The City Council adopted the current Limits of Annexation Map on May 14, 2012. 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 2015-2019 Capital Improvements Plan at its April 14, 2014, Council meeting. 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, advises the City Council. The Committee has met four times from November 2013 through February 2014 to discuss revisions to the map. The proposed amendments this year are only to the Limits of Annexation Map, not the Policy. The map amendments for 2014 were presented to the City Council at its work session on March 17. The Council is expected to conduct a public hearing and take formal action on the map amendments at this meeting.

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, including the Capital Improvement Plan (CIP). The proposed revisions to the map reflect these considerations and attempt not to favor one department’s ability to provide service over another department’s limitation.

In considering the Annexation Committee's recommendations, the Council may:

• Approve the Annexation Committee's recommendations as presented; or
• Modify and approve the Annexation Committee's recommendations; or
• Not approve any of the Annexation Committee's recommendations

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 demands. 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 and is discussed in detail in the Background section of this memo.

The City of Billings has annexed 3.35 square miles since 2004 (38.65 to 42 sq. mi.). This accounts for both annexations and deannexations. 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 (2014-2018) 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.

Limits of Annexation Map Amendment Requests
Staff received two requests from property owners and agents to include properties in the Red Area of the 2014-2019 Limits of Annexation Map. The areas are referred to as the Knife River Request and the Elysian Area Request and are described in detail below. Staff received one request from a property owner to include property in the Orange Area (Long Range Urban Planning Area) of the 2014-2019 Limits of Annexation Map. This area is referred to as the Trailhead Commerce Park Request. However, this request was withdrawn by the applicant from consideration before it was brought to Council for review.The City did not have any changes to the Limits of Annexation Map regarding City owned property for this year.

Red Area Requests
The Annexation Committee did have concerns about providing services to these areas if they were added to the Red Area and eventually annexed into the City. These concerns are outlined in comments from some of the City Departments. However, overall the Annexation Committee found that the density and types of development that will occur on these properties is development that will be more likely to pay for all or most of its service demands rather than cost the City additional resources to provide services over time. This assumption is based on information provided by McCall Development in its Urban Planning Study regarding property tax and fee revenues generated by high-density residential development and mixed use commercial and residential development. The assumption also is based on the knowledge that commercial and higher density mixed use commercial and residential development returns a higher property tax stream than large lot residential or big-box, low-density commercial development and also often puts less strain on Police services (commercial development often does not generate as many calls as residential development). While a cost of service study or similar analysis of the cost for the City to deliver its services would be the best way to determine what types of development and what locations may be most efficient and a good investment for the City, the Annexation Committee has agreed that these two properties are likely to provide a better return on investment for the City and potentially less of a strain on City services over time than other potential locations and developments both outside and already within the City limits. 

Knife River Request
Lots 1, 2, 3 and 4, Block 1, Long Subdivision, Tracts 1A1 and 1B of C/S 1100,
Tract 1 of C/S 2562
 
Property owner Knife River Corporation submitted a request and Urban Planning Study in November through Sanderson Stewart to include Lots 1, 2, 3 and 4, Block 1, Long Subdivision, Tracts 1A1 and 1B of C/S 1100, Tract 1 of C/S 2562 in the Red area on the Limits of Annexation Map. The full Urban Planning Study that accompanied this request is available electronically and for review at the City-County Planning Division Office. Knife River submitted a similar request in 2012 to the City to amend the Limits of Annexation Map but the request was not approved. The 447 acre property is located west of Shiloh Road, east of 48^th Street West and north and south of Hesper Road. The property is currently zoned Agricultural Open Space and is used for gravel mining and business operations for Knife River. The property owners have completed the gravel extraction and plan to gradually reclaim the property and develop it for commercial and residential uses. Staff supports adding these properties to the Red area but has provided some comments regarding how quickly all City services could be provided to the entire property.
 
Department Comments: Below are comments regarding this map amendment request provided by the various City Departments through the Annexation Committee. Overall, City staff supports including this property in the Red Area on the Limits of Annexation Map:

Public Works: Public Works has closely reviewed serving this property since it was first requested in 2012. Water storage capacity in the City system was a limiting factor when the first request was considered in 2012. Public Works has since made improvements to the water system storage capacity and the storage concern from the 2012 request is currently being addressed. It is understood from the property owner that development will be phased and not all of the property would be annexed at once. The phasing will make it possible for Public Works to serve this area. Water service will likely be looped from 44^th Street West at the north side of the property during property development. Public Works staff will work with the developer to determine which entity is responsible for which section of the infrastructure for the development.

Fire Department: The City Fire Department currently serves the subject property as it is within the Billings Urban Fire Service Area. However, the current gravel extraction use of the property is very different than the proposed commercial uses that could be developed on the property. The Fire Department originally had concerns about water supply but that was addressed by the storage improvements by Public Works. The Fire Department is concerned about providing service to the developed property as the Fire Department is strained now with staffing. ISO ratings have dropped in the City due to fire protection service limitations. The rating system looks at station placement, hydrant locations and staffing. Hydrants in new areas of development will help both new and existing areas of the City be served, and the Fire Department will provide services if the area is annexed in the future. 

MET Transit: MET has limited service on Shiloh Road that serves Shiloh Crossing, the Zoo, and the Veterans Affairs campus off Gabel Road. This new route would be able to serve a portion of the Knife River property with its current route. However, without more funding, MET cannot expand without taking away or shuffling services in different parts of town. MET is seeing flat funding annually from the Federal Transit Administration, and the annual mill levy and fares do not provide enough funding for expansion of services.
 
Police Department: Police had comments that were similar to the Fire Department in that the Department tries to continue to serve new areas but it is facing more limitations. Police staffing has been stagnant for five or six years. The Police Department received about 79,500 calls for service in 2013. The Police are prioritizing calls now and are using a volunteer force to handle some calls. The area where the Knife River property is located is part of a West End patrol area that has three officers on a shift. The officers are spread thin. The police substation at the 54^th Street West Fire Station is not currently staffed and there is no definite time frame to staff it. If the property is included in the Red Area, and eventually annexed, the Police will respond, but response times may be longer in both newly annexed areas and areas already within the City Limits.
 
Parks: While the Shiloh Conservation Area just north of the Knife River property is going to be a natural park area, the City really needs a large regional park in the area of the Knife River property in southwest Billings. Given the size of the total Knife River property at 447 acres, as development occurs there may be an opportunity for some kind of large park that could be regional in use and service for the community.
 
Planning:  The City can control annexations and can limit services with conditions of annexation, so phasing of annexation and development of the property might mitigate some impacts to services. The subdivision and zoning process also enables some management of the effect development has on the existing infrastructure and neighborhood. While the Annexation Policy is designed to address the burden on existing tax payers as part of its criteria, the City is not able to easily determine in detail how the added property would affect its services until the City completes a cost of service study, or similar analysis. The City did begin to pursue a cost of service study in 2008, but the project was never completed.

Trails/Alternate Transportation:  Connectivity to the existing Heritage Trail System segments along Shiloh Road and future trail segments should be encouraged.  Also as neighborhood and community parks are developed in the area trail connections should be encouraged to provide safe access to recreational opportunities.  Connections should be made to the natural park at the Shiloh Conservation Area. 
 

Elysian Area
Tract 1A, Amended, and C/S 832, Government Lot 1 and the NENW, Section 19, Township 1 South, Range 26 East, and the North Fraction of Lot 5 and Lot 2 (Less Lee Subdivision), Section 19, Township 1 South, Range 26 East, and Section 18, Township 1 South, Range 26 East, Southwest ¼ (Less RY, Hwy and C/S 1614 and C/S 2038.
 
McCall Development and Sanderson Stewart on behalf of property owners Gary Armstrong, Leroy and Norma Walter, and Elysian School, and property owner Quarnburg Farming Corporation in collaboration with Morrison-Maierle submitted a request and Urban Planning Study in November to include Tract 1A, Amended, and C/S 832, Government Lot 1 and the NENW, Section 19, Township 1 South, Range 26 East, and the North Fraction of Lot 5 and Lot 2 (Less Lee Subdivision), Section 19, Township 1 South, Range 26 East, and Section 18, Township 1 South, Range 26 East, Southwest ¼ (Less RY, Hwy and C/S 1614 and C/S 2038 in the Red are on the Limits of Annexation Map. The two Urban Planning Studies that accompanied this request are available electronically and for review at the City-County Planning Division Office. The 290 acre property is located west of Mullowney Lane, south of the Laurel Frontage Road and east of East Lane with the exception of the Elysian School property at the southwest corner of the intersection of Elysian Road and East Lane. The property is currently zoned Agricultural Open Space and Highway Commercial and is used for agricultural operations, sod farming, and an elementary/junior high school. The agents and property owners are interested in developing the area with a mix of residential and commercial uses. Staff supports adding these properties to the Red area but has provided some comments regarding how quickly all City services could be provided to the entire property.
 
Department Comments: Below are comments regarding this map amendment request provided by the various City Departments through the Annexation Committee. Overall, City staff supports including this property in the Red Area on the Limits of Annexation Map:

Public Works: The City has adequate water capacity and sewer treatment capacity available now to serve the Elysian Area proposal. There is approximately a mile gap between the termination of the existing water and sewer lines to the east of the Elysian area to where they need to be extended to serve the subject area. Public Works staff has been working with and will continue to work with the developers in this area regarding the funding mechanisms and the logistics to install the infrastructure in the Elysian Area. Public Works has included in the proposed CIP water and sewer extensions in the Elysian area in 2015.

Fire Department: The City Fire Department currently serves the subject property as it is within the Billings Urban Fire Service Area. However, the property is not developed at this time. Fire is interested in how the water service would be provided and that the capacity would meet its requirements for firefighting purposes. Fire Station #5 on 24^th Street West is the closest fire station to the area and has a three person crew stationed there. Fire will serve the property if annexed but Fire’s issues for this property are similar to the Knife River request and include: Overall service to the developed property is a concern as the Fire Department is strained now with staffing; ISO ratings have dropped in the City due to Fire protection service limitations. Hydrants in new areas of development will help both new and existing areas of the City be served.

MET Transit: MET would not be able to serve the property under current funding constraints. MET does not get any closer to the subject property than between a mile and a half mile at the Holiday Inn at Mullowney Lane and the Laurel Frontage Road. Without more funding, MET cannot expand routes without taking away or shuffling services in different parts of town. MET is seeing flat funding annually from the Federal Transit Administration, and the annual mill levy and fares do not provide enough funding for expansion of services.
 
Police Department: Police comments were similar to those for the Knife River property for this property. This area is closer in for police response time and patrols. While there is a shift change at the Billings Operation Center on Midland Road, Police officers are not dispatched or located there during shifts. Police will serve the area if annexed, but many of the Police issues are the same as for the Knife River request, including: Police staffing has been stagnant for five or six years. The Police Department received about 79,500 calls for service in 2013. If the property is included in the Red Area, and eventually annexed, the Police will respond, but response times may be longer in both newly annexed areas and areas already within the City Limits.
 
Parks:  Within the Elysian area as development takes place there will be an increased need for neighborhood and community parks to service the recreational needs of area residents. Particular attention should be given to the Yellowstone River corridor to preserve this unique natural resource. 
 
Trails/Alternate Transportation: The Elysian Area is in an area that has been identified as a future trail corridor to connect the Zoo and Riverfront Park. It would benefit the entire City parks and trail system to plan and develop a corridor in this area if the property were brought into the Red Area and annexed in the future.
 
Planning: Adding the Elysian Area Request and the Knife River Request together totals about one square mile of land added to the Red Area and ultimately the City. The City needs to be aware of the potential speed at which some of the Elysian area specifically might annex. When the City approves a petition to annex, then it is essentially agreeing to provide services right then but it is not always feasible to have all services in place within a reasonable period of time. The City’s control over annexations and condition of annexations, and encouraging phasing of development would likely be the only way the City could provide all services adequately.

The Urban Planning Study portion of the Elysian Area Request headed by McCall Development provided a detailed analysis of estimated property tax and system development fee revenue generation for their proposed mixed use development approach for their proposed area to be added to the Red Area. This was a new and welcome addition to the Urban Planning Studies the Annexation Committee has seen to date. This information provides a glimpse at the revenue side of a certain development approach and only needs the City’s analysis of the costs of providing services to determine if this development model would actually pay for itself over time and make service delivery more certain for the City.

Two written requests were received by the City from property owners and agents to include properties in the Red Area of the 2014-2019 Limits of Annexation Map. The areas are referred to as the Knife River Request and the Elysian Area Request. As per the Annexation Policy requirements, Urban Planning Studies were completed on behalf of the property owners and distributed to the City Annexation Committee for review and comment. Public comment was formally taken at the City Council work session on March 17 regarding the proposed amendments to the Limits of Annexation Map. Informal comment also was provided during the Annexation Committee Meetings when the agents of the property owners, some of the property owners and employees of Knife River attended the meetings. A public hearing also is scheduled for this item on the City Council's April 28 Meeting Agenda and additional input from the public may be provided at that time before the Council takes action.

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 2009 Update, neighborhood or area plans, and the CIP. The proposed revisions to the 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.