May 2005

Policy Statement 23 – Water and Wastewater System Extension and Connection Policy

It is the Town of Cary’s goal to establish a comprehensive annexation program that guides future annexation decisions and provides for an orderly and predictable extension of our municipal boundaries. The Town also desires to inform residents and property owners impacted by future annexation of the implications of annexation, the costs and benefits and what to expect in the process.

Specifically, the Town of Cary’s comprehensive annexation program seeks to establish annexation policies and evaluation criteria to objectively identify which properties are appropriate to annex and why. The program addresses both citizen-initiated annexation (heretofore referred to as voluntary annexation) and Town-initiated annexation (heretofore referred to as involuntary annexation), including establishing a process where areas for Town-initiated annexations are considered on a two-year cycle. A comprehensive public information element is included to ensure ample notice of possible annexation and raise awareness and understanding of the important details of annexation.

While not required by State law, this new program has been developed to help potential annexes as well as existing Cary citizens understand the various aspects of annexation. This document includes Part 1 of a two part program. Part 1 of the program contains key information about annexation and establishes policies and criteria that will guide future annexation decisions. Please note that is a policy document and does not grant any procedural rights. In other words, this document is a guide to assist in making annexation decisions; any deviation from this document would not be a basis for challenging annexation ordinances in the future.

Part 2, which will include maps, will be developed following the approval by the Cary Town Council of Part 1 and will use the policies and criteria to identify “annexation study areas” and establish a phasing plan with associated timeframes for annexation areas. This phasing plan will designate areas by the potential for annexation within a certain time frame (e.g. 1-4 years, 3 to 5 years, beyond 5 years) with the understanding that this is a general estimate and is subject to change. All areas that qualify for annexation within Cary’s urban service/planning area may be considered for annexation in the future.

Annexation study areas identified in Part 2 consist of unincorporated areas that qualify for annexation and may be considered for Town-initiated annexation sometime in the future. These maps will be used by staff as a guide in selecting areas that will be presented to Council for potential Town-initiated annexation during each even-calendar year (e.g. 2006, 2008). Staff will also present preliminary budget impacts for each recommended qualifying area. Council will decide every even year whether or not to pursue any or all of the areas recommended by staff. Once Council decides which, if any, areas to pursue for annexation, the staff will begin the official process for Town-initiated annexation as required by State law.

The Town of Cary’s comprehensive annexation program will apply to all properties within Cary’s urban services area as designated on our current Land Use Plan (NOTE: no areas are under consideration for Town-initiated annexation at the time of this program’s adoption).

This draft document was produced by Town staff using feedback from the Cary Town Council and participants from two annexation focus groups. One of the two focus groups was created from a randomized list of all 700+ owners of properties annexed into the Town of Cary in 2003, including but not limited to Summerwinds and Kingston Ridge. The other focus group was developed from a randomized list of all 2600+ owners of properties within Town of Cary resolution of consideration and intent areas from the last two years, including but not limited to Medfield Estates and Dutchman Downs.

Annexation is the legal process by which municipalities add land to their corporate limits. Since 1959, the North Carolina General Statutes give all municipalities the authority to annex areas that meet specified standards provided that required procedures are followed and the municipality commits to extend basic services into the annexed areas. The State’s annexation policy favors the expansion of cities to provide essential urban services to areas that are deemed urban in character, which is defined by the State in General Statutes 160A-48 Character of Area to be Annexed (see Section III for details). Specifically, only municipalities are authorized by law to provide the full range of basic urban services--from water and sewer service to street maintenance and improvements.

Cary, like other municipalities in North Carolina, may expand its corporate boundaries through two options: 1) Citizen-initiated annexation (referred to in the North Carolina General Statutes as voluntary annexation) and 2) Town-initiated annexation (referred to in the NC General Statutes as involuntary annexation). Both have specific procedures and qualifying standards that must be followed.

Ø Typically includes an immediate effective date following annexation ordinance’s adoption.

Citizen-initiated annexations typically take 3 months to process, while Town-initiated annexations take approximately 1 ½ years from start to effective date.

Historically, the expansion of Cary’s Town limits has primarily been the result of citizen-initiated annexation. Over the last 20 years, the Town has developed long range plans and made investments in essential facilities that provided a foundation for orderly growth and development that promotes a high quality of life and environment. This planning, in combination with Cary’s desirable location, resulted in significant expansion of Cary’s corporate limits as property owners needed Town services to support new developments consistent with our adopted land use plans and ordinances. Cary’s ordinances and comprehensive plans are effective tools at managing growth in a way that protects property values and results in high quality development.

Citizen-initiated annexation continues to be Cary’s primary method of annexation. The Town’s citizen-initiated annexation policy provides for annexation by property owners if they are requesting Town services. Thus far, a minority of these types of annexations have been the result of existing single family property owner’s requesting public utilities because their well and/or septic systems have failed. However, as homes around Cary continue to age, this type of situation will likely grow.

Town-initiated annexations represent a minor part of the total property annexed into the Town (about 2% of the total area annexed in the 20 years immediately preceding development of this policy. Historically, the Town has not pursued this type of annexation, in part, due to the successful growth of the corporate limits through citizen-initiated annexation. However, over the years, new developments within the corporate limits have expanded to surround unincorporated properties. Due to their location, these “doughnut holes” are considered for Town-initiated annexation because they could be more effectively served by the Town than the County. A significant portion of these areas included older subdivisions developed with private well and septic systems through Wake County within the boundary that is presently in Cary’s urban service area (within the Town’s planning jurisdiction, with services of water, sewer and emergency services). Four of these subdivisions and many non-subdivision single family lots have experienced private system failures that resulted in the Town providing public utility service without immediate annexation provided that annexation agreements were signed by all the property owners. (An annexation agreement is a legal document that states that the property owners agree to submit a citizen-initiated annexation petition upon the request by the Town anytime in the future.)

Town-initiated annexations have occurred in 1974, 1982, 1991, and 2002. In 1982 approximately 270 acres were annexed. In the 1991 Town-initiated annexation, properties that were already connected to Town water and/or sewer were annexed (approximately 90 acres). In 2002, a comprehensive annexation resulted in incorporating approximately 755 properties containing a total of 1,039 acres (including 629 residential dwelling units).

A majority of these properties were included in County subdivisions that were nearly completely surrounded by Cary Town limits. Annexation of these “doughnut holes” provided for more efficient service delivery and the availability for public water and sewer for these new residents. Soon after the 2002 annexation, approximately 362 property owners, primarily from five subdivisions, requested that water and/or sewer be extended into portions of their subdivision. These property owners chose to sign a petition to request the Town fund a utility extension project within their subdivision. Some residents participated while others within the same subdivision chose not to connect to utilities at that time. The percentage of voluntary participation by residents ranged from 100% to 50%.

This level of participation (approximately 58% of the residential property owners whose property was annexed and 87% within existing subdivisions) demonstrates the desire from a majority of these residents to replace their private well and septic systems with a more permanent public system at a reasonable cost.

The main focus of the Town of Cary’s comprehensive annexation program is to acknowledge and wherever possible successfully address the following issues:

· Unincorporated Subdivisions Adjacent to Corporate Limits – Today, many unincorporated subdivisions and individual residentially used properties exist within the Town’s designated service areas. In Cary and other Wake County jurisdictions, the County has designated those areas within its 1988 General Development Plan should be included within municipalities due to existing and future plans for municipal services. These unincorporated subdivisions are served by private well, septic and/or private utility providers (i.e., Heater Utilities). Due to failures or inability to support the homes with private well and/or septic systems, four unincorporated County subdivisions are already receiving Town utilities (i.e., Hollybrook, Cary Oaks, Oak Chase and Jamison Park).

Most of the unincorporated subdivisions were developed under one of two conditions. First, they were not within the Town of Cary’s Extraterritorial Planning and Zoning Jurisdiction (ETJ) or second, they developed at a time when the Town of Cary did not have the utilities extended to these areas. Since the property rights laws of the State of North Carolina give property owners the right to use their property, the Town of Cary did not have the authority to deny the owners use of their property, even if utilities were not available to serve it and whether or not it was in Cary ’s ETJ. The zoning of areas outside of Cary’s ETJ is regulated by Wake County. The County’s past and current zoning regulations allow residential development at urban density with private wells and septic systems.

Cary, exercising authority given to it and other municipalities by the General Assembly, has and can vote to annex qualifying properties in order to provide services, manage urban growth and protect the area’s health, safety, welfare, and environment. Most property owners facing a Town-initiated annexation oppose this action and the increase in taxes.

· Individual Property Rights Versus Long-term Communal Interests
Individual property owners opposed to annexation are concerned that the process designated under State Law is contrary to democratic principles and individual property rights. They are concerned that their individual interests are being subjected to the interests of a larger community that they feel they do not belong to (such as Cary) rather than seeing themselves as part of a State that defines annexation as important.

· Timing, Completeness, and Clarity of Information About Annexation – For a number of reasons, many property owners do not completely understand the complex issues of annexation. Inaccuracies are primarily related to the costs of public utilities and if and when properties are required to connect. In addition, property owners are confused about how zoning regulations apply to their existing properties. Specifically, owners are concerned about any additional regulations that may apply to them upon annexation.

· Timing of Annexation – Property owners in qualifying annexation areas are concerned about if and when annexation will occur. Many residents may be less opposed to annexation if they are provided enough notice to prepare for its implications.

· Impact of Citizen-Initiated Annexations on Town-initiated Annexations – Historically, the Town has routinely approved citizen-initiated annexations. However, approval of these annexations may lead to creating more “doughnut holes” and may jeopardize the potential for Town-initiated annexations of properties. In the 2002 annexation, several potentially eligible properties were not annexed due to a previous citizen-initiated annexation.

As outlined earlier in this document, annexation is an important tool for North Carolina, which has provided its localities to expand their boundaries, protections, and services in accordance with adopted plans and policies. Only municipalities are authorized by State law to provide the full range of services required to support developed/developing areas (i.e., water and sewer services, solid waste collection and disposal, street maintenance and improvements). Counties are not authorized under State law to provide street maintenance and improvement and do not typically provide public water and sewer, which is the case in Wake County. This is one of the reasons why nearly all places used for the general public’s day-to-day activities are located within the corporate limits of or are served by municipalities. Municipalities can provide the services and facilities to support more urban and concentrated development. Places such as schools, restaurants, hospitals, apartments, shopping centers and other retail areas require the complete array of services that counties are not directly nor typically authorized under State law to provide.

State annexation policy allows for municipalities to expand, which maintains the financial strength needed to deliver essential services at a reasonable cost. According to a staff memorandum prepared by George Esser for the Municipal Government Study Commission, annexation is important to a municipality’s fiscal health. The State’s annexation statute permits a city to “extend its tax base and ….secure payment from services from those who receive the services.” Cities with such an annexation power would benefit from “a more stable and equitable property tax base,” enabling the city to have “a more stable income and (be better) able to meet its capital needs.”

In addition, State annexation laws encourage the growth of existing municipalities to reduce redundant services and redundant costs, provide for economy of scale, more uniform level of service, and ultimately improve the vitality and quality of our communities and, therefore, our State.

One of the most important issues of many of the owners of property being considered for Town-initiated annexation is their perception that the process is undemocratic since the State-mandated process does not include an election for them to vote on the proposal. Further, they state that they have no representation regarding annexation. However, the process for annexation was adopted into law by members of the State General Assembly, a group of men and women that all registered voters in North Carolina elect regardless of jurisdiction or incorporation.

In a representative democratic society there are areas of public policy where a determination must be made about what is in the best interest of the public as a whole if individuals and their property are to be protected and provided for now and for the long-term. For example, the Town of Cary has and continues to provide emergency water and/or sewer connections to subdivisions and individual lots within Wake County where private utility failures that are not repairable or contaminated wells have left residents seeking help to protect the use of their property. If the Town had made no future plans to serve these areas for the greater public good then these owner’s property values would diminish significantly.

The authority to make Town-initiated annexation decisions has the same basis in democratic theory that gives elected officials the authority to make decisions that are in the best interest of protecting the public health and welfare as their representatives. Specifically, the authority to make these decisions is the same that allows elected officials to regulate land use, define individual behaviors and the use of property that are nuisances to the public as whole.

According to David M. Lawrence with the Institute of Government at The University of North Carolina at Chapel Hill, the enabling statutes for annexation are based on what is in the best interest of municipalities and the State as a whole.

“The involuntary annexation statutes are based on the idea that an incorporated city is at the center of, but is not the whole of, an urban community – a community defined less by governmental boundaries than by economic and social realities. Although the city is not the whole of its urban community, it has much to do with the community’s existence, health, and growth. If the city did not exist, the larger community would probably not exist either. It is the attractive power of the jobs and quality of life generated by or within the city that creates the larger urban community. That being the case, the statutes are based on the conclusion that it is good public policy – for the city and its citizens, for those living in the urban fringe, and for the people of North Carolina – that the city be able unilaterally to annex developed and developing property within its surrounding urban community. “

In addition, the State annexation statutes for Town-initiated annexation support municipalities’ annexing developed areas adjacent to their boundaries to ensure that those that receive benefits also participate at an appropriate and meaningful level in paying for these services/benefits. As stated above, unincorporated residents do benefit from the Town’s investment in the community. This is also supported by the North Carolina Supreme Court decision upholding an annexation undertaking by the City of Winston-Salem:

“It is common knowledge and experience that residents of areas adjacent to our cities and towns which are subject to annexation under the laws of our State enjoy a great many city services financed by city taxpayers without paying city property taxes themselves. Most of those outside residents work in the city, shop in the city, use all manner of office facilities in the city, use in-city health care facilities, park and recreational facilities and programs and while doing so use city streets, city law enforcement and fire protection services, city garbage and refuse collection services, city parking facilities and city water and sewer services. They also receive planning, zoning and inspection services from the city. With the possible exception of parking fees, inspection fees, and in some instances fees for the use of recreational facilities and perhaps some other isolated costs, these outside residents pay nothing for these services financed by taxes paid by residents of our cities. Fairness dictates that there comes a time when these residents must join in bearing the costs of those services.” (In re Annexation Ordinance (Winston-Salem), 303 N.C. 220, 233-34, 278 S.E.2d 224, 233 (1981))

One of the reasons for the State’s annexation policy is that municipalities are the appropriate authority to decide on the extension of their boundaries. Municipalities are established by the State to make decisions to support the objectives of the larger urban community. Allowing extension of municipal boundaries to be the responsibility of individual residents living outside a municipal boundary would not fulfill the municipalities’ responsibility given to them by the State to protect and promote the health, safety and welfare of existing and future residents in consideration for the long-term viability of North Carolina. .

Annexation accomplishes several goals that are beneficial to existing Town property owners. These goals include to 1) improve service efficiency and effectiveness, 2) plan for future service delivery and development of utility capacity to benefit the property owners in qualifying annexation areas, 3) protect the environment and public health, 4) accomplish these goals in a manner that does not place a financial burden on the residents of the annexation areas or the existing citizens of Cary, and 5) allocate the cost of providing urban services and infrastructure to serve those benefiting on an equitable basis.

Unincorporated property owners/residents do benefit the Town through their valued patronage of commercial establishments; however, none of the sales taxes come directly to Cary since sales tax is apportioned to municipalities based on population, and, by definition, unincorporated patrons do not count towards Cary’s population total. In addition, these valued patrons do not participate fully and appropriately in financially supporting the Town’s obligation to provide essential urban services to these commercial areas such as street construction and maintenance as well as fire and police inspection and protection to name a few.

Unincorporated property owners/residents also benefit the community with their involvement in schools, religious institutions, charities, volunteerism, and civic organizations. However and again, unincorporated citizens do not participate fully and appropriately in financially supporting the Town obligation to provide the essential urban services necessary to support these community benefits.

Lack of full and appropriate participation in financial support creates inequity among unincorporated property owners and Cary taxpayers. Annexation of developed properties as allowed by the State ensures that everyone that benefits contributes to funding the government services and facilities needed. Without the ability to annex, Cary residents would be carrying more than their fair share of the financial responsibility for the areas high quality of life.

In addition, developed properties that exist within our designated service area and outside of our Town limits can produce inefficiency, duplication and unnecessary costs for the County and Town tax payers. The existence of unincorporated residential areas on the outskirts of or as doughnut holes within existing municipalities can increase the County taxes municipal residents have to pay to support duplications in urban services such as police patrol, parks and recreation, solid waste disposal and others.

Elimination of qualifying annexation areas over time reduces duplication of urban services and will help keep taxes lower for everyone, both inside municipalities and in the county. As it is now, municipal residents are subsidizing the duplicative urban services that are provided by the county because municipal residents also pay county taxes.

One of the main questions that residents with property proposed for annexation asks is “How much will this cost?” While the answer will vary from property owner to property owner, the most significant financial impact for most potential annexes is the payment of municipal property taxes--both real and personal (including homes, cars, boats, etc.), the monthly solid waste fee, and an annual per vehicle license fee of $15. The solid waste fee should be a reduction for most residents from their private collection service. The vehicle license fee is dedicated toward Town transportation improvements and to support capital and operational funding for our Town’s transit system, C-Tran. One of the major misconceptions about cost is associated with public utilities.

No Requirement to Connect to Town Utilities - Property owners may continue to use their private well or septic system; there is no requirement to tie onto Town water and/or sewer once a property is annexed. It is the sole decision of each individual property owner to determine when or if to connect to Town utilities.

Cost of Town Utilities is Voluntary - With the exception of a small, monthly availability fee that may be charged if utilities voluntarily requested by adjacent neighbors extend to a person’s property but he/she decided not to connect, all the costs associated with extension of utilities are purely voluntary. Property owners would have to sign a petition to request any utility extensions to be subject to the associated utility costs.

Taxes Do Not Fund Water and Sewer Extensions – Funding for water and sewer extensions are paid from user development fees and utility rates, not from property taxes; therefore, the users of water and sewer fund the Town’s utility services. This means that property owners who are not connected to the water and sewer system are not entitled to these services just because they pay Town property taxes. Town taxes are used for general government services such as police, fire, parks, street improvements, and a variety of other Town department services. In addition, Town utilities are optional for existing homeowners using private wells and septic systems. Prior to annexation occurring, each property owner is responsible for maintaining their private well or septic systems in a properly functioning state of repair. After annexation of properties on well and septic systems, the Town has no obligation for repairing these private systems.

The following sections detail the financial impacts, benefits, utilities and impact of regulations.

Upon annexation, new residents and property owners assume both the benefits and the full and fair responsibilities of living within the Town. One such responsibility is payment of property taxes. Yard waste pickup, nationally accredited and enhanced police service and fire protection, street maintenance, snow removal, street lights, reduced parks and recreation fees, ordinance enforcement, and capital contributions toward roads, parks, and open space will all be provided through these property taxes.

The net financial impact will be less than the 42 cents per $100 in assessed value (Town of Cary current property tax rate). To help illustrate this point and with the recognition that every situation is different and cannot be reasonably included in this document, the examples below are provided to illustrate the potential impact of Cary taxes on homes assessed between $150,000 to $300,000 at the 2003-2004 Cary tax rate of 42 cents per $100 in property value. These are all averages and each property will be different. The examples are based on solid waste fees and taxes in effect at the time of this program’s adoption; these may change in the future. The purpose is to give a realistic look at the potential financial impact from Cary’s taxes.

= With tax deductions: $291 annually ($24.25 monthly)
= Without tax deductions: $515 annually ($42.92 monthly)

= With tax deductions: $395 annually ($32.91 monthly)
= Without tax deductions: $675 annually ($56.25 monthly)

= With tax deductions: $499 annually ($41.58 monthly)
= Without tax deductions: $830 annually ($69.58 monthly)

Taxes are collected according to the fiscal year schedule, which begins on July 1 and ends June 30. A property owner’s first tax year begins when annexation takes effect and is prorated for the remainder of the fiscal year. For example if the annexation effective date is June 30, 2006, the property taxes are assessed and typically must be paid no later than early January 2007 for the full fiscal year July 1, 2006 through June 30, 2007.

Other savings may include reduction in homeowner’s insurance and elimination of monthly street light costs. Again, costs and savings differ based on individual circumstances.

How Cary Taxes Are Used:

The figure below represents how taxes are allocated among different areas. It is important to note that none of these taxes are used to obtain bonds and/or to support expenditures for water and sewer plants or infrastructure construction; Cary’s utility services are totally supported by and accounted for within utility rates paid by utility customers, and Town-initiated annexes are not required to connect to utilities. The percentage of the taxes that repay debt is for parks, roads and other general government facilities.

For details on budget allocations, please review a current copy of the Town of Cary’s Annual Budget, available online at www.townofcary.org.

Like most municipalities, Cary does have and enforces laws to help ensure the development and maintenance of healthy neighborhoods. As in other communities, Cary’s regulations address safety, health, welfare and appearance. Below is a list of what many property owners consider to be the most significant regulations.

* Loud and disturbing noises are prohibited – In general, a limit of 60 decibel at an adjacent residentially zoned property line.

* Minimum housing standards are established to ensure safe housing fit for human habitation

* Long term parking of travel vehicles must be in side or rear of residential properties

* Changes to a grandfathered use/structure (Use/Structures that do not meet current setbacks or use regulations are allowed to continue until significant changes are proposed.)

* Restrictions on expansion to non-conformities uses (e.g. farm animals in a non-agricultural zoning district)

Upon the annexation effective date, the Town will assign a zoning designation that will be the best fit for the existing County zoning designation and not create non-conformities. Typically, when the Town rezones properties that are currently used, non-conforming items related to the use of the property (i.e., items that do not conform to the Town zoning regulations and codes) are grandfathered. This means that the non-conforming item may continue but could not be expanded to further the non-conformity.

Upon the annexation effective date, property owners are also required to obtain building and related permits (plumbing, electrical, mechanical) for changes to their property from the Town of Cary Inspections and Permits Department. Both the County and the Town enforce the same State Building Code, so the type of regulation enforced in this area will not change upon annexation. For most property owners, limited changes will be required on the use of property upon annexation, and every effort will be made to support the property’s existing use.

In summary, newly annexed residents should not see a significant impact from Town regulations on the way they use their properties.

Newly annexed residents receive benefits from being within the Town limits. For example, in exchange for annexation, the Town commits to providing essential and high quality services to support new and existing development. Upon the effective date of the annexation, new residents begin receiving services from Cary. These services include weekly solid waste and recycling collection, street maintenance, police and fire protection, and other general government services. More detail on these services and others benefits are listed below.

· Street maintenance including pothole repair and resurfacing for qualifying roads

· Fast, dependable, and comprehensive police and fire protection services from nationally accredited departments

· Priority access to lower cost and nationally accredited parks, recreation, and cultural resources facilities and programs

· Low crime (safest city in North Carolina and consistently in the top 10 of all municipalities over 100,000 in America)

· Opportunity to choose to connect to public water and sewer (must meet policy requirements –see below)

After the annexation effective date, the Town of Cary will initiate the process of taking over maintenance and improvement responsibility for all of the minor, local public roads in annexation areas from the North Carolina Department of Transportation (NCDOT).

Existing roadways within these subdivisions will remain the same with the exception of pothole repair and resurfacing for qualifying roads (non-curb and gutter streets will generally remain the same). Street lighting and sidewalks along these streets are optional and are typically only installed by the Town upon request by the majority of the residents within the neighborhood. Upon annexation, residents along a street may request additional street lighting, beyond that already installed, provided current street lighting does not meet Town standards and the request includes an approved petition (see attached policy for more details). For most residential subdivisions, there will be little to no change to the existing neighborhood’s physical environment after annexation.

Once these roads become Town-maintained, the Town of Cary Public Works and Utilities Department will provide the following services:

· Missing and broken storm drain or manhole cover replacement on public property;

Each year Town of Cary staff hires an independent agency to provide a pavement condition survey for all Town-maintained streets. The Engineering Department establishes a recommended priority list for resurfacing based on an annual street rating. These recommendations are voted on by the Cary Town Council.

All major thoroughfares, and some collector streets and residential streets, in any annexation area will continue to be maintained by NCDOT.

All existing private streets in the annexation area will remain privately owned and maintained.

One of the significant benefits of being annexed is the fast and dependable service provided by the Town’s nationally accredited Police and Fire Departments. The Police Department average response time is under 5 minutes in emergency situations and under 20 minutes in non-emergency situations. The Cary Fire/Rescue Department provides fire suppression, emergency medical service in a first responder capacity, and technical rescue within the Town's corporate limits. The Fire Department staff at stations is organized into three rotating shifts that provide 24-hour coverage. Some of the Wake County volunteer fire departments have a combination of full time and volunteer positions; however, they do not provide 24-hour staff coverage at the fire stations. The Town’s Fire Department typically responds with more staff than volunteer department. Response times, 24 hour coverage and more people to assist can make a noticeable difference in emergency situations.

Upon the effective date of Town-initiated annexation, the Town will be responsible for extending major trunk water mains and sewer interceptors. Water and sewer service will be made accessible to the annexation areas such that the property owners within the annexation areas will be able to secure individual water and sewer service in accordance with the Town’s utility extension policy (see attached Policy Statement 23 for more detailed information on extension and connection to utilities).

Proposed trunk water mains and sewer interceptors that are not already in operation must be constructed by the Town within two years of the effective date of annexation. The proposed trunk water mains and sewer interceptors do not include local water and sewer mains extended into subdivisions that are typically constructed along the street frontage.

Provided they meet the requirements of the Town’s Utility Connection Policy, owners of annexed property are assured the opportunity to voluntarily connect to Cary's high quality, reliable water and sewer systems, enabling them to do away with their well and septic systems and the associated maintenance costs. Extensions of water lines include the installation of fire hydrants to enhance the fire protection provided to the area. Property owners within annexed areas are not required by the Town of Cary to connect to Town water and sewer services; it is up to each individual property owner to decide whether he or she wants to connect to Town utilities and when.

Please note, however, that in cases where a private system fails or no longer meets the demands of an expanding facility, Wake County Government may not approve of the installation/repair of a new well and/or septic system (typically if the public utility is within 300 feet of the property). While the Town of Cary is not requiring the connection, it may be, by default, a property owner’s only choice.

As has been the case with many properties annexed in 2002, groups of property owners within subdivisions have initiated petitions for the extension of Town water and/or sewer lines. Town of Cary utility extension and connection policy explains how a community or group of property owners may petition the Town Council for line extensions to obtain water and sewer.

While each individual situation may be different, the cost paid to the Town for connecting to public utilities is, on average, generally in the same range as the cost of replacing private wells or septic systems (ranging from $4,863 to $7,146 for both Town water and sewer). In other words, this is a cost that the owners of residential properties can expect to eventually have to bear each time their systems fail and there are several cases where repairing a septic system is not a viable option due to poor soil conditions or a lack of property. The provision of public utilities is a permanent solution and provides higher quality service over time both to the individual and the environment.

Some properties that are annexed do not require extensions of water and/or sewer lines because these facilities are already adjacent to the property. In these cases, the owner may choose to go through an individual request for connection to the water and/or sewer line. The owner will be required to pay the development fees and all the related connection charges. No petition of his or her neighbors would be required.

In cases where utility lines are not already adjacent to properties (see above), approval of utility extension projects requires majority consent from the property owners within the area to be served.

In isolated cases, the Town Council reserves the right to extend water and sewer lines to accommodate citizens with severe needs such as when their wells and/or septic systems fail and there are no viable options for repair.

Where an existing community water system must be purchased by the Town, the petition participation goals will be increased to include over 75% of the property owners in the community requesting municipal water service. The Town will need a greater number of residents who are requesting Town utilities to sign the required petition to implement a potential transfer of water services from a private company to the Town of Cary. This will also require Town Council approval to commit the additional funds needed if the private company must be compensated.

Essentially, a group of property owners who petitions for water and sewer lines pays development fees and discounted connection charges. These development fees are required to pay for utility plant capacity that is being used and expanded as new impacts are added to the overall system. The connection charges are necessary to reimburse a portion of the cost required to provide individual service lines to each property. As stated earlier, the Town’s utility system is a separate entity not supported by property taxes, which is why those requesting utilities must pay for the utilities.

In addition and unlike many other cities and towns, the Town of Cary has no assessment charges. Below is a listing of the Town’s current fees for residents desiring their property be connected to Town water and sewer. The total amount reflects the current fees for both water and sewer. This fee includes the water and sewer development fees plus 50% of the full service base tap connection charge. The property owner is responsible for running the private lines from the public water and sewer lines to the house.

Note: Home Size is based on the heated square feet as listed with the Wake County Tax Assessor’s office

The owners may pay development fees in three installments with no finance charges.

When the utility extension project is advertised for construction, property owners who did not participate in the original petition effort will receive a last opportunity to join the petition and take advantage of the routine connection charges waiver. They will have 90 days to join the petition by paying their development fees and discounted connection charges in full.

After the 90-day period, property owners requesting a utility connection will be responsible for paying the full utility connection charges and development fees. These utility connection costs are the actual construction costs for making individual utility connections to the Town system.

For the purpose of comparison with other municipalities, a sample property with 110 linear feet of street frontage and a home size of 1,800-2,200 square feet was reviewed. The results of the survey from selected other municipalities have been shown in the chart below. Please note that the information listed from other municipalities was obtained through fee schedules available on municipal Web sites and through phone conversations with staff members.

In reviewing the data from the largest municipalities in the State, Cary’s current fees are quite competitive and in most cases lower than the fees charged by several other larger municipalities (i.e., Raleigh, Durham, Winston Salem and Greensboro). This information demonstrates that property owners requesting water and sewer service through the petition process receive pricing that is fair and equitable when compared to other major service areas of the State.

NOTE: Chart titled water and sewer fees charged by selected municipalities is on with with the official minutes in the town clerk's office.

Based on 2005 construction costs, staff estimates that the Town pays approximately 42% of the construction cost to install utility lines within existing residential annexation areas. Overtime, this Town cost is recovered through the payment of utilities bills by these new customers and revenue generated from the newly annexed properties. The overall cost to most property owners is estimated at approximately 58% of the actual construction costs required to extend water and sewer lines and connections fronting their property. In addition to the above costs, the Town is also financially responsible for all other construction costs including those costs outside of the residential areas that are required for connecting new utility trunk/main lines to the existing Town system. Additionally, the Town maintains responsibility for 100% of the costs associated with design services, such as engineering, surveying, public notification, project management, easement recordation and construction administration.

The cost of installing private water and sewer service from the street right-of-way or public utility easement to dwellings and structures is the responsibility of the individual property owner. The cost of maintaining and abandoning existing wells and septic systems is also the property owner’s responsibility. Existing wells may be retained for irrigation purposes under certain circumstances in accordance with Town policies and ordinances.

The payment of water and sewer development fees by property owners who voluntarily choose to connect is typically done over a two year period. Exceptional circumstances may exist where a financial hardship exist with a property owner. On a case by case basis, the Town Council may consider financial assistance provided the following items are met:

1. The property owner is required to connect due to a private utility failure and the regulating County agency will not permit a repair to the private utility system(s) (i.e., no other alternative exist); and

2. The homeowner provides the town the necessary information that shows a clear financial hardship.

Upon connection to public utilities, the Town offers the Oasis program. Oasis is a program to help those going through financial hardship with their Town of Cary utility bill through donations from other utility customers. The money from the program may only be used for a Town of Cary utility bill or for plumbing repairs to fix leaks.

* A majority of the residents in a subdivision/area petition the Town to extend the utility in accordance with the Town’s policy;

* Owners who signed the petition make the three payments of the development fees over the allowable period of time

* Owner hires a plumber to run private lines to the house (timing of this action is at the owner’s discretion – owner may continue to use private well and/or septic system long after extension project is completed).

Once water and sewer lines are extended for the property owners that have submitted a citizen-initiated petition, the owners are not required to connect to the lines. However, property owners choosing not to connect will be required to pay a monthly availability charge (currently $1.97 per month for each utility) after the lines have been installed. The rationale behind this charge is to provide a means by the Town to support maintenance on the water and sewer mains adjacent to the property. The fee is only charged to owners if water and/or sewer services are made available to their property.

With the completion of the Town’s Water Treatment Plan Expansion to 40 million gallons per day in 2002, the Town has ample water to service existing and future needs for many years. However, the Town has a comprehensive water conservation program to provide solutions for maximizing the use of this crucial natural resource.

Demand for water during the hottest, driest days can be more than twice the daily average. Reducing this spike in usage lengthens the time before costly treatment plant expansion is required.

The purpose of these policies is to articulate and effectively guide decision making regarding annexation. These policies are for general guidance only. They are not intended to be inflexible and, as with other policies of the Town, may be varied under such circumstances and in such manner, as the Town determines to be appropriate.

An annexation effective date of June 30th, the last day of the Town’s fiscal year, assures that the area is in the Town for the full fiscal year beginning on July 1st. Affected property owners are entitled to receive a full, fiscal year of services and become obligated to pay property taxes for a full fiscal year (Town water and sewer service is not automatically provided because it is not funded through Cary property taxes and is optional for owners of existing homes on well and septic systems – See Section VII for more details)

10. As required by State laws, the Town will pay economic losses to all qualified solid waste collection firms and rural fire departments.

The State annexation laws outline the process and steps the Town must follow to compensate private businesses that provide public services when those private services are no longer needed because of Town-initiated annexation.

11. The number and the size of the annexed areas proposed every two years should generally be based upon the cost and the Town’s ability to extend services to these areas while still maintaining the quality of these services.

Evaluating potential annexation areas as they relate to the Town’s criteria on its current and future ability to serve is important. For example, similar areas that can be served by State required extension of main water and sewer trunk lines/facilities should be considered together. In addition, maintaining the quality of the service delivered to existing residents is important in evaluating the number and size of areas to be annexed.

The majority of citizen-initiated annexation petitions are for parcels of vacant land that the petitioners wish to develop for residential purposes.

1. Citizen-initiated annexations should be approved only in instances where the annexation of property under current or likely future residential use will not adversely affect the Town’s ability to annex other property.

The processing of a citizen-initiated annexation petition requires a review by key departments that would provide service to the annexed area, most notably Public Works and Utilities, Fire, Police, Planning, and Engineering. The question asked by each department is whether it could serve the proposed annexation area at a level comparable to areas within the Town without a negative impact on its operating or capital budgets or without decreasing the level of service already furnished within the Town

Principle: If the citizen-initiated annexation of land currently developed or earmarked for residential development may adversely affect the Town’s ability to annex other property in the future, staff will recommend against the citizen-initiated annexation.

Citizen-initiated annexations should be approved only in instances where Town services can be extended to the annexation area without an undue negative impact on Town finances or services.

Citizen-initiated annexation petitions may involve non-contiguous land. Town staff must carefully evaluate petitions for non-contiguous (“satellite”) citizen-initiated annexation, both from the standpoint of compliance with applicable State statutes, and from a service delivery/equity perspective (as discussed above). Citizen-initiated annexation properties can, however, include boundaries which, if annexed, create unincorporated territory completely surrounded by the Town (“doughnut hole”). Such areas may be very difficult to annex at a later date.

Principle: If the Town cannot provide service comparable to service already provided within the Town to the citizen-initiated annexation area without an undue negative impact on Town finances or services, staff will recommend against the citizen-initiated annexation.

2. Citizen-initiated annexations should be approved only in instances where annexation of the property will not create situations where unincorporated areas will not be encompassed by the new Town limits.

Principle: If a proposed citizen-initiated annexation may create a situation in which an unincorporated area is completely encompassed by the Town limits and the future annexation of such unincorporated area may be difficult or create difficulties in annexing other property in the vicinity, staff will recommend against the citizen-initiated annexation.

3. The foregoing policies may be waived if the Town Council determines that either of the following conditions exist:

· A petitioner for a citizen-initiated annexation would experience a significant hardship if the annexation were not approved; or

· Under the facts of a particular citizen-initiated annexation petition, the Town’s interests are served by varying the application of one or more of these policies.

The areas chosen for the 2002 Town-initiated annexation were primarily based on characteristics that distinguished them from other qualifying areas. These characteristics included the percentage of contiguous boundary and the current and future ability to service these properties. The following criteria include these characteristics and others to assist the Town in determining objective priorities for what properties should be annexed.

Criteria	Measurement
Urban Tests	Percent of contiguous boundary to Town limits, adjacent municipal utility service agreement areas with adjacent municipalities (e.g., Raleigh, Holly Springs, Durham), and Swift Creek Land Management Critical Areas (These designated areas currently have restrictions on extension of municipal water and sewer services and are controlled by Wake County and several affected jurisdictions.)
Current & Future Ability to Serve	Existing/planned utility lines, parks, road improvements; “Rolling” municipal services within the area (police, solid waste vehicles).
Environmental/Health Concerns	Age of septic systems, well water quality, history of utility failure

Urban Tests – State law requires that 12.5% of the boundary of the qualifying annexed area be contiguous to Cary’s corporate limits, agreement boundary or Swift Creek Land Management Critical Area. Typically, the higher the percentage of contiguous boundary the easier and more efficient it is to serve the area through Town services instead of through the County. Those annexation areas with a greater percentage of contiguous boundary should be considered sooner unless other criteria are deemed more important (e.g., septic system failures).

Current and Future Ability To Serve – This criteria is reflective of the Town’s ability to service these areas with services and facilities either existing or planned. The measurement for this criterion may be the proximity to public service facilities (e.g., parks, fire stations). This helps provide a more logical extension of boundaries based on existing and future infrastructure planning. Four unincorporated existing subdivisions are already receiving Town water and/or sewer, they are: Jamison Park, Hollybrook, Cary Oaks, and Oak Chase subdivisions.

Environmental/Health Concerns – Failure of wells and septic systems represent a clear need to provide water and sewer to developments to protect the health, safety and welfare of residents and the nearby natural environment. Many residents within the 2002 annexation areas were prompt to replace their wells and septic systems with a reliable public system to address water quality and environmental issues. Wake County Department of Environmental Health can provide the Town information on calls for services and well/septic system repairs.

The purpose of this element of the Town of Cary’s Annexation Program is to articulate processes and methods for ensuring that all legal requirements for annexation public information and notice are met or exceeded. Implementation of this element will be guided by the principle that such information and notice will be provided as soon as possible and far enough in advance that affected citizens have adequate time to review and react to the communication. The purpose of this element is not to facilitate local debate on the merits, morality, or legality of State annexation law since those topics are more appropriately addressed with lawmakers of the North Carolina General Assembly.

§ Raise awareness and understanding of the details on annexation process, costs, requirements, and methods and provision of municipal services

While every annexation will generate an individualized communication plan, the groups most likely to be included at some point in the public information process include:

§ Elected officials and staff of the counties (including school systems) in which the annexation is planned

While every annexation may generate an individualized communication plan, the information most likely to be presented to groups at some point in the public information process includes:

§ Planning and development, including the role of annexation in the State’s economic development and environmental protection

§ Comparison of the Town’s annexation program structure and costs with surrounding jurisdictions such as Raleigh and Apex;

§ Statistics on septic tank and well failures as well as other environmental data

While every annexation may generate an individualized communication plan, the information vehicles most likely to be utilized in the communication of information to groups include:

§ Focus Groups of recently annexed property owners and those property owners of potential annexation areas.

Following the Council's adoption of a resolution of intent to annex, State law requires notification of the required public information meeting and hearing be sent to property owners by first class mail. In addition to the local and State publicity, public involvement, and advertising requirements relative to annexations, the Town of Cary will use the following activities to help achieve the Annexation Program’s public information goals:

Develop and implement a flexible communications plan to address information issues consistently for all voluntary annexations, and develop and implement separate communications plans for each involuntary annexation. All plans will include goals, objectives, target publics, key messages, primary activities, budget, and timetable.

Develop and implement a free subscription based service where anyone can register on the Town of Cary’s Web site to be notified by the Planning Department of any annexation up for consideration before the Town Council. Two lists would be provided, one for citizen-initiated annexation and the other for Town-initiated annexations. In ordinary circumstances, the e-mail will go out to subscribers no less than five business days prior to the first public meeting at which the annexation is scheduled to appear. The e-mail will alert subscribers to the proposed action and provide a link to online information about the proposed annexation and will include contact information for the staff member overseeing the project. In extraordinary situations—emergency and special called public meetings—the e-mail will be sent at the same time public notice for the meeting is posted in accordance with State law.

A video detailing Cary’s Annexation Program will be developed and loaded onto the Town’s Web site as well as played regularly on Cary TV 11. Other videos will also be developed for each involuntary annexation to be used during public information sessions.

Maintain a detailed section about Cary’s Annexation Program and current annexation activities on the Town’s Web site. In addition to covering the content necessary in KEY TOPICS, the site will include a link to the new e-mail services, videos, Power Points, and feedback mechanisms. As always, news releases will be posted on the Town’s Web site and distributed via the Town’s electronic mailing list service.

The Town will develop and produce printed materials detailing the Town’s annexation program. These materials will be available on the Web for download, from Town staff in the Planning Department, and in initial mailings to property owners potentially affected by an annexation according to Town standards.

Notices from the Planning Department of any annexation up for consideration before the Town Council will also be placed on Cary TV. In ordinary circumstances, the notice will be posted on the channel no less than five business days prior any to the first public meeting at which the annexation is scheduled to appear. The e-mail will alert subscribers to the proposed action and provide a link to online information about the proposed annexation and will include contact information for the staff member overseeing the project. In extraordinary situations—emergency and special called public meetings—the e-mail will be sent at the same time public notice for the meeting is posted in accordance with State law.

Because of their lack of relative “news value”, news releases will not be issued to the media for citizen-initiated annexations; media, like any others with access to the Internet, will be able to receive this information via the Electronic Mailing List Service. Information highlighting milestones in any Town-initiated annexation process will be issued to by the Town to all regional media. These releases will enable the media to write articles, produce stories, and cover the milestones in special public affairs mediums.

This document sets forth Part One of a comprehensive annexation program to guide future annexation decisions in a way that facilitates an orderly and predictable extension of the Town of Cary corporate limits. This document also provides information to help existing citizens as well as future residents understand the process and effects of annexation.

For further information of this document please contact the following Town departments:

NOTE: The policies referenced in the appendix are maintained in the town clerk’s office and are incorporated herein by reference.

Subdivision/Area	Properties Petitioning	Properties in Petition Area	Percent Participation
Hillsdale Forest Area	139	147	93%
Triangle Forest	39	46	84%
Logan Road/Bud El Acres	3	3	100%
Piney Plains Road	6	10	60%
Summerwinds Phase 3	35	43	81%
Windsor Oaks	89	90	98%
Bud El Acres/Woodland Dr.	11	22	50%
Summerwinds Ph. 1 & 2	40	55	70%
Totals	362	416	87%

Home Size (sq.ft.)	Water Dev. Fee	Sewer Dev. Fee	50% Connect. Charges	Total Fee Amount
<1,700	$1,241.00	$2,143.00	$1,478.50	$4,862.50
1,701 to 2,400	$1,372.00	$2,172.00	$1,478.50	$5,022.50
2,401 to 3,100	$1,684.00	$2,639.00	$1,478.50	$5,801.50
3,101 to 3,800	$1,904.00	$2,866.00	$1,478.50	$6,248.50
>3,800	$2,402.00	$3,265.00	$1,478.50	$7,145.50

Breakdown of Payments	Schedule of Payment
First 1/3 partial payment	Within 60 days of petition verification and approval by the Town of Cary
Second 1/3 partial payment	Prior to the Town advertising the construction contract for installing the proposed water and sewer mains
Third and final partial payment	When a billing account is initiated or within 60-days of the construction completion date as determined by the Town of Cary

Usage	Inside Town Rates	Outside Town Rates
Tier 1 0 – 5,000 gallons	$3.28/Kgals	$9.84/Kgals
Tier 2 5,000 – 8,000 gallons	$3.75/Kgals	$11.25/Kgals
Tier 3 8,000 – 23,000 gallons	$5.33/Kgals	$15.99/Kgals
Tier 4 Greater than 23,000 gallons or over water budget amount	$10.83/Kgals	$32.49/Kgals
Sewer	Inside Town Rates	Outside Town Rates
Any Amount	$3.73/Kgals	11.19/Kgal