Annexation is the legal process that occurs when a city or town incorporates new property into municipal boundaries. A pre-annexation agreement is a contract between the incorporating municipality and the owner of the property being annexed. In most states, a pre-annexation agreement is not required, but private landowners and some municipalities prefer to work out a formal agreement to resolve utilities, services, zoning, density, and other land use approval issues.
Some private landowners are only willing to annex into a municipality if the legislative body of the municipality agrees to zone the property a certain zoning classification for a certain period of time. For example, a business may only agree to annexation if the city will zone the property for commercial uses. Or, an owner may only agree to annexation if the city agrees it will preserve the residential quality of the neighborhood by restricting the zoning classification to only residential.
Another key component of a pre-annexation that many private landowners like to see in the agreement is a provision relating to the density approvals on the property. A commercial zoning classification does not necessarily mean that the business owner will have the density desired. Many zoning classifications allow a range of density approvals, so this is something the pre-annexation agreement can address.
Pre-annexation agreements also commonly lay out how the utilities on the property will be provided. A landowner may be required to pay certain impact and connection fees, or provide a certain amount of water rights or physical infrastructure installments, so the pre-annexation agreement can address those requirements. Additionally, the agreement can address what commitments the municipality will make in providing utilities and municipal services, such as fire and law enforcement, to the newly annexed property.
Municipalities commonly ask annexing landowners and developers for exactions, which are essentially fees or dedications required from the private landowner or developer in exchange for land use approval, such as annexation, from the municipality. The U.S. Supreme Court has held that, in essence, any exaction imposed by a land use approval authority, such as an annexing municipality, must be roughly proportional and related to the approval granted. Generally, this means that the annexing municipality cannot, for example, require a landowner to donate road easements if the annexation of the landowner's property will not increase the burden on existing municipal roads. The pre-annexation agreement can give the municipality some flexibility to work around these restrictions on exactions.