South Carolina General Assembly
107th Session, 1987-1988

Bill 411


                    Current Status

Bill Number:               411
Ratification Number:       733
Act Number                 626
Introducing Body:          Senate
Subject:                   Annexation procedure
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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A626, R733, S411)

AN ACT TO AMEND CHAPTER 3 OF TITLE 5, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE METHODS OF ANNEXATION AUTHORIZED FOR MUNICIPALITIES, BY ADDING SECTION 5-3-300 SO AS TO AUTHORIZE AN ADDITIONAL METHOD OF ANNEXATION WHICH MAY BE INITIATED BY A PETITION OF TWENTY-FIVE PERCENT OR MORE OF THE RESIDENT FREEHOLDERS IN AN AREA CALLING FOR AN ELECTION IN A PROPOSED AREA AND IF APPROVED BY A MAJORITY OF THE QUALIFIED ELECTORS THE MUNICIPAL COUNCIL SHALL GIVE PUBLIC NOTICE THAT IT INTENDS TO ANNEX THE AREA, PROVIDE THAT NOTICE OF THE ELECTION MUST BE PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION IN THE MUNICIPALITY, PROVIDE THAT IF A PETITION IS SUBMITTED WITHIN THIRTY DAYS AFTER NOTICE IS GIVEN AN ELECTION MUST BE HELD WITHIN A MUNICIPALITY TO APPROVE THE ANNEXATION, PROVIDE THAT THE ANNEXATION IS NOT EFFECTIVE UNLESS APPROVED BY THE ELECTORS IN THE MUNICIPALITY WHEN THE PETITION IS SUBMITTED, PROVIDE THAT ANY FREEHOLDER WHO OWNS TWENTY-FIVE PERCENT OR MORE OF THE ASSESSED VALUE OF REAL PROPERTY IN THE AREA TO BE ANNEXED SHALL RECEIVE WRITTEN NOTICE OF THE ANNEXATION AND IF HE FILES WRITTEN OBJECTION TO THE INCLUSION OF HIS PROPERTY IN THE AREA TO BE ANNEXED HIS PROPERTY MUST BE EXCLUDED FROM THE ANNEXATION, TO PROVIDE FOR THE DEFINITION OF "AGRICULTURAL REAL PROPERTY", TO AUTHORIZE THE MUNICIPAL CLERK TO REQUIRE THE FREEHOLDER TO GIVE WRITTEN AUTHORIZATION TO VERIFY FARM INCOME AND TO PROVIDE THE AGRICULTURE STABILIZATION AND CONSERVATION SERVICE FARM IDENTIFICATION NUMBER OF THE TRACT AND ALLOW VERIFICATION OF THIS NUMBER; BY ADDING SECTION 5-3-310 SO AS TO PROVIDE A PROCEDURE AND CONDITIONS WHERE A MUNICIPALITY ANNEXES PART OR ALL OF A SPECIAL PURPOSE DISTRICT, SPECIAL TAXING DISTRICT, OR ASSESSMENT DISTRICT; BY ADDING SECTION 5-3-311 SO AS TO AUTHORIZE AN ANNEXING MUNICIPALITY AND A DISTRICT TO FORMULATE AN AGREEMENT REGARDING THE ANNEXATION OF ALL OR PART OF THE DISTRICT, TO PROVIDE THE CONDITIONS OF THE AGREEMENT; BY ADDING SECTION 5-3-312 SO AS TO PROVIDE THAT THE PLAN FORMULATED UNDER THE PROVISIONS OF THIS CHAPTER MUST SEEK TO BALANCE THE EQUITIES AND INTERESTS OF THE RESIDENTS AND TAXPAYERS OF THE ANNEXED AREA AND OF THE AREA OF THE DISTRICT NOT ANNEXED, TO PROVIDE FACTORS WHICH MUST BE USED IN FORMULATING THE PLAN; BY ADDING SECTION 5-3-313 SO AS TO REQUIRE THE AUDITOR AND TREASURER OF THE COUNTY IN WHICH THE ANNEXED AREA IS LOCATED TO TAKE SUCH ACTION AS IS APPROPRIATE TO CONFORM WITH THE PLAN FINALLY ESTABLISHED PURSUANT TO THE PROVISIONS OF THIS CHAPTER; BY ADDING SECTION 5-3-314 SO AS TO PROHIBIT THE DISTURBANCE OF THE OBLIGATION BETWEEN A DISTRICT AND ITS GENERAL OBLIGATION BONDHOLDERS, HOLDERS OF COUNTY BONDS BY ANY PLAN WHICH IS FINALLY ESTABLISHED; AND BY ADDING SECTION 5-3-315 SO AS TO AUTHORIZE ANY DISTRICT AFFECTED BY THE PROPOSED ANNEXATION TO CONDUCT A PUBLIC HEARING WITHIN SIXTY DAYS BEFORE THE REQUIRED ELECTION, AND REQUIRE THE DISTRICT TO GIVE AT LEAST FOURTEEN DAYS' NOTICE OF THE TIME AND PLACE OF THE PUBLIC HEARING IN A NEWSPAPER OF GENERAL CIRCULATION WITHIN THE AREA PROPOSED TO BE ANNEXED.

Be it enacted by the General Assembly of the State of South Carolina:

Annexation procedure

SECTION 1. Chapter 3 of Title 5 of the 1976 Code is amended by adding:

"Section 5-3-300. (A) In addition to other methods of annexation authorized by this chapter, any area which is contiguous to a municipality may be annexed to the municipality by the filing of a petition with the council signed by twenty-five percent or more of the freeholders who are residents within the area proposed to be annexed.

(B) The petition must contain a description of the area to be annexed, the signature of the freeholder, the address of residence, and the act or code section pursuant to which the proposed annexation is to be accomplished.

(C) If the municipal council finds that the petition has been signed by twenty-five percent or more of the freeholders resident within the area proposed to be annexed, it may certify that fact to the county election commission of the county in which the area is situated. Upon receipt of a written resolution certifying that the petition meets the requirements of this section, the county election commission shall order an election to be held within the area proposed to be annexed to the municipality on the question of extension of the corporate limits of the municipality by annexation of the area proposed to be annexed.

(D) The election ordered pursuant to this section is a special election and not a municipal election and must be held, regulated, and conducted with the provisions prescribed by Chapters 13 and 17 of Title 7, except as otherwise provided in this section. The county election commission shall give at least thirty days' notice in a newspaper of general circulation within the area proposed to be annexed to the municipality. Registered qualified electors residing within the area proposed to be annexed to the municipality shall have the same qualifications to vote in this election as are required of registered qualified electors to vote in state and county general elections. At the election the registered qualified electors residing within the area proposed to be annexed shall vote in a box or boxes to be provided for the purpose within the area proposed to be annexed by the county election commission. The county election commission shall certify the result of the election to the municipal council of the municipality. If a majority of the votes cast by the qualified electors of the area proposed to be annexed are in favor of the annexation, then the council by written resolution shall publish the result of the election.

(E) After publishing the result of the election, the municipal council shall publish in a newspaper of general circulation within the municipality a notice which must contain:

(1) a description of the area to be annexed;

(2) the act or code section pursuant to which

the proposed annexation is to be accomplished;

(3) a statement that the qualified electors of the area to be annexed voted to be annexed to the municipality; and

(4) a statement that the municipal council will approve the annexation of the area unless a petition signed by five percent or more of the electors within the municipality is presented to the municipal council within thirty days from the date of the notice requesting that the municipal council order an election to be held within the municipality on the question of extension of the corporate limits by annexation of the area proposed to be annexed.

(F) The municipal council may give final reading approval to an ordinance declaring the area annexed not less than thirty days from the date of the publication of the notice required by subsection (E). However, if within thirty days from the date of the publication of the notice required by subsection (E), a petition signed by five percent or more of the electors within the municipality is presented to the municipal council requesting an election to be held within the municipality on the question of extension of the corporate limits by annexation of the area proposed to be annexed, the municipal council shall delay final reading approval of the ordinance declaring the area annexed until the results of the election within the municipality are published.

(G) If within thirty days from the date of the publication of the notice required by subsection (E), a petition is presented to the municipal council requesting an election to be held within the municipality on the question of extension of the corporate limits by annexation of the area proposed to be annexed, the municipal council, after verifying that at least five percent of the electors within the municipality have signed the petition, shall certify that fact to the municipal election commission and order an election. The election ordered pursuant to this subsection is a municipal election and must be held, regulated, and conducted by the municipal election commission pursuant to provisions prescribed by Chapters 13 and 17 of Title 7, except as otherwise provided in this subsection. The municipal election commission shall give at least thirty days' notice prior to the date set for the election by publishing the notice in a newspaper of general circulation within the municipality. Registered qualified electors residing within the municipality shall have the same qualifications to vote in this election as are required of registered electors to vote in the state and county general elections. The municipal election commission shall certify the result of the election to the municipal council.

(H) If a majority of the votes cast by the qualified electors of the municipality are in favor of the annexation then the council shall give final reading approval to the ordinance declaring the area annexed. If a majority of the votes cast by the qualified electors of the municipality are in opposition to the annexation, the municipal council shall publish the result of the election and table the proposed ordinance.

(I) When the procedure for annexation provided for in this section is followed, any freeholder owning real property in the area to be annexed equal to twenty-five percent or more of the total assessed value of all real property of the area proposed to be annexed and any freeholder owning agricultural real property in the area to be annexed shall receive written notice of the proposed annexation by certified mail, return receipt requested, from the municipal clerk. Unless the freeholder files written notice with the municipal clerk at least ten days before the election provided for in subsection (D), the freeholder's property must be considered as part of the area proposed to be annexed for the purposes of the annexation election. If the freeholder files written notice objecting to the inclusion of his property in the area to be annexed with the municipal clerk at least ten days before the election provided for in subsection (D), then the freeholder's property must be excluded from the area to be annexed. For purposes of this section, 'agricultural real property' means:

(1) land used to grow timber, if the size of the tract is ten acres or more. Tracts of timberland of less than ten acres which are contiguous to or are under the same management system as a tract of timberland which meets the minimum acreage requirement are treated as part of the qualifying tract. Tracts of timberland of less than ten acres are agricultural real property when they are owned in combination with other tracts of nontimberland agricultural real property that qualify as agricultural real property. For purposes of this item, tracts of timberland must be actively devoted to growing trees for commercial use;

(2) all other agricultural real property, if the size of the tract is ten acres or more. Tracts of other than timberland of less than ten acres which are contiguous to a tract which meets the minimum acreage requirement are treated as part of the qualifying tract;

(3) tracts of other than timberland not meeting the acreage requirement qualify if the freeholder reported at least one thousand dollars of gross farm income on his federal income tax return Schedule E or F for at least three of the five taxable years preceding the year of the annexation. The municipal clerk may

require the freeholder (a) to give written authorization consistent with privacy laws allowing the clerk to verify farm income from the South Carolina Tax Commission, or the Internal Revenue Service and (b) to provide the Agriculture Stabilization and Conservation Service (ASCS) farm identification number of the tract and allow verification with the ASCS office."

Annexation of special purpose district

SECTION 2. Chapter 3 of Title 5 of the 1976 Code is amended by adding:

"Section 5-3-310. When all or part of the area of a special purpose district as defined in Section 6-11-1610 or a special taxing district created pursuant to Section 4-9-30, or Section 4-19-10, et seq. or an assessment district created pursuant to Chapter 15 of Title 6, or any other special purpose district or special taxing or assessment district is annexed into a municipality under the provisions of Section 5-3-300, the following provisions apply:

(1) At the time of annexation or at any time thereafter the municipality may elect at its sole option to provide the service formerly provided by the district within the annexed area. The transfer of service rights must be made pursuant to a plan formulated under the provisions of this act.

(2) Until the municipality upon reasonable written notice elects to displace the district's service, the district must be allowed to continue providing service within the district's annexed area.

(3) Annexation does not divest the district of any property; however, subject to the provisions of item (4) below, real or tangible personal property located within the area annexed must be transferred to the municipality pursuant to a plan formulated under the provisions of this act.

(4) In any case in which the municipality annexes less than the total service area of the district, the district may, at its sole discretion, retain ownership and control of any asset, within or without the annexed area, used by or intended to be used by residents within the district's unannexed area or used or intended to be used to provide service to residents in the unannexed area of the district.

(5) Upon annexation of less than the total area of the district, the district's boundaries must be modified, if at all, by the plan formulated pursuant to the provisions of this act. Such plan shall specify the new boundaries of the district."

Agreement

SECTION 3. Chapter 3 of Title 5 of the 1976 Code is amended by adding:

"Section 5-3-311. The plan contemplated by this act may be formulated by agreement of the district and the annexing municipality. If, however, the district and municipality do not agree on such a plan within ninety days following a favorable vote at the last referendum election required to be held to authorize the annexation, then the district and the municipality shall appoint a committee to formulate such a plan in accordance with the following:

(1) The district and municipality shall each select a member of the committee and the two members so selected shall select a third member.

(2) If the two members fail to select a third member within thirty days after the second of them is appointed, either member may petition the court of common pleas for the county in which the annexed area or any part thereof lies to appoint a third member.

(3) Within ten days after appointment of a third member, the three members must select a committee chairman from among themselves.

(4) Within sixty days after selection of a chairman, the committee shall develop a plan and present it to the district and the municipality.

(5) If either the annexing municipality or the district objects to the plan, it may appeal the plan to the court of common pleas for the county in which the annexed area or any part thereof lies. The appeal must be instituted within thirty days of the date the district or municipality receives the committee's plan.

(6) The court may modify the plan forwarded by the committee only upon finding an error of law, abuse of discretion, or arbitrary or capricious action by the committee.

(7) The fact that a plan has not been finalized may not in any way alter or delay the effective date of annexation; however, the district shall retain the right to operate its existing system, collect revenues, and collect taxes from or within the area annexed until such time as the municipality and the district agree on a plan or a plan is presented to the municipality and the district under item (4) above. In the event a plan is appealed to the courts, the court of common pleas for the county in which the annexed area or any part thereof lies may enter such orders under its general equitable powers as are necessary to protect the rights of parties pending final resolution of any appeal."

Plan to balance equities and interest

SECTION 4. Chapter 3 of Title 5 of the 1976 Code is amended by adding:

"Section 5-3-312. The plan formulated under this act shall seek to balance the equities and interests of the residents and taxpayers of the annexed area and of the area of the district not annexed. The plan may be formulated with regard to any factors bearing on such balance of equities and interests in accordance with the following:

(1) The plan may provide for certain service contracts to be entered into between the municipality and the district. The municipality has the right, in its sole discretion, to determine whether the municipality will provide service to the area annexed directly or by contract with the district. At the option of the district, the plan may provide for service contracts by which the municipality will provide service to residents of unannexed areas of the district.

(2) In any case in which less than the total service area of the district will be annexed by the municipality, the plan shall:

(a) protect the district's ability to serve the residents of the district's unannexed area economically and efficiently, and protect the district's ability to continue to expand or otherwise make service available throughout its unannexed area;

(b) protect the ability of the municipality to serve residents of the annexed area of the district economically and efficiently;

(c) protect the rights of the district's bondholders.

(3) To carry out the requirements of subitem (a) of item (2) above, the plan shall require the municipality to assume contractually the obligation to pay debt service on an amount of the district's bonded indebtedness or other obligations including lease purchase obligations adequate to offset the district's loss of net service revenue or tax revenue from the area annexed, in accordance with the following:

(a) specifically included within this amount must be revenues, if any, projected under the provisions of any governmentally approved plan promulgated pursuant to federal pollution control legislation;

(b) as the district retires bonded indebtedness existing at the time of annexation, the municipality's payment obligation under this provision must be reduced by the proportion which the principal amount of the indebtedness retired bears to the total principal amount of bonded indebtedness of the district at the time of annexation;

(c) as used herein, net service revenue means revenue from fees, charges, and all other sources, attributable to service provided in the area annexed, less the actual cost of operating and maintaining the system or facilities needed to serve that area; however, debt service or other payments required to finance capital assets may not be considered to be part of such operating and maintenance expenses. Tax revenue means taxes collected from property owners within the annexed area.

(4) Under any plan whereby the district must disconnect or reintegrate its facilities, the municipality shall bear the reasonable cost of such disconnection or reintegration. In the event that the plan contemplates that the district will continue to provide service by contract within the incorporated limits of the municipality, the municipality shall agree to provide the district with all permits or authority necessary to use municipal streets, alleys, ways, and other public spaces for the provision of such service.

(5) In no event may any provision be incorporated in any plan which will impair the rights of bondholders, or which will impair the statutory liens created by Section 6-21-330 or Title 7 of the United States Code, Section 1926(b), or which will accelerate the requirement to repay bonds, or which would violate the conditions of any grant.

(6) In no event may any plan require that the residents in the annexed area be taxed or assessed by both the municipality and the district for the provision of the same service, except as provided by the laws of this State.

(7) Absent consent of the district, neither annexation nor any plan hereunder entitles the municipality to any cash, securities, or other liquid assets of any kind of the district.

(8) Subject to the provisions of Article VIII, Section 15 of the Constitution of this State, the service provided or made available through any district may not be curtailed or limited by inclusion of the area served by the district within the boundaries of any municipal corporation or other public body, or by the granting of any private franchise for similar service within such area in a manner which would impair any of the district revenue bonds."

Auditor and treasurer to conform to plan

SECTION 5. Chapter 3 of Title 5 of the 1976 Code is amended by adding:

"Section 5-3-313. The auditor and treasurer of the county or counties in which the annexed area is located shall take such action as is appropriate to conform with the plan finally established pursuant to the terms of this act, including releasing or adjusting any levy of district taxes within any annexed area. The annexing municipality and the district shall execute and deliver such documents, including any deeds or bills of sale, appropriate to the implementation of such a plan."

Obligation may not be disturbed

SECTION 6. Chapter 3 of Title 5 of the 1976 Code is amended by adding:

"Section 5-3-314. In no event under any plan or otherwise may the obligation between the district and its general obligation bondholders or, in the case of a special tax or assessment district, the obligation between the district and the holders of the county bonds issued on its behalf, be disturbed. If adequate provision is not made for the levy of taxes or for payment of the principal and interest on such bonds, it is the duty of the auditor of the county to levy, and of the treasurer of the county to collect, an ad valorem tax, without limit as to rate or amount, upon all taxable property within the district as it was constituted on the dates those bonds were issued sufficient to pay principal and interest as they become due. Only bondholders or agents or trustees acting on their behalf may proceed at law or in equity to enforce this requirement."

Public hearing

SECTION 7. Chapter 3 of Title 5 of the 1976 Code is amended by adding:

"Section 5-3-315. Any district affected by the proposed annexation may conduct a public hearing within sixty days prior to the required election. The district must give at least fourteen days' notice of the time and place of this public hearing in a newspaper of general circulation within the area proposed to be annexed; however, failure to conduct a public hearing or failure to publish proper notice of the hearing may not delay any election or other proceedings herein."

Time effective

SECTION 8. This act takes effect upon approval by the Governor.