to provide better transit service to employees and customers that may use the existing and future commercial services on the site.

Planning supports this change based on the mitigation of impacts to the Five Mile Creek riparian area by providing municipal water, sewer, and stormwater management to this area. This also is a very limited extension of City services and commercial development in an area with existing retail development that is already zoned Community Commercial. The property’s proximity to existing services and the intersection of Highway 312 and Highway 87 also make development of the subject property in the City reasonable and expected.

The subject property is just outside existing patrol areas for the Police Department. The Police are able to serve this property but continue to monitor how any expansion of the City affects its ability to provide services.

City Finance and Administration did not have any specific concerns about the request, but did express concern about how well impacts to all City departments and services were measured in the Urban Planning Study and how impacts to adjacent property in and outside the City might be determined.

One written request for including property within the 2011 – 2015 Limits of Annexation Red Area was received from the property owner and agent for the "Cross Roads North" property. The request with an Urban Planning Study completed by Sanderson Stewart was distributed to the City Annexation Committee for review and comment. Public comment on the Annexation Policy and Limits of Annexation Map also were taken at three CIP public meetings in January and February 2011. There were no specific requests to amend the map or policy at the CIP meetings. The Committee recommendations are summarized in the Alternatives Analysis section of this report.

The Annexation Committee considered the need to align the Annexation Policy and City Code to be consistent with application of the Annexation Policy in the future. In making its recommendations, the Annexation Committee takes into consideration many plans and policies, including, but not limited to, the Water and Wastewater Master Plan, Stormwater Master Plan, Yellowstone County and City of Billings Growth Policy, Billings Urban Area Transportation Plan, and CIP. The proposed revisions to the Policy and Map reflect an effort to be consistent with adopted policies and plans, and attempt not to favor one department’s ability to provide service over another department’s limitation.