IN THE SUPREME COURT OF MISSISSIPPI
NO. 2007-AN-00826-SCT
IN THE MATTER OF THE ENLARGEMENT AND EXTENSION OF THE CORPORATE LIMITS AND BOUNDARIES OF THE CITY OF SOUTHAVEN, MISSISSIPPI: CITY OF HORN LAKE, MISSISSIPPI, CITY OF OLIVE BRANCH, MISSISSIPPI, CITY OF HERNANDO, MISSISSIPPI, TOWN OF WALLS, MISSISSIPPI, SUMMERWOOD, WHITTEN PLACE HOMEOWNERS ASSOCIATIONS AND OTHER INDIVIDUAL OBJECTORS
v.
CITY OF SOUTHAVEN, MISSISSIPPI
DATE OF JUDGMENT: 04/10/2007 TRIAL JUDGE: HON. MITCHELL M. LUNDY, JR. COURT FROM WHICH APPEALED: DESOTO COUNTY CHANCERY COURT ATTORNEY FOR APPELLANTS: JAMES H. HERRING ATTORNEYS FOR APPELLEE: JERRY L. MILLS MARK SORRELL NATURE OF THE CASE: CIVIL - MUNICIPAL BOUNDARIES & ANNEXATION DISPOSITION: AFFIRMED - 01/15/2009 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC.
DICKINSON, JUSTICE, FOR THE COURT:
¶1. The Chancery Court of DeSoto County found that the City of Southaven’s proposed
annexation was reasonable and granted the annexation. We affirm. BACKGROUND FACTS AND PROCEEDINGS
¶2. The City of Southaven (“the City”) sought to annex three separate parcels;
specifically, property to the northeast (the “Northeast Parcel”), to the south and to the
northwest of the city. The Northeast Parcel is bordered on three sides by the City of
Southaven and, on the fourth, by the City of Olive Branch.
¶3. On March 5, 2004, the City filed its petition to annex in the Chancery Court of DeSoto
County. On October 27, 2005, Summerwood Homeowners’ Association, Whitten Place
Homeowners’ Association, and individual objectors (collectively, “the Objectors”) filed a
motion to dismiss challenging the accuracy of the description of the proposed annexation
area (the “PAA”). The chancery court ruled that the description of the PAA was defective,
but denied the other relief sought in the motion. On February 10, 2006, the City filed an
amended petition in response. Thereafter, a bench trial was scheduled for September 18,
2006.
¶4. In its final judgment, the chancellor found that the proposed annexation was
reasonable in its entirety and granted the annexation. The Objectors appeal only as to the
annexation of the Northeast Parcel.
ANALYSIS
¶5. In annexation matters, this Court employs a limited standard of review and will
reverse a chancellor’s decision only if it is manifestly wrong and not supported by substantial
and credible evidence. Town of Marion v. City of Meridian (In re Enlarging, Extending
& Defining the Corporate Limits & Boundaries of the City of Meridian), 992 So. 2d
2 1113,1116 (Miss. August 14, 2008) (citing In re Extension of Boundaries of City of
Hattiesburg, 840 So. 2d 69, 81 (Miss. 2003)).
¶6. Summarily, the appellate review is limited to the question of whether the annexation
is reasonable, under the totality of the circumstances. See Lamar County v. City of
Hattiesburg (In re Extension of the Boundaries of Hattiesburg), 840 So. 2d 69, 73 (Miss.
2003). To determine the reasonableness of the annexation, this Court has laid out twelve
indicia of reasonableness which are not separate, independent tests, but rather need to be
considered under the totality of circumstances. Mun. Boundaries v. City of Madison, 650
So. 2d 490, 494-95 (Miss. 1995). These indicia of reasonableness are:
(1) the municipality's need to expand, (2) whether the area sought to be annexed is reasonably within a path of growth of the city, (3) potential health hazards from sewage and waste disposal in the annexed areas, (4) the municipality's financial ability to make the improvements and furnish municipal services promised, (5) need for zoning and overall planning in the area, (6) need for municipal services in the area sought to be annexed, (7) whether there are natural barriers between the city and the proposed annexation area, (8) past performance and time element involved in the city's provision of services to its present residents, (9) economic or other impact of the annexation upon those who live in or own property in the proposed annexation area, (10) impact of the annexation upon the voting strength of protected minority groups, (11) whether the property owners and other inhabitants of the areas sought to be annexed have in the past, and in the foreseeable future unless annexed will, because of their reasonable proximity to the corporate limits of the municipality, enjoy economic and social benefits of the municipality without paying their fair share of taxes, and (12) any other factors that may suggest reasonableness.
Madison, 650 So. 2d at 494.
(1) Need to expand
¶7. When determining a city's need for expansion, this Court has considered many factors,
including:
3 (1) spillover development into the proposed annexation area; (2) the City's internal growth; (3) the City's population growth; (4) the City's need for development land; (5) the need for planning in the annexation area; (6) increased traffic counts; (7) the need to maintain and expand the City's tax base; (8) limitations due to geography and surrounding cities; (9) remaining vacant land within the municipality; (10) environmental influences; (11) the city's need to exercise control over the proposed annexation area; and (12) increased new building permit activity.
In re Extension of Boundaries of City of Winona, 879 So. 2d 966, 974 (Miss. 2004) (citing
In the Matter of the Enlargement and Extension of the Boundaries of the City of Macon,
854 So. 2d 1029, 1034 (Miss. 2003)).
¶8. The City is a rapidly developing city with a population increase of twenty-five percent
in the four years that followed the 2000 census. Chris Watson, the City’s Urban Regional
Planner, testified that the City is also growing in the commercial, residential, industrial and
public sectors, as evidenced by the increased building permit activity in both commercial and
residential structures. Moreover, with the rate of population increase and commercial and
industrial development, the land in Southaven is quickly being absorbed, thereby accelerating
the City’s need for vacant, developable land. The City’s path for potential growth is also
limited in places by the Tennessee state line and the borders of other cities in DeSoto County.
¶9. However, the trial court specifically stated in its “Findings of Facts and Conclusions
of Law” that the City has no “need for developable land” in the Northeast Parcel because the
parcel “is essentially built out.” Even though we adopt the chancellor’s finding of the fact
that the Northeast parcel is “built out,” we do not agree with his analysis of this indicium.
Under this indicium, we assess the municipality’s need to expand, which is independent of
4 the character of the land sought to be annexed. Therefore, we find that the City properly
demonstrated its need to expand. Consequently, the indicium favors annexation.
(2) Path of growth
¶10. In determining the indicia of reasonableness for the path of growth, this Court has said
that a “city need only show that the areas desired to be annexed are in ‘a’ path of growth [sic]
this does not mean that the area is ‘the most urgent or even the city's primary path of
growth.’” City of Winona, 879 So. 2d at 977 (citations omitted). Moreover, this Court has
set out a number of factors to be considered, such as: (1) spillover development in
annexation area; (2) annexation area immediately adjacent to City; (3) limited area available
for expansion; (4) interconnection by transportation corridors; (5) increased urban
development in annexation area; (6) geography; and (7) subdivision development. Id.
¶11. This Court, in Enlargement and Extension of Municipal Boundaries of City of
Meridian v. City of Meridian, 662 So. 2d 597, 612-13 (Miss.1995), also held that the most
important factors when determining the path of growth are the adjacency of the proposed
annexation area to the city, accessibility of the proposed annexation area by city streets, and
spillover of urban development into the proposed annexation area. Here, the chancellor
found that, irrespective of the fact that the Northeast parcel “was platted and being developed
many years prior to Southaven’s extension of its boundaries,” spillover growth occurred in
that parcel from the State of Tennessee and the cities of Southaven and Olive Branch.
Furthermore, he found that the Northeast parcel is immediately adjacent to the City, that the
City’s subdivision development was “occurring in the direction of each of the [PAA],” and
5 that the Northeast parcel of land is in the path of growth of the City. The substantial credible
evidence at the hearing supports the chancellor’s finding of reasonableness for this indicum.
¶12. The Northeast parcel is surrounded on three sides by the City and therefore is clearly
adjacent to the City. The area is also interconnected to the City by Getwell Rd. on the west,
Malone Rd. on the east and Stateline Rd. on the north. Moreover, Watson testified that
portions of the annexation areas are accessible only from within the City, specifically Threat
Rd. The chancellor also noted that, a drive-through assessment of the area showed evidence
of massive subdivision development in Southaven in various stages. All these factors show
that the Northeast parcel is in the City’s path of growth and thus favor its annexation.
¶13. This Court finds that the chancellor’s findings for this indicium were supported by
substantial credible evidence and were reasonable. Thus, this factor favors annexation of the
Northeast parcel.
(3) Potential health hazards
¶14. This Court has set out the following factors in determining whether any potential
health hazards are reasonable: (1) potential health hazards from sewage and waste disposal;
(2) a large number of septic tanks in the area; (3) soil conditions which are not conducive to
onsite septic systems; (4) open dumping of garbage; and (5) standing water and sewage. City
of Winona, 879 So. 2d at 979 (citing In re Enlargement and Extension of the Boundaries
of the City of Macon, 854 So. 2d 1029, 1038 (Miss. 2003)).
¶15. The Objectors contend that the City does not offer centralized sewer service to the
residents of the Northeast parcel, but only offers “pressurized” sewer service on a voluntary
basis (i.e., if the residents are willing to pay for it). This implies that, as long as State
6 Department of Health regulations are complied with, the citizens who have septic tanks or
individual treatment plants at their homes will be allowed to retain those facilities.
Accordingly, they argue that the Court should not consider this indicum in its analysis
because, after annexation, there will be no change from the health requirements or conditions
that already exist.
¶16. Based on the experts’ reports and the residents’ testimonies, the chancellor concluded
that there was a definite need for central sewer service in the PAA, given the potential health
hazards created by poor maintenance of on site disposal systems by the property owners,
odor problems from septic tanks, and the topography, which facilitates backflow of sewage
to the City’s central sewer system. He further opined that a pressure system would be
available to the residents of the PAA if they were in the City. After considering the experts’
testimonies, the chancellor found that such a system was favorable because: 1) it is cheaper;
2) the installation would be less disruptive than a gravity system; 3) installation would be
faster; 4) it would eliminate potential health hazards; and 5) it would allow connections only
where needed.
¶17. This Court finds that the chancellor’s findings for this indicium were supported by
substantial credible evidence and were reasonable. Thus, this factor favors annexation of the
(4) Financial ability to provide municipal services
¶18. This Court has considered the following factors in determining whether there is
reasonable financial ability to provide municipal services to the PAA: (1) present financial
condition of the municipality; (2) sales tax revenue history; (3) recent equipment purchases;
7 (4) financial plan and department reports proposed for implementing and fiscally carrying
out the annexation; (5) fund balances; (6) the City's bonding capacity; and (7) expected
amount of revenue to be received from taxes in the annexed area. City of Winona, 879 So.
2d at 981-82.
¶19. The chancellor found that “the evidence clearly establishes that the City of Southaven
has the financial ability to provide the services and make the improvements set out in its
ordinance of annexation.” He stated several reasons for his conclusions. First, the chancellor
gave weight to the testimony of Demery Grubbs, an expert in municipal finance, who found
that the City is “more than capable of providing the services” outlined in the financial plan.
¶20. With regard to fund balances, the chancellor stated:
Grubbs testified that his firm recommended to municipalities that fund balances be maintained in the 10 to 12 percent range. The most current audit reflects that Southaven had over a 20% fund balance in the general fund. The fund balances maintained by Southaven is indicative of the financial ability to provide the services and make the improvements promised.
¶21. Moreover, the chancellor gave deference to Grubbs’s positive review of the City’s
sales tax history as well as to Mayor Greg Davis’s testimony attesting to the increase in the
City’s sales tax revenues from $3.5 million to $10 million for the current year. Additionally,
retail development in Southaven continues to be strong, evidencing continued sales tax
growth.
¶22. As to recent equipment purchases, the chancellor found that “the proactive nature of
the City of Southaven is dynamic evidence of its financial ability to serve the area.” This
evidence includes the staffing and equipping of a fire station to serve the Northeast parcel
and pumps to provide sewer service for the Northeast parcel.
8 ¶23. Grubbs also testified that the City has “an excellent bonding capacity” with other non-
bond financing options available to it as well. He also maintained that the City’s A-plus
rating with Standard and Poor’s Rating Agency was an excellent indicator of its financial
ability.
¶24. It is within the prerogative of the chancellor to accept or reject the testimony of any
witness, to consider all facts not in dispute, and to make his decision accordingly. In re
Extension & Enlarging of Boundaries of the City of Laurel, 922 So. 2d 791, 798 (Miss.
2006). This Court finds that the chancellor’s findings for this indicium were supported by
substantial credible evidence and were reasonable. Thus, this factor favors annexation of the
(5) Zoning and planning
¶25. This Court previously has upheld an annexation even when a town had no zoning
ordinance and presented no evidence of any urban planning. City of Winona, 879 So. 2d at
982 (citing In re Enlargement and Extension of Corporate Boundaries of the Town of
Mantachie, 685 So. 2d 724, 728 (Miss. 1996)). Conversely, this Court has upheld an
annexation even though a county already had a zoning ordinance. Id. (citing In re
Extension of the Boundaries of City of Ridgeland v. City of Ridgeland, 651 So. 2d 548, 559
(Miss. 1995)).
¶26. The chancellor found that this indicium did not favor the annexation of the Northeast
parcel because it “is a platted area and also has restrictive or protective covenants which
lessens the need for zoning and planning by the City of Southaven.”
9 ¶27. In this case, the record clearly demonstrates that DeSoto County has “an excellent
zoning ordinance and well organized county planning department.” Chris Watson also
testified that DeSoto County has had a comprehensive plan since 1958. Therefore, this Court
finds that the chancellor’s findings for this indicium were supported by substantial credible
evidence and were reasonable. Thus, this factor does not favor annexation. This factor alone,
however, does not determine whether or not the annexation is reasonable. In re
Enlargement and Extension of Municipal Boundaries of City of Biloxi, 744 So. 2d 270,
276 (Miss. 1999) (twelve factors “are only indicia of reasonableness, not separate and
distinct tests in and of themselves.”).
(6) Municipal services
¶28. In City of Winona, this Court said that the factors to be considered in determining
whether the need for municipal services is reasonable may include: (1) requests for water
and sewage services; (2) plan of the City to provide first response fire protection; (3)
adequacy of existing fire protection; (4) plan of the City to provide police protection; (5)
plan of the City to provide increased solid waste collection; (6) use of septic tanks in the
proposed annexation area; and (7) population density. City of Winona, 879 So. 2d at 984.
This Court has found that sparsely populated areas have less need for immediate municipal
services than densely populated areas. Id. (citing In re Enlargement and Extension of the
Boundaries of the City of Macon, 854 So. 2d 1029, 1041-42 (Miss. 2003)).
¶29. The chancellor determined that the indicium of reasonableness for municipal services
favored annexation. He based his conclusion on the fact that “[a]ll the parcels sought to
annexed are primarily urban or urbanizing,” and consequently, “in need of municipal services
10 or will be in foreseeable future.” Substantial credible evidence in the record supports the
chancellor's finding of reasonableness for this indicium.
¶30. The Objectors contend that “while it arguably could be stated that Southaven could
provide a higher level of such services, the evidence establishes beyond dispute that such
services are adequately provided to the Northeast parcel and that most citizens in that area
are adequately satisfied.”
¶31. Mayor Davis testified at the hearing that the fire station had been relocated to serve
the Northeast annexation area. As to the ambulance services, the City of Southaven has been
providing that service to the PAA even without an interlocal agreement to do so. Moreover,
Police Chief Tom Long elucidated Southaven’s plan to provide municipal-level police
services to the PAA so as to provide “more police presence” in the area. With regard to
septic-tank usage in the Northeast area, the Objectors’ engineer Danny Rutherford admitted
that a need exists in the PAA for a central sewer. With regard to the population density, the
Northeast parcel exceeds that of many municipalities around the state, thereby increasing the
need for municipal services.
¶32. Therefore, this Court adopts the chancellor’s findings as supported by substantial and
credible evidence. As the Northeast parcel develops and grows in population, the need for
municipal services will grow, and the City of Southaven is well-equipped to provide them.
Thus, this indicium favors the reasonableness of annexation.
(7) Natural Barriers
¶33. One of the indicia of reasonableness of a proposed annexation is whether there are any
natural barriers between the municipality and the PAA. The chancellor ruled that there are
11 “no natural barriers that would prohibit Southaven from providing the full range of municipal
services and facilities to all the areas sought to be annexed.” This Court finds that the
chancellor’s findings for this indicium were supported by substantial credible evidence and
were reasonable.
(8) Past performance
¶34. The Objectors proffered evidence alleging that the City of Southaven has a record of
inadequate past performance in providing services. They gave an example of annexation in
1997 when centralized sewer service was not provided by the City for six to eight years after
the annexation. They also pointed out that the City failed to maintain some roads which were
overgrown, impassable or unpaved.
¶35. When comparing what the City promised and what it delivered, the chancellor
concluded that Southaven had a record of good past performance. The chancellor considered
the commitments in the services and facilities plan adopted as a part of the 1997 annexation
and found that the City’s failure to provide sewer service, etc. “could be attributed to the vast
amount of work that has to be done in a city with a growth rate of Southaven.” He further
said that “there must be a line of priority,” concluding the City kept most of the promises it
made in the 1997 annexation plan.
¶36. This Court has upheld an annexation as reasonable even when the City was unable to
provide all services to its present residents. See In re Extension of the Boundaries of
Hattiesburg v. City of Hattiesburg, 840 So. 2d 69, 89-91 (Miss. 2003). Therefore, the
chancellor was correct in concluding that the City’s past performance in providing services
to the residents and landowners within its existing boundaries supports the reasonableness
12 of the proposed annexation and favors annexation of the Northeast parcel. This Court finds
that the chancellor’s findings for this indicium were supported by substantial credible
evidence and were reasonable.
(9) Economic or other impact on residents and property owners
¶37. The Objectors argue that the proposed services they will receive if the PAA is
annexed, are already furnished to them by DeSoto County. In addition, the Objectors claim
that they will be forced to pay higher ad valorem taxes and that the annexation will cost each
homeowner from $1,062 to $1,319 per year. They describe the annexation as nothing more
than a “tax grab” or “tax crutch” for the City. Moreover, they contend that the mailing
addresses in the Northeast Parcel will change, and this will result in a huge inconvenience
to the citizens for several years.
¶38. The other economic argument the Objectors present concerns the reduction of
property values in the Northeast Parcel. First, because property values are higher in Olive
Branch than Southaven,1 the Objectors argue that losing association with Olive Branch will
adversely affect property values in the Northeast parcel. Second, they presented the
testimony of Jamie Edward Coker, a realtor and real estate broker, stating that the value of
the homes in the Northeast parcel will be driven down because, in her opinion, customers
prefer gravity centralized sewer system over the pressure sewer system that Southaven is
offering.
1 The median home value in Olive Branch is $125,800, while the median home value in Southaven is $91,400.
13 ¶39. This Court previously has found that “[t]he mere fact that residents in the PAA will
have to pay more taxes is insufficient to defeat annexation.” City of Winona, 879 So. 2d at
988 (citations omitted). Under this indicium, in Matter of the Extension of Boundaries of
City of Columbus, 644 So. 2d 1168, 1172 (Miss. 1994), this Court clarified that the
reviewing court is required to balance the equities by comparing the City’s need to expand
and any benefits accruing to residents from the annexation with any adverse impact,
economic or otherwise, which probably will be experienced by those who live in and own
property in the annexation area. (Citing Matter of Boundaries of City of Jackson, 551 So.
2d 861, 867- 68 (Miss. 1989)). The mere fact that residents and landowners will have to
start paying city property taxes is not sufficient to show unreasonableness. Id. at 868.
¶40. Similarly, the Objectors’ argument in the case sub judice fails to convince this Court
to render the annexation unreasonable. Moreover, this Court finds that the chancellor was
correct in ruling that the change in mailing addresses would not be a significant
inconvenience.
¶41. As to the argument that property values would decrease in the Northeast parcel, the
balancing test as prescribed in Columbus is useful here. On one hand, the Northeast parcel
will receive fire ratings which will result in lower fire insurance rates, ambulance services,
more police protection, central sewer service, as well as other municipal services. On the
other hand, the residents may experience increased taxes and a decrease in home values. The
chancellor weighed each side and found that this factor weighs in favor of annexation. This
Court agrees because the chancellor’s findings for this indicium were supported by
substantial credible evidence and were reasonable.
14 (10) Impact on minority voting
¶42. The impact on minority voting strength was found to be de minimis, as 90.3 percent
of the City of Southaven before annexation is white, 6.7 percent is African-American and 3
percent is described as “other.” 2 After annexation, those numbers will shift slightly to the
City of Southaven being 90.1 percent white, 7.1 percent African-American and 2.9 percent
other, which is a 0.4 percent change.3 This Court finds that the chancellor's findings for this
indicium were supported by substantial credible evidence and were reasonable. This factor
supports the annexation of the Northeast Parcel.
(11) Enjoyment of economic and social benefits of the municipality without paying a fair share of taxes
¶43. Based on the residents’ testimony, the chancellor found that “without a doubt . . . .
the residents would be in fact enjoying the benefits of proximity of Southaven” in fire
ratings, ambulance service, park and recreation service and road access.
¶44. The Objectors assert that they do not enjoy any benefits from the City without paying
for them. Furthermore, the Summerwood neighborhood has its own park, obviating the need
to depend solely on the Southaven park system. Consequently, the objectors state that they
are not “freeloaders.”
2 These numbers are obtained from the 2000 census. 3 This Court does not have before it the racial makeup of the Northeast Parcel. The entire PAA is 86.2 percent white, 13.1 percent African-American, and .084 percent other. However, for the purposes of analysis under this indicium, we consider the prior and resultant racial makeup of the City that seeks to annex, not the specific proposed annexation area. See In re Enlarging City of Brookhaven, 957 So. 2d 382, 386 (Miss. 2007).
15 ¶45. Under our limited standard of review, this Court cannot say that the chancellor abused
his discretion correct in finding that this indicium supports the annexation.
(12) Any other factors that may suggest reasonableness
¶46. Under this indicium, the Objectors contend that “based upon the telephone
conversation between Mayor Davis and Mrs. Stephanie Russell [Vice-President of the
Summerwood Neighborhood Association]. . . this annexation was pursued because of the
animus that the Southaven Board of Aldermen had against Mr. Sparkman, one of the
objectors, and others who were very vocal at City Board Meetings in opposition to this
annexation.” Therefore, they argue, the annexation is for spite or for an improper or arbitrary
reason.4
4 The pertinent excerpt from the recorded telephone conversation is as follows:
[Mayor Davis]: I just thought I would call you back. Mr. Sparkman has successfully over the last three of four weeks, agitated enough of my aldermen to where I can’t keep Summerwood out of it. So, I was informed after he agitated the last one after this past Tuesday that Summerwood would be part of annexation no matter what. So, I felt like I needed to let you know, since I told you different.
....
[Mayor Davis]: Sorry. And I had no idea, it’s different issues with different aldermen [sic], so I – ranging from sewer and water accusations to other stuff. But they just there isn’t no way in the world with him out there running his mouth that they aren’t going to go after him, and prove him wrong. So, anyway, I felt like I owed you a call. ....
[Stephanie Russell]: Who did he hack off? [Mayor Davis]: The last one was Greg Guh. [Stephanie Russell]: Uh, oh. [Mayor Davis]: So, that made number five, I gave up, I can hold three or four down. [Stephanie Russell]: He got six, right? [Mayor Davis]: I can’t hold five. Five out of seven is even too much for me to even fight.
16 ¶47. The chancellor did not address this issue. This evidence, however, is insufficient to
prove that the annexation was arbitrary or for an improper purpose. At most, it reflects one
of the Board’s considerations in deciding which areas to annex. Moreover, the objectors
themselves argue that if they must be annexed, they would prefer to be annexed by Olive
Branch. However, this consideration does not cause the annexation by Southaven to be
unreasonable.
CONCLUSION
¶48. Considering a city’s burden of proving the reasonableness of a proposed annexation,
and because, absent an abuse of discretion, we leave undisturbed a chancellor’s finding of
reasonableness, this Court affirms the chancellor's judgment approving the petition for
annexation.
¶49. AFFIRMED.
WALLER, C.J., CARLSON AND GRAVES, P.JJ., RANDOLPH, LAMAR, KITCHENS, CHANDLER AND PIERCE, JJ., CONCUR.