When the idea to revamp the state’s annexation code, because it had been turned into such a mess through amendments and retractions during Salt Lake County “annexation wars” in the 1990s and 2000s, finally gained traction a couple of years ago, a working group was put together to propose a new draft. The working group, comprised of a number of county and city attorneys, a few planners, and a couple of private property representatives, talked about all kinds of issues with the annexation code. It was quickly decided, however, that the first priority was to just clean up the code and make it easier to read and use. There were a number of issues that the working group identified that would require changes in annexation doctrine and policy, but it was decided not to tackle those just yet, and instead just focus on the code clean-up. That is what is currently proposed as part of HB368, the big omnibus land use bill worked on by the Land Use Task Force.
As the coordinator of the annexation working group, I agreed with the approach it was decided to take, but I also figured that we might well leave things open for someone to step in and start proposing policy changes separate from what we had been working on and talking about. Friday, it did indeed happen. And what a proposal it is!
The new annexation (and incorporation) policy is proposed in SB322 – Municipality Annexation and Incorporation Amendments. The bill would do two things. First, it would require that a municipal annexation policy plan must show, among other things, what the current zoning of the proposed annexation area is under the county’s land use regulations, and a statement of what the zoning would likely be were the area to be annexed into the municipality. Hmmm. There are some practical issues with doing this, such as zoning that changes in the county, and plans that change for the city. I guess before an annexation takes place, a first step might have to be for the city to update the annexation policy plan.
It’s the second policy change proposed by the bill, however, that really could knock everyone’s socks off. The bill says,
… for at least one year after the effective date of an annexation, a legislative body may not amend a zoning district in an affected area in a manner that results in the affected area being utilized in a more restrictive way than before the affected area was annexed into the municipality.
Wow. What qualifies as more restrictive? If the land is zoned agricultural in the county (which is quite likely in many areas), and the city wants to zone it for housing, would that means it is more restrictive because it would likely prohibit agricultural uses (particularly if the annexed land owner wants to keep farming)? Is commercial use more or less restrictive than residential use?
The real kicker comes with the rest of this change, though. The bill then says,
A municipal legislative body shall establish by ordinance a process for the municipality to compensate a property owner for a reduction in property value if: (1)the municipality annexes the property owner’s property as described in this part; and (2)following the annexation, the municipality zones the property in a more restrictive way than the property was zoned before the property was annexed into the municipality.
Double wow! This concept of compensating property owners for diminution of value because of zoning regulations is one that has been considered here in Utah in the past, but fortunately never really went anywhere. It has, however, happened in some other states, most notably Arizona Prop 207 in 2006, and Oregon Measure 37 in 2006, which was partially overturned by Measure 49 the following year.
Without getting into the weeds of just everything these measures did and how they work, they really upended the way land use regulation was practiced in these two states, turning things much more cautious and limited. An Arizona Law Review article in 2009 highlights many of the issues that resulted, including making determinations of what the reduced value should be (how does that get decided?), and whether a land use regulation really does result in a reduction of property value. The Arizona law, however, puts the property owner in the position of declaring what he/she believes the reduction in property value to be, and does not allow the local government to challenge that, but only to do one of the following: (1) reach an agreement with the landowner on the amount of just compensation it will pay; (2) amend the regulation to avoid a diminution in value; (3) repeal the regulation entirely; or (4) grant the landowner an exemption to enforcement of the regulation on the owner’s parcel.
The paper notes that in research on the effect of such laws, “…scholars have criticized the more restrictive partial regulatory takings measures … that call for compensation for any reduction in value. First, by requiring payments of compensation that most local governments simply cannot afford, these laws interfere with the ability of governments to regulate land use for the public good. Second, such laws tip the balance between private property and the public good in favor of private property to the public’s detriment. Finally, partial regulatory takings laws take an oversimplified view of the relationship between property value and land use regulation.”
The measures in SB322 would also apply to land that is included in the incorporation of a new municipality.
I don’t know what kind of traction this SB322 will get near the end of the legislative session, but it is clear to me that our annexation working group should not delay getting back together and start working up some of those annexation policy changes we had been talking about!
A couple of other bills also showed up for the first time on Friday:
HB542 – Economic Development Amendments, which would essentially do away with the Unified Economic Opportunity Commission (UEOC), which has had such a lot of say over the direction for land use and housing legislation (puts much of this role into another existing Committee in the GOEO – not sure what it does to the Commission on Housing Affordability either, as it was one of the subcommittees of the UEOC).
HB540 – Municipal Incorporation Modifications, which does away with the code that was passed by the legislature last year to allow for what is called a “preliminary municipality,” essentially allowing a large landowner/developer to start the process of incorporation of a new municipality without having any residents (yet).
Also, the awaited 2nd substitute for HB368 was released. It will likely be adopted when the full House votes on the bill, probably today. The substitute bill mainly just cleans up some sections of the annexation code that were in question in the first version of the bill.
An odd thing happened with the 3rd substitute SB195 – Transportation Amendments when it came up for vote on the Senate floor on Thursday afternoon. Miranda Jones Cox at WFRC explained it well:
“The 3rd sub would place a moratorium in Salt Lake City for one year (May 2025 – March 2026) on implementing “Highway Reduction Strategies” and requiring a mobility and environmental impact analysis of those strategies by UDOT. Highway reduction strategies are defined as lane reductions or narrowing, adding traffic control measures, decreasing speed limits or using speed bumps, or any other strategy that may increase congestion or discourage motor vehicle use. The impact analysis is to be completed before October 15, 2025 and study the impact of highway reduction strategies completed or planned between 2015-2035. Many of you have reached out to WFRC expressing concerns about the Salt Lake City “Highway Reduction Strategy” language now included in this bill. The impact of this change is also of concern to WFRC and our transportation and local partners, and we are actively working with legislative leaders to address these concerns. We will share more as things develop. “
A story in the SL Trib also highlights what happened on this bill. Having worked for six years in Salt Lake City, it never ceased to amaze me at how often the legislature tried to tinker in local SLC politics and processes. I guess they think local rule is fine, until they don’t.
That’s not all that’s happening, but it’s enough for now. Two weeks left!