Annexation: Where we are and where we go from here

by Eric MacGilvray

There has been a lot of talk in recent months about the possibility of annexing the Village of Riverlea into the City of Worthington. A process is now underway that will formally put the question of annexation before the voters. The purpose of this memo is to answer some of the many questions that you no doubt have about this process. As always you should feel free to contact me or one of your other elected officials if you have any other questions. We’ll do our best to keep you informed as the process moves forward from here, so please keep an eye on the Village Web site and future newsletters.

  1. Why is annexation an issue right now?
    The annexation question has come up at regular intervals over Riverlea’s history. Interest tends to fluctuate depending on the issues and challenges that are before the Village at a given time.

    As many of you know, a group of residents circulated a petition back in November requesting that the Village Council initiate annexation proceedings. According to Ohio Revised Code section 709.24, if such a petition is signed by 25% of citizens who voted in the most recent election then Council is required by law to pass an ordinance within 30 days appointing three commissioners to negotiate terms of annexation. The Franklin County Board of Elections determined that the circulated petition had 103 valid signatures, 91 of whom had voted in the most recent election. This represented about 30% of electors, which was enough to trigger the statute and bind Council to act. A copy of the signed petition is available on the Village Web site.

    Although there were news reports in December that the petition had attracted the necessary number of signatures, the Village Clerk did not receive the validated petition from the Board of Elections until early February. At the next regular meeting on February 22 Council voted unanimously to appoint three current Council members, Scott Gordon, Kirk McHugh, and myself, as commissioners. None of the organizers or signers of the petition attended the meeting, nor did any of them put their names forward to Council as possible commissioners.

  2. What happens next?
    The ordinance appointing commissioners for Riverlea has been delivered to the Worthington City Council, which has 30 days to appoint its own slate of three commissioners or to decline to act. Once they’ve appointed their commissioners, which we expect them to do, then the six commissioners will have 120 days to negotiate the terms of an annexation proposal. If we fail to agree on terms then a probate judge will appoint a seventh commissioner to break the tie. There is no guidance in the statute as to whom the judge should or would appoint.

    The proposal that the commissioners agree must be approved by a simple majority of Riverlea and of Worthington voters in order to pass. If it passes then annexation would take effect 30-45 days after the election. We hope to have the proposal on the ballot in November, but as it stands the timetable is going to put us hard up against the 2011 filing deadline for ballot initiatives, so there’s a chance that the vote won’t take place until the primary election in March 2012.

    The Ohio Municipal League hasn’t been able to find an example of this statute ever having been used before, so we’re all flying blind as we try to understand the legal and practical implications.

  3. Is Worthington interested in annexing Riverlea?
    Matt Greeson, the Worthington City Manager, has said that he’s interested in adding Riverlea to Worthington because he sees it as a “prestige” neighborhood, and is always interested in adding “prestige” neighborhoods to Worthington. But the bottom line for him is whether annexation makes sense to Worthington from a financial standpoint, weighing the tax revenue that we would bring to the table versus the cost of providing us with services.

    Obviously we can’t predict how people in Worthington will vote. Presumably the Worthington leadership will share their own sense of the pros and cons, but presumably Riverlea voters will be paying more attention to this issue than Worthington voters since it affects us much more than it affects them. So how the vote goes in Worthington is a wild card in this process.

  4. Is annexation a good idea for Riverlea?
    This is the $64,000 question, and it’s impossible to give a straightforward answer for at least three reasons. First of all, we won’t know what the terms of annexation actually are until the commissioners come up with a proposal. Second of all, even once there’s a concrete proposal on the table it will involve a lot of different factors that are hard to weigh against each other, which means that different people will draw different conclusions depending on what they care about most. What seems like a “pro” to one person will seem like a “con” to another, and what seems like a big deal to one won’t seem like a big deal to another. Finally, annexation is by its nature a bet on the future, and there’s no way to know for sure how Riverlea and Worthington will fare in the coming years, or how the leadership of each community might respond differently to the challenges that they face. Having said that, here are some of the key issues to be thinking about:

    1. Schools. This is an easy one: Riverlea is and will under any foreseeable circumstances remain part of the Worthington School District, which is a separate taxing authority from the City of Worthington itself. So annexation won’t affect this issue one way or another.
    2. Services. This is another easy one: the municipal services that Riverlea residents receive – police and fire protection, garbage and snow removal, street repair, maintenance of our two small parks, etc. – are already outsourced either to Worthington itself, to Sharon Township, or to private contractors. Although Council has chosen the service providers that we feel do the best job for the best price, most residents probably won’t notice much of a difference in the level and quality of services that they receive one way or another.
    3. Taxes. This is a fairly simple question in the short run, but more complicated in the long run. According to the Franklin County Auditor’s Web site property owners in Riverlea currently pay a slightly higher mill rate than those in Worthington. However, Worthington has a 2.5% local income tax, whereas Riverlea has no income tax. If annexation were to occur then this tax would be applied to anyone who works at home in Riverlea or who works in a community that doesn’t have a reciprocal tax credit arrangement with Worthington. It would also apply to net profits from business and rental activity in Riverlea.

      In the long run the fiscal picture is more complicated. Worthington and Riverlea have very different tax structures: where Riverlea gets about half of its revenue from property taxes, Worthington gets about 60% of its revenue from income taxes and only 12% from property taxes. This means that where Riverlea’s future revenue stream depends on property values remaining stable, Worthington’s depends more heavily on its ability to maintain and develop its business and commercial sector, which is always a challenge for a “landlocked” inner suburb. They raised their property taxes by 2 mills in 2006 and raised their income tax rate from 2% to 2.5% last year. Nevertheless, they ran a $2 million deficit in 2010 and a $1 million deficit in 2009, on a total budget of about $22 million.

      Riverlea has fiscal challenges too. We’ve run deficits in the last couple of years due primarily to engineering and other costs associated with our upcoming infrastructure upgrade, although because of our small size it’s typical for our expenses to fluctuate substantially above and below our revenue from year to year. As you know we recently approved a 1/2 mill property tax increase. Both communities would be hit hard, although Riverlea proportionately more, by the elimination of the local government distribution and the Ohio estate tax, both of which are currently being considered in the state legislature.

      In short, while both communities have faced significant fiscal challenges in recent years and will face significant challenges in the near future, those challenges are very different in nature, and it’s hard to predict how this will shake out from a tax standpoint over time.

    4. Infrastructure. As most of you know Riverlea will be undertaking a multi-million dollar infrastructure upgrade starting in 2013 to repair or replace our aging street beds, water mains and sewer system. How this project would be handled in the event of annexation will have to worked out by the commissioners, but Matt Greeson has said that he would recommend that Riverlea residents be assessed separately for the expenses, and we expect that this is the line that the Worthington commissioners (and Worthington voters) will take as well. In other words, Riverlea residents should expect to be on the hook for those costs one way or another.

      Another thing to keep in mind is that the Ohio Public Works Commission runs two programs that provide grants and zero-interest loans to municipalities for infrastructure repairs. The value of these grants and loans to Riverlea could be anywhere from a few hundred thousand to more than a million dollars. One of the biggest factors working in favor of our application would be the large cost of our project relative to the size of our community. There’s a lot of uncertainty here, since we don’t know if the current OPWC programs will survive in the state budget or exactly how well our application will fare, but joining Worthington would make it less likely all things being equal that we would receive that funding when the time comes.

    5. Ordinances. This is one of the most complicated issues that the commissioners will have to discuss. The most significant question will be how Worthington’s zoning ordinances would be applied in Riverlea. Worthington has two levels of residential zoning, a stricter one for Old Worthington (the area bounded by North, South, Evening and Morning Streets) and a looser one for other residential neighborhoods. Riverlea’s code more closely resembles the stricter Worthington code, although there are significant differences. We’ll have to decide which code would apply in Riverlea and how to deal with non-conforming properties: for example it’s likely that frontage and setback requirements would be different under Worthington than under Riverlea code. Whichever code is applied, Riverlea residents would still have to get approval from Worthington for exterior improvements to their homes.

      Zoning aside, there are significant differences between Worthington and Riverlea ordinances regarding waste disposal, street parking, yard signs, solicitations, leash laws, and a number of other issues that we’ll no doubt be learning about in the coming months.

    6. Home rule. This is really the central issue, especially in the long run. Annexation would mean that the Village of Riverlea would no longer exist as a sovereign entity, and that each citizen of Riverlea would go from being one vote in 400 to one vote in 14,000. For better or worse, it’s fairly easy for Riverlea residents to organize and change things if they don’t happen to agree with a particular law, decision, or elected official. This is much harder to do in a city the size of Worthington. Ironically, the annexation petition that triggered this process is an excellent illustration of this fact. More generally, the government of the Village exists in order to make decisions about neighborhood-level issues, and those decisions would be made much more impersonally if Riverlea were to become part of Worthington.

      A number of residents have contacted Council over the past few months to say that if we annex we need to make sure that Worthington does or doesn’t do X, where X could be anything from installing streetlights, connecting roads, regulating the riverfront properties, etc. It’s important to keep in mind that legally speaking there would be no “we” after annexation, and that short of amending the Worthington charter there’s very little that the Worthington commissioners or the current Worthington Council can do to bind future Councils with regard to any of these issues. That’s what’s at stake with the loss of home rule.

  5. What is this going to cost?
    The legal and consulting fees associated with preparing an annexation proposal are likely to cost Riverlea residents in the tens of thousands of dollars. Unfortunately there’s no responsible way for us to avoid incurring these costs, even if annexation ultimately doesn’t go through. This is a complicated issue, the stakes are high, and the statute that was triggered by the annexation petition requires that we reach an agreement within 120 days. Given that we have to prepare a proposal, we need to make sure that it’s a sound one and that all of the implications – legal, financial, and practical – have been carefully considered. As I mentioned above there’s no record of this statute having been used before, so there’s no one we can turn to who has experience as to how exactly the process is supposed to go.
  6. What can residents do?
    First of all, we hope that every resident will take the time to inform themselves about the pros and cons of annexation: again, this is a complicated issue, and this memo has only scratched the surface of the questions involved. The Riverlea commissioners will hold at least one public forum on this issue, probably in the late summer, once we have a proposal on the table. We welcome and are in fact counting on your input.

    Second of all, we understand that this is an emotional issue for many people on both sides, but we urge residents to keep in mind that there are reasonable arguments for and against annexation, and to please be civil to one another as the process moves forward from here.

    Finally, be sure to vote!