GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	2 

HOUSE BILL 94*
Committee Substitute Favorable 4/9/97

Short Title:  Annexation Changes.	(Public)

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Sponsors:

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Referred to:  

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February 11, 1997

A BILL TO BE ENTITLED
AN ACT TO CHANGE THE ANNEXATION LAWS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 160A-35 reads as rewritten:
"§ 160A-35.  Prerequisites to annexation; ability to serve; report and plans.
A municipality exercising authority under this Part shall make plans for the extension of services to the area proposed to be annexed and shall, prior to the public hearing provided for in G.S. 160A-37, prepare a report setting forth such plans to provide services to such area.  The report shall include:
(1)	A map or maps of the municipality and adjacent territory to show the following information:
a.	The present and proposed boundaries of the municipality.
b.	The proposed extensions of water transmission lines and interceptor sewers to serve the annexed area, if such utilities are operated by the municipality.  The water and sewer map must bear the seal of a registered professional engineer or a licensed surveyor.
(2)	A statement showing that the area to be annexed meets the requirements of G.S. 160A-36.
(3)	A statement setting forth the plans of the municipality for extending to the area to be annexed each major municipal service performed within the municipality at the time of annexation.  Specifically, such plans shall:
a.	Provide for extending police protection, fire protection, solid waste collection and street maintenance services, including street lighting, to the area to be annexed on the date of annexation on the same basis and in the same manner as such services are provided within the rest of the municipality prior to annexation.  A contract with a rural fire department to provide fire protection shall be an acceptable method of providing fire protection.  If a water distribution system is not available in the area to be annexed, the plans must call for reasonably effective fire protection services until such time as waterlines are made available in such area under existing municipal policies for the extension of waterlines.  A contract with a private firm to provide solid waste collection services shall be an acceptable method of providing solid waste collection services.
b.	Provide for extension of water transmission lines and interceptor sewers lines into the area to be annexed so that property owners in the area to be annexed will be able to secure public water and sewer services.  The municipality shall extend water distribution mains, water service lines, collector sewers, and sewer service laterals according to the financial policies in effect in such municipality for extending water service lines or sewer service laterals  to individual lots or subdivisions.  If the municipality must, at its own expense, extend water transmission lines, interceptor sewers, or both into the area to be annexed before property owners in the area can, according to municipal policies, make such connection to such lines or sewers, then the plans must call for contracts to be let and construction to begin on such lines or sewers, within one year following the effective date of annexation.
c.	Set forth the method under which the municipality plans to finance extension of services into the area to be annexed.
d.	Provide for street paving service on substantially the same basis and in the same manner as that service is provided within the rest of the municipality prior to the annexation.
e.	Include a summary of city police, fire, solid waste, street maintenance and paving, and water and sewer services provided to current city residents as of 90 days prior to the date set for the public hearing.  The summary shall specify, at a minimum, the number of personnel employed by the municipality for police and fire protection, the services provided as part of police and fire protection, the increase in personnel or equipment, if any, planned as a result of the annexation and the method the municipality used to calculate present level of service, including, if applicable, personnel to population ratios and average response times.
(4)	A statement of the impact of the annexation on any rural fire department providing service in the area to be annexed and a statement of the impact of the annexation on fire protection and fire insurance rates in the area to be annexed, if the area where service is provided is in an insurance district designated under G.S. 153A-233, a rural fire protection district under Article 3A of Chapter 69 of the General Statutes, or a fire service district under Article 16 of Chapter 153A of the General Statutes.  The rural fire department shall make available to the city not later than 30 days following a written request from the city all information in its possession or control, including but not limited to operational, financial and budgetary information, necessary for preparation of a statement of impact.  The rural fire department forfeits its rights under G.S. 160A-37.1 and G.S. 160A-37.2 if it fails to make a good faith response within 45 days following receipt of the written request for information from the city, provided that the city's written request so states by specific reference to this section.
(5)	A statement containing the classification as to use and size of each lot or tract in the area to be annexed.
(6)	A clear and easily understandable statement notifying persons affected by the annexation of their right to appeal under G.S. 160A-38 and the remedy under G.S. 160A-37(h) for failure of the city to provide services.
(7)	A statement showing how the proposed annexation will affect the city's finances and services, including city revenue change estimates.  This statement shall be delivered to the clerk of the board of county commissioners at least 30 days before the date of any public hearing on any annexation under this Part."
Section 2.  G.S. 160A-36 reads as rewritten:
"§ 160A-36.  Character of area to be annexed.
(a)	A municipal governing board may extend the municipal corporate limits to include any area which meets the general standards of subsection (b), and which meets the requirements of subsection (c).
(b)	The total area to be annexed must meet the following standards:
(1)	It must be adjacent or contiguous to the municipality's boundaries at the time the annexation proceeding is begun, except if the entire territory of a county water and sewer district created under G.S. 162A-86(b1) is being annexed, the annexation shall also include any noncontiguous pieces of the district as long as the part of the district with the greatest land area is adjacent or contiguous to the municipality's boundaries at the time the annexation proceeding is begun.
(2)	At least one eighth of the aggregate external boundaries of the area must coincide with the municipal boundary.
(3)	No part of the area shall be included within the boundary of another incorporated municipality.
(4)	No part of the area to be annexed shall be located in a county other than the county with a majority of the municipality's residents, unless areas previously added to the municipality in another county include at least 1,000 persons.
(5)	No lot or tract in the area to be annexed shall be in use for bona fide farm purposes as defined in G.S. 153A-340.
(c)	The area to be annexed must be developed for urban purposes 30 days prior to the first public hearing on the annexation ordinance.  For purposes of this section, area of streets and rights-of-way shall not be used to determine total acreage or acreage of lots and tracts under this section.  For purposes of this section, ‘right-of-way' means a recorded right-of-way, or if none is recorded, a presumptive 60-foot right-of-way.  An area developed for urban purposes is defined as:
(1)	Any area which is so developed that at least sixty percent (60%) of the total number of lots and tracts in the area at the time of annexation are used for residential, commercial, industrial, institutional or governmental purposes, and is subdivided into lots and tracts such that at least sixty percent (60%) of the total acreage, not counting the acreage used at the time of annexation for commercial, industrial, governmental or institutional purposes, consists of lots and tracts five acres or less in size; or
(2)	An area so developed that at the time of annexation, all tracts in the area to be annexed are used for commercial, industrial, governmental, or institutional purposes; or
(3)	The entire area of any county water and sewer district created under G.S. 162A-86(b1), but this subdivision only applies to annexation by a municipality if that:
a.	Municipality has provided in a contract with that district that the area is developed for urban purposes; and
b.	Contract provides for the municipality to operate the sewer system of that county water and sewer district;
provided that the special categorization provided by this subdivision only applies if the municipality is annexing in one proceeding the entire territory of the district not already within the corporate limits of a municipality.
(d)	In fixing new municipal boundaries, a municipal governing board shall use recorded property boundaries and natural topographic features such as ridge lines and streams and creeks as boundaries, and may use streets as boundaries.  Some or all of the boundaries of a county water and sewer district may also be used when the entire district not already within the corporate limits of a municipality is being annexed.
(e)	The area of an abolished water and sewer district shall be considered to be a water and sewer district for the purpose of this section even after its abolition under G.S. 162A-87.2(b)."
Section 3.  G.S. 160A-37 reads as rewritten:
"§ 160A-37.  Procedure for annexation.
(a)	Notice of Intent. – Any municipal governing board desiring to annex territory under the provisions of this Part shall first pass a resolution stating the intent of the municipality to consider annexation.  Such resolution shall describe the boundaries of the area under consideration and fix a date for a public hearing on the question of annexation, the date for such public hearing to be not less than 45 days and not more than 90 days following passage of the resolution.
(b)	Notice of Public Hearing. – The notice of public hearing shall:
(1)	Fix the date, hour and place of the public hearing.
(2)	Describe clearly the boundaries of the area under consideration, and include a legible map of the area.
(3)	Include a clear and easily understandable statement notifying persons affected by the annexation of their right to appeal under G.S. 160A-38 and the remedy under G.S. 160A-37(h) for failure of the city to provide services.
(4)	State the right of a property owner to request abatement of water and sewer assessments under G.S. 160A-237.  A form for requesting an abatement, and an easily understandable explanation of the form, shall be mailed to all property owners entitled to a mailed notice of the proposed annexation.
(5)	State that the report required in G.S. 160A-35 will be available at the office of the municipal clerk at least 30 days prior to the date of the public hearing.
Such notice shall be given by publication once a week for at least two successive weeks prior to the date of the hearing in a newspaper having general circulation in the municipality and, in addition thereto, if the area to be annexed lies in a county containing less than fifty percent (50%) of the land area of the municipality, in a newspaper having general circulation in the area of proposed annexation.  The period from the date of the first publication to the date of the last publication, both dates inclusive, shall be not less than eight days including Sundays, and the date of the last publication shall be not more than seven days preceding the date of public hearing.  If there be no such newspaper, the municipality shall post the notice in at least five public places within the municipality and at least five public places in the area to be annexed for 30 days prior to the date of public hearing.  In addition, notice shall be mailed at least four weeks prior to date of the hearing by first class mail, postage prepaid to the owners as shown by the tax records of the county of all freehold interests in real property located within the area to be annexed, and one mile beyond the area to be annexed.  The notice sent to property owners in the area one mile beyond the area to be annexed shall include an easily understandable explanation that the property owner may be subject to planning and zoning by the city as a result of being added to the city's extraterritorial planning and zoning jurisdiction.  The person or persons mailing such notices shall certify to the governing board that fact, and such certificate shall become a part of the record of the annexation proceeding and shall be deemed conclusive in the absence of fraud.  If the notice is returned to the city by the postal service by the tenth day before the hearing, a copy of the notice shall be sent by certified mail, return receipt requested, at least seven days before the hearing.  Failure to comply with the mailing requirement of this subsection shall not invalidate the annexation unless it is shown that the requirements were not substantially complied with.
If the governing board by resolution finds that the tax records are not adequate to identify the owners of some or all of the parcels of real property within the area it may in lieu of the mail procedure as to those parcels where the owners could not be so identified, post the notice at least 30 days prior to the date of public hearing on all buildings on such parcels, and in at least five other places within the area to be annexed.  In any case where notices are placed on property, the person placing the notice shall certify that fact to the governing board.
(c)	Action Prior to Hearing. – At least 30 days before the date of the public hearing, the governing board shall approve the report provided for in G.S. 160A-35, and shall make it available to the public at the office of the municipal clerk.  In addition, the municipality may prepare a summary of the full report for public distribution.  In addition, the city shall post in the office of the city clerk at least 30 days before the public hearing a legible map of the area to be annexed and a list of the persons holding freehold interests in property in the area to be annexed that it has identified.
(d)	Public Hearing. – At the public hearing a representative of the municipality shall first make an explanation of the report required in G.S. 160A-35, including appeal rights as summarized in G.S. 160A-35(6).  Following such explanation, all persons resident or owning property in the territory described in the notice of public hearing, and all residents of the municipality, shall be given an opportunity to be heard, an opportunity to ask questions, and receive answers from the city's representative.
(e)	Passage of the Annexation Ordinance. – The municipal governing board shall take into consideration facts presented at the public hearing and shall have authority to amend the report required by G.S. 160A-35 to make changes in the plans for serving the area proposed to be annexed so long as such changes meet the requirements of G.S. 160A-35.  At any regular or special meeting held no sooner than the thirtieth day following the public hearing and not later than 90 days following such public hearing, the governing board shall have authority to adopt an ordinance extending the corporate limits of the municipality to include all, or such part, of the area described in the notice of public hearing which meets the requirements of G.S. 160A-36 and which the governing board has concluded should be annexed.  The ordinance shall:
(1)	Contain specific findings showing that the area to be annexed meets the requirements of G.S. 160A-36. The external boundaries of the area to be annexed shall be described by metes and bounds.  In showing the application of G.S. 160A-36(c) and (d) to the area, the governing board may refer to boundaries set forth on a map of the area and incorporate same by reference as a part of the ordinance.
(2)	A statement of the intent of the municipality to provide services to the area being annexed as set forth in the report required by G.S. 160A-35.
(3)	A specific finding that on the effective date of annexation the municipality will have funds appropriated in sufficient amount to finance construction of any water and sewer lines found necessary in the report required by G.S. 160A-35 to extend the basic water and/or sewer system of the municipality into the area to be annexed, or that on the effective date of annexation the municipality will have authority to issue bonds in an amount sufficient to finance such construction.  If authority to issue such bonds must be secured from the electorate of the municipality prior to the effective date of annexation, then the effective date of annexation shall be no earlier than the day following the statement of the successful result of the bond election.
(4)	Fix the effective date for annexation.  The effective date of annexation may be fixed for any date not less than 70 days nor more than 400 days from the date of passage of the ordinance.
(f)	Effect of Annexation Ordinance. – From and after the effective date of the annexation ordinance, the territory and its citizens and property shall be subject to all debts, laws, ordinances and regulations in force in such municipality and shall be entitled to the same privileges and benefits as other parts of such municipality.  Real and personal property in the newly annexed territory on the January 1 immediately preceding the beginning of the fiscal year in which the annexation becomes effective is subject to municipal taxes as provided in G.S. 160A-58.10.  If the effective date of annexation falls between June 1 and June 30, and the effective date of the privilege license tax ordinance of the annexing municipality is June 1, then businesses in the area to be annexed shall be liable for taxes imposed in such ordinance from and after the effective date of annexation.
(g)	Simultaneous Annexation Proceedings. – If a municipality is considering the annexation of two or more areas which are all adjacent to the municipal boundary but are not adjacent to one another, it may undertake simultaneous proceedings under authority of this Part for the annexation of such areas.
(h)	Remedies for Failure to Provide Services. – If, not earlier than one year from the effective date of annexation, and not later than 15 months from the effective date of annexation, any person owning property in the annexed territory shall believe that the municipality has not followed through on its service plans adopted under the provisions of G.S. 160A-35(3) and 160A-37(e), such person may apply for a writ of mandamus under the provisions of Article 40, Chapter 1 of the General Statutes.  Relief may be granted by the judge of superior court
(1)	If the municipality has not provided the services set forth in its plan submitted under the provisions of G.S. 160A-35(3)a on substantially the same basis and in the same manner as such services were provided within the rest of the municipality prior to the effective date of annexation, and
(2)	If at the time the writ is sought such services set forth in the plan submitted under the provisions of G.S. 160A-35(3)a are still being provided on substantially the same basis and in the same manner as on the date of annexation of the municipality.
Relief may also be granted by the judge of superior court
(1)	If the plans submitted under the provisions of G.S. 160A-35(3)c require the construction of major trunk water mains and sewer outfall lines and
(2)	If contracts for such construction have not yet been let.
If a writ is issued, costs in the action, including a reasonable attorney's fee for such aggrieved person, shall be charged to the municipality.
(i)	No resolution of intent may be adopted under subsection (a) of this section unless the city council (or a planning agency created or designated under either G.S. 160A-361 or the charter) has, by resolution adopted at least one year prior to adoption of the resolution of intent, identified the area as being under consideration for annexation; provided, adoption of such resolution of consideration shall not confer prior jurisdiction over the area as to any other city.  The area described under the resolution of intent may comprise a smaller area than that identified by the resolution of consideration.  The resolution of consideration may have a metes and bounds description or a map, shall remain effective for two years after adoption, and shall be filed with the city clerk.  A new resolution of consideration adopted before expiration of the two-year period for a previously adopted resolution covering the same area shall relate back to the date of the previous resolution.
(j)	Subsection (i) of this section shall not apply to the annexation of any area if the resolution of intent describing the area and the ordinance annexing the area both provide that the effective date of the annexation shall be at least one year from the date of passage of the annexation ordinance."
Section 4.  G.S. 160A-38 is rewritten by adding a new subsection to read:
"( l)	Any settlement reached by all parties in an appeal under this section may be presented to the superior court in the county in which the municipality is located.  If the superior court, in its discretion, approves the settlement, it shall be binding on all parties without the need for approval by the General Assembly."
Section 5.  G.S. 160A-41 reads as rewritten:
"§ 160A-41.  Definitions.
The following terms where used in this Part shall have the following meanings, except where the context clearly indicates a different meaning:
(1)	'Contiguous area' shall mean any area which, at the time annexation procedures are initiated, either abuts directly on the municipal boundary or is separated from the municipal boundary by a street or street right-of-way, a creek or river, the right-of-way of a railroad or other public service corporation, lands owned by the municipality or some other political subdivision, or lands owned by the State of North Carolina.
(2)	'Used for residential purposes' shall mean any lot or tract five acres or less in size on which is constructed a habitable dwelling unit.
(3)	Water definitions:
a.	'Water distribution mains'. – Midsize water lines that run from transmission lines down individual streets or near individual properties to be served.
b.	'Water service lines'. – Smallest water lines that run from distribution mains onto property to be served.
c.	'Water transmission lines' (also referred to as trunk lines or mains). – Largest water lines that connect water treatment plant to distribution lines.
(4)	Sewer definitions:
a.	'Interceptor sewers' (also referred to as outfalls). – Largest sewers that connect to sewage treatment plant.
b.	'Collector sewers'. – Midsize sewers that run down individual streets or near individual properties to be served.
c.	'Service laterals'. – Smallest sewers that run from individual properties served to collector sewers."
Section 6.  G.S. 160A-42 reads as rewritten:
"§ 160A-42.  Land estimates.
In determining degree of land subdivision for purposes of meeting the requirements of G.S. 160A-36, the municipality shall use methods calculated to provide reasonably accurate results.  In determining whether the standards set forth in G.S. 160A-36 have been met on appeal to the superior court under G.S. 160A-38, the reviewing court shall accept the estimates of the municipality as provided in this section unless the actual total area or degree of subdivision falls below the standards in G.S. 160A-36:
(1)	As to total area if the estimate is based on an actual survey,  or on county tax maps or records, or on aerial photographs, or on some other reasonably reliable map used for official purposes by a governmental agency unless the petitioners on appeal demonstrate that such estimates are in error in the amount of five percent (5%) or more.
(2)	As to degree of land subdivision, if the estimates are based  on an actual survey, or on county tax maps or records, or on aerial photographs, or on some other reasonably reliable source, unless the petitioners on appeal show that such estimates are in error in the amount of five percent (5%) or more."
Section 7.  G.S. 160A-47 reads as rewritten:
"§ 160A-47.  Prerequisites to annexation; ability to serve; report and plans.
A municipality exercising authority under this Part shall make plans for the extension of services to the area proposed to be annexed and shall, prior to the public hearing provided for in G.S. 160A-49, prepare a report setting forth such plans to provide services to such area.  The report shall include:
(1)	A map or maps of the municipality and adjacent territory to show the following information:
a.	The present and proposed boundaries of the municipality.
b.	The present water transmission lines and interceptors and outfalls, and the proposed extensions of such interceptor sewers as required in subdivision (3) of this section.  The water and sewer map must bear the seal of a registered professional engineer.
c.	The general land use pattern in the area to be annexed.
(2)	A statement showing that the area to be annexed meets the requirements of G.S. 160A-48.
(3)	A statement setting forth the plans of the municipality for extending to the area to be annexed each major municipal service performed within the municipality at the time of annexation.  Specifically, such plans shall:
a.	Provide for extending police protection, fire protection, solid waste collection and street maintenance services, including street lighting, to the area to be annexed on the date of annexation on the same basis and in the same manner as such services are provided within the rest of the municipality prior to annexation.  A contract with a rural fire department to provide fire protection shall be an acceptable method of providing fire protection.  If a water distribution system is not available in the area to be annexed, the plans must call for reasonably effective fire protection services until such time as waterlines are made available in such area under existing municipal policies for the extension of waterlines.  A contract with a private firm to provide solid waste collection services shall be an acceptable method of providing solid waste collection services.
b.	Provide for extension of water transmission lines and interceptor sewers into the area to be annexed so that when such lines are constructed, property owners in the area to be annexed will be able to secure public water and sewer service.  The municipality shall extend water distribution mains, water service lines, collector sewers, and sewer service laterals according to the financial policies in effect in such municipality for extending water service lines or sewer service laterals to individual lots or subdivisions.  If requested by the owner of an occupied dwelling unit or an operating commercial or industrial property in writing on a form provided by the municipality, which form acknowledges that such extension or extensions will be made according to the current financial policies of the municipality for making such extensions, and if such form is received by the city clerk not less than 10 days before adoption of the annexation ordinance, provide for extension of water service lines or sewer service laterals to the property or to a point on a public street or road right-of-way adjacent to the property according to the financial policies in effect in such municipality for extending water and sewer lines.  The municipality must accept requests for water and sewer service under this section for at least 30 days following the public hearing concerning the area proposed to be annexed.  If any such requests are timely made, the municipality shall at the time of adoption of the annexation ordinance amend its report and plan for services to reflect and accommodate such requests.
c.	If extension of water transmission lines, water distribution mains, interceptor sewers, or collector sewers is necessary, set forth a proposed timetable for construction of such water transmission lines, water distribution mains, interceptor sewers, or collector sewers as soon as possible following the effective date of annexation.  In any event, the plans shall call for construction to be completed within two years of the effective date of annexation.
d.	Set forth the method under which the municipality plans to finance extension of services into the area to be annexed.
e.	Provide for street paving service on substantially the same basis and in the same manner as that service is provided within the rest of the municipality prior to the annexation.
f.	Include a summary of city police, fire, solid waste, street maintenance and paving, and water and sewer services provided to current city residents as of 90 days prior to the date set for the public hearing.  The summary shall specify, at a minimum, the number of personnel employed by the municipality for police and fire protection, the services provided as part of police and fire protection, the increase in personnel or equipment, if any, planned as a result of the annexation and the method the municipality used to calculate present level of service, including, if applicable, personnel to population ratios and average response times.
(4)	A statement of the impact of the annexation on any rural fire department providing service in the area to be annexed and a statement of the impact of the annexation on fire protection and fire insurance rates in the area to be annexed, if the area where service is provided is in an insurance district designated under G.S. 153A-233, a rural fire protection district under Article 3A of Chapter 69 of the General Statutes, or a fire service district under Article 16 of Chapter 153A of the General Statutes.  The rural fire department shall make available to the city not later than 30 days following a written request from the city all information in its possession or control, including but not limited to operational, financial and budgetary information, necessary for preparation of a statement of impact.  The rural fire department forfeits its rights under G.S. 160A-49.1 and G.S. 160A-49.2 if it fails to make a good faith response within 45 days following receipt of the written request for information from the city, provided that the city's written request so states by specific reference to this section.
(5)	If the lot or tract standard was used to qualify the area, the report shall state the classification of each lot or tract in the area to be annexed as to use and size.  If a population standard was used to qualify the area, the report shall state how the population estimate of the area was determined.
(6)	A clear and easily understandable statement notifying persons affected by the annexation of their right to appeal under G.S. 160A-50, the right to request water and sewer services under sub-subdivision (3)b. of this section, and the remedies under G.S. 160A-49(h) and (k) for failure of the city to provide services.
(7)	A statement showing how the proposed annexation will affect the city's finances and services, including city revenue change estimates.  This statement shall be delivered to the clerk of the board of county commissioners at least 30 days before the date of any public hearing on any annexation under this Part at the time of the public hearing for the annexation ordinance."
Section 8.  G.S. 160A-48 reads as rewritten:
"§ 160A-48.  Character of area to be annexed.
(a)	A municipal governing board may extend the municipal corporate limits to include any area
(1)	Which meets the general standards of subsection (b), and
(2)	Every part of which meets the requirements of either subsection (c) or subsection (d).
(b)	The total area to be annexed must meet the following standards:
(1)	It must be adjacent or contiguous to the municipality's boundaries at the time the annexation proceeding is begun, except if the entire territory of a county water and sewer district created under G.S. 162A-86(b1) is being annexed, the annexation shall also include any noncontiguous pieces of the district as long as the part of the district with the greatest land area is adjacent or contiguous to the municipality's boundaries at the time the annexation proceeding is begun.
(2)	At least one eighth of the aggregate external boundaries of the area must coincide with the municipal boundary.
(3)	No part of the area shall be included within the boundary of another incorporated municipality.
(4)	No part of the area to be annexed shall be located in a county other than the county with a majority of the municipality's residents, unless areas previously added to the municipality in another county include at least 1,000 persons.
(5)	No lot or tract in the area to be annexed shall be in use for bona fide farm purposes as defined in G.S. 153A-340.
(c)	Part or all of the area to be annexed must be developed for urban purposes 30 days prior to the public hearing for the annexation ordinance.  Area of streets and rights-of-way shall be used only to determine total resident population per acre of land in this section.  An area developed for urban purposes is defined as any area which meets any one of the following standards:
(1)	Has a total resident population equal to at least two persons for each acre of land included within its boundaries; or
(2)	Has a total resident population equal to at least one person for each acre of land included within its boundaries, and is subdivided into lots and tracts such that at least sixty percent (60%) of the total acreage consists of lots and tracts five acres or less in size and such that at least sixty-five percent (65%) of the total number of lots and tracts are one acre or less in size; or
(3)	Is so developed that at least sixty percent (60%) of the total number of lots and tracts in the area at the time of annexation are used for residential, commercial, industrial, institutional or governmental purposes, and is subdivided into lots and tracts such that at least sixty percent (60%) of the total acreage, not counting the acreage used at the time of annexation for commercial, industrial, governmental or institutional purposes, consists of lots and tracts five acres or less in size; or
(4)	Is the entire area of any county water and sewer district created under G.S. 162A-86(b1), but this subdivision only applies to annexation by a municipality if that:
a.	Municipality has provided in a contract with that district that the area is developed for urban purposes; and
b.	Contract provides for the municipality to operate the sewer system of that county water and sewer district;
	provided that the special categorization provided by this subdivision only applies if the municipality is annexing in one proceeding the entire territory of the district not already within the corporate limits of a municipality; or
(5)	Is so developed that at the time of annexation, all tracts in the area to be annexed are used for commercial, industrial, governmental, or institutional purposes.
(d)	In addition to areas developed for urban purposes, a governing board may include in the area to be annexed any area which does not meet the requirements of subsection (c) if such area either:
(1)	Lies between the municipal boundary and an area developed for urban purposes so that the area developed for urban purposes is either not adjacent to the municipal boundary or cannot be served by the municipality without extending services and/or water and/or sewer lines through such sparsely developed area; or
(2)	Is adjacent, on at least sixty percent (60%) of its external boundary, to any combination of the municipal boundary and the boundary of an area or areas developed for urban purposes as defined in subsection (c).
The purpose of this subsection is to permit municipal governing boards to extend corporate limits to include all nearby areas developed for urban purposes and where necessary to include areas which at the time of annexation are not yet developed for urban purposes but which constitute necessary land connections between the municipality and areas developed for urban purposes or between two or more areas developed for urban purposes.  For purposes of this subsection, ‘necessary land connection' means an area that does not exceed 100 acres and does not exceed twenty-five percent (25%) of the total area to be annexed.
(e)	In fixing new municipal boundaries, a municipal governing board shall use recorded property boundaries and natural topographic features such as ridge lines and streams and creeks as boundaries, and may use streets as boundaries.  Some or all of the boundaries of a county water and sewer district may also be used when the entire district not already within the corporate limits of a municipality is being annexed.
(f)	The area of an abolished water and sewer district shall be considered to be a water and sewer district for the purpose of this section even after its abolition under G.S. 162A-87.2(b)."
Section 9.  G.S. 160A-49 reads as rewritten:
"§ 160A-49.  Procedure for annexation.
(a)	Notice of Intent. – Any municipal governing board desiring to annex territory under the provisions of this Part shall first pass a resolution stating the intent of the municipality to consider annexation.  Such resolution shall describe the boundaries of the area under consideration and fix a date for a public hearing on the question of annexation, the date for such public hearing to be not less than 45 days and not more than 90 days following passage of the resolution.
(b)	Notice of Public Hearing. – The notice of public hearing shall:
(1)	Fix the date, hour and place of the public hearing.
(2)	Describe clearly the boundaries of the area under consideration, and include a legible map of the area.
(3)	State that the report required in G.S. 160A-47 will be available at the office of the municipal clerk at least 30 days prior to the date of the public hearing.
(4)	State the right of a property owner to request abatement of water and sewer assessments under G.S. 160A-237.  A form for requesting an abatement, and an easily understandable explanation of the form, shall be mailed to all property owners entitled to a mailed notice of the proposed annexation.
(5)	Include a clear and easily understandable statement notifying persons affected by the annexation of their right to appeal under G.S. 160A-50, the right to request water and sewer services under G.S. 160A-47(3)b., and the remedies under G.S. 160A-49(h) and (k) for failure of the city to provide services.  A form for requesting water and sewer services under G.S. 160A-47(3)b., an easily understandable explanation of the form, and the city's water and sewer financial policies shall be mailed to all property owners entitled to a mailed notice of the proposed annexation.
Such notice shall be given by publication once a week for at least two successive weeks prior to the date of the hearing in a newspaper having general circulation in the municipality and, in addition thereto, if the area to be annexed lies in a county containing less than fifty percent (50%) of the land area of the municipality, in a newspaper having general circulation in the area of proposed annexation.  The period from the date of the first publication to the date of the last publication, both dates inclusive, shall be not less than eight days including Sundays, and the date of the last publication shall be not more than seven days preceding the date of public hearing.  If there be no such newspaper, the municipality shall post the notice in at least five public places within the municipality and at least five public places in the area to be annexed for 30 days prior to the date of public hearing.  In addition, notice shall be mailed at least four weeks prior to date of the hearing by first class mail, postage prepaid to the owners as shown by the tax records of the county of all freehold interests in real property located within the area to be annexed, and one mile beyond the area to be annexed.  The notice sent to property owners in the area one mile beyond the area to be annexed shall include an easily understandable explanation that the property owner may be subject to planning and zoning by the city as a result of being added to the city's extraterritorial planning and zoning jurisdiction.  The person or persons mailing such notices shall certify to the governing board that fact, and such certificate shall become a part of the record of the annexation proceeding and shall be deemed conclusive in the absence of fraud.  If the notice is returned to the city by the postal service by the tenth day before the hearing, a copy of the notice shall be sent by certified mail, return receipt requested, at least seven days before the hearing.  Failure to comply with the mailing requirements of this subsection shall not invalidate the annexation unless it is shown that the requirements were not substantially complied with.  If the governing board by resolution finds that the tax records are not adequate to identify the owners of some or all of the parcels of real property within the area it may in lieu of the mail procedure as to those parcels where the owners could not be so identified, post the notice at least 30 days prior to the date of public hearing on all buildings on such parcels, and in at least five other places within the area to be annexed.  In any case where notices are placed on property, the person placing the notices shall certify that fact to the governing board.
(c)	Action Prior to Hearing. – At least 30 days before the date of the public hearing, the governing board shall approve the report provided for in G.S. 160A-47, and shall make it available to the public at the office of the municipal clerk.  In addition, the municipality may prepare a summary of the full report for public distribution.  In addition, the city shall post in the office of the city clerk, at least 30 days before the public hearing, a legible map of the area to be annexed and a list of persons holding freehold interests in property in the area to be annexed that it has identified.
(d)	Public Hearing. – At the public hearing a representative of the municipality shall first make an explanation of the report required in G.S. 160A-47, including appeal rights as summarized in G.S. 160A-47(6).  Following such explanation, all persons resident or owning property in the territory described in the notice of public hearing, and all residents of the municipality, shall be given an opportunity to be heard, an opportunity to ask questions, and receive answers from the city's representative.
(e)	Passage of the Annexation Ordinance. – The municipal governing board shall take into consideration facts presented at the public hearing and shall have authority to amend the report required by G.S. 160A-47 to make changes in the plans for serving the area proposed to be annexed so long as such changes meet the requirements of G.S. 160A-47, provided that if the annexation report is amended to show additional subsections of G.S. 160A-48(c) or (d) under which the annexation qualifies that were not listed in the original report, the city must hold an additional public hearing on the annexation not less than 30 nor more than 90 days after the date the report is amended, and notice of such new hearing shall be given at the first public hearing.  At any regular or special meeting held no sooner than the thirtieth day following the public hearing and not later than 90 days following such public hearing, the governing board shall have authority to adopt an ordinance extending the corporate limits of the municipality to include all, or such part, of the area described in the notice of public hearing which meets the requirements of G.S. 160A- 48 and which the governing board has concluded should be annexed.  The ordinance shall:
(1)	Contain specific findings showing that the area to be annexed meets the requirements of G.S. 160A-48. The external boundaries of the area to be annexed shall be described by metes and bounds.  In showing the application of G.S. 160A- 48(c) and (d) to the area, the governing board may refer to boundaries set forth on a map of the area and incorporate same by reference as a part of the ordinance.
(2)	A statement of the intent of the municipality to provide services to the area being annexed as set forth in the report required by G.S. 160A-47.
(3)	A specific finding that on the effective date of annexation the municipality will have funds appropriated in sufficient amount to finance construction of any major trunk water mains and sewer outfalls and such water and sewer lines as required in G.S. 160A-47(3)(b) found necessary in the report required by G.S. 160A-47 to extend the basic water and/or sewer system of the municipality into the area to be annexed, or that on the effective date of annexation the municipality will have authority to issue bonds in an amount sufficient to finance such construction.  If authority to issue such bonds must be secured from the electorate of the municipality prior to the effective date of annexation, then the effective date of annexation shall be no earlier than the day following the statement of the successful result of the bond election.
(4)	Fix the effective date for annexation.  The effective date of annexation may be fixed for any date not less than 70 days nor more than 400 days from the date of passage of the ordinance.
(f)	Effect of Annexation Ordinance. – From and after the effective date of the annexation ordinance, the territory and its citizens and property shall be subject to all debts, laws, ordinances and regulations in force in such municipality and shall be entitled to the same privileges and benefits as other parts of such municipality.  Real and personal property in the newly annexed territory on the January 1 immediately preceding the beginning of the fiscal year in which the annexation becomes effective is subject to municipal taxes as provided in G.S. 160A-58.10.  Provided that annexed property which is a part of a sanitary district, which has installed water and sewer lines, paid for by the residents of said district, shall not be subject to that part of the municipal taxes levied for debt service for the first five years after the effective date of annexation.  If this proviso should be declared by a court of competent jurisdiction to be in violation of any provision of the federal or State Constitution, the same shall not affect the remaining provisions of this Part.  If the effective date of annexation falls between June 1 and June 30, and the effective date of the privilege license tax ordinance of the annexing municipality is June 1, then businesses in the area to be annexed shall be liable for taxes imposed in such ordinances from and after the effective date of annexation.
(g)	Simultaneous Annexation Proceedings. – If a municipality is considering the annexation of two or more areas which are all adjacent to the municipal boundary but are not adjacent to one another, it may undertake simultaneous proceedings under authority of this Part for the annexation of such areas.
(h)	Remedies for Failure to Provide Services. – If, not earlier than one year from the effective date of annexation, and not later than 15 months from the effective date of annexation, any person owning property in the annexed territory shall believe that the municipality has not followed through on its service plans adopted under the provisions of G.S. 160A-47(3) and 160A-49(e), for any required service other than water and sewer services such person may apply for a writ of mandamus under the provisions of Article 40, Chapter 1 of the General Statutes.  Relief may be granted by the judge of superior court
(1)	If the municipality has not provided the services set forth in its plan submitted under the provisions of G.S. 160A-47(3)a on substantially the same basis and in the same manner as such services were provided within the rest of the municipality prior to the effective date of annexation, and
(2)	If at the time the writ is sought such services set forth in the plan submitted under the provisions of G.S. 160A-47(3)a are still being provided on substantially the same basis and in the same manner as on the date of annexation of the municipality.
If, not earlier than 24 months from the effective date of the annexation, and not later than 27 months from the effective date of the annexation, any person owning property in the annexed area can show that the plans submitted under the provisions of G.S. 160A-47(3)c require the construction of major trunk water mains and sewer outfall lines and if construction has not been completed within two years of the effective date of the annexation, relief may also be granted by the superior court by an order to the municipality to complete such lines and outfalls within a certain time.  Similar relief may be granted by the superior court to any owner of property who made a timely request for a water or sewer line, or both, pursuant to G.S. 160A-47(3)b and such lines have not been completed within two years from the effective date of annexation in accordance with applicable city policies and through no fault of the owner, if such owner petitions for such relief not earlier than 24 months following the effective date of annexation and not later than 27 months following the effective date of annexation.
If a writ is issued, costs in the action, including a reasonable attorney's fee for such aggrieved person, shall be charged to the municipality.
(i)	No resolution of intent may be adopted under subsection (a) of this section unless the city council (or planning agency created or designated under either G.S. 160A-361 or the charter) has, by resolution adopted at least one year prior to adoption of the resolution of intent, identified the area as being under consideration for annexation; provided, adoption of such resolution of consideration shall not confer prior jurisdiction over the area as to any other city.  The area described under the resolution of intent may comprise a smaller area than that identified by the resolution of consideration.  The resolution of consideration may have a metes and bounds description or a map and shall remain effective for two years after adoption, and shall be filed with the city clerk.  A new resolution of consideration adopted before expiration of the two-year period for a previously adopted resolution covering the same area shall relate back to the date of the previous resolution.
(j)	Subsection (i) of this section shall not apply to the annexation of any area if the resolution of intent describing the area and the ordinance annexing the area both provide that the effective date of the annexation shall be at least one year from the date of passage of the annexation ordinance.
(k)	If a valid request for extension of a water or sewer line has been made under G.S. 160A-47(3)b, and the extension is not complete at the end of two years after the effective date of the annexation ordinance, the owner of the property may petition the Local Government Commission for abatement of taxes to be paid to the city which have not been levied as of the expiration date of the two-year period, if such petition is filed not more than 90 days after the expiration of the two-year period.  If the Local Government Commission finds that the extension to the property was not complete by the end of the two-year period, it shall enter an order directing the city not to levy any further ad valorem taxes on the property until the fiscal year commencing after completion of the extension.  In addition, if the Local Government Commission found that the extension to the property was not completed by the end of the two-year period, and if it finds that for any fiscal year during the period beginning with the first day of the fiscal year in which the annexation ordinance became effective and ending the last day of the fiscal year in which the two-year period expired, the city made an appropriation for construction, operation or maintenance of a water or sewer system (other than payments the city made as a customer of the system) from the fund or funds for which ad valorem taxes are levied, then the Local Government Commission shall order the city to release or refund an amount of the petitioner's property taxes for that year in question in proportion to the percentage of appropriations in the fund made for water and sewer services.  By way of illustration, if a net amount of one hundred thousand dollars ($100,000) was appropriated for water or sewer construction, operation or maintenance from a fund which had total expenditures of ten million dollars ($10,000,000) and the petitioner's tax levy was one thousand dollars ($1,000), the amount of release or refund shall be ten dollars ($10.00).
(k1)	If major municipal services (police protection, fire protection, solid waste collection, and street maintenance services) were to be provided to an annexed area according to the annexation services report, and if any of the services are not provided by the end of the one year after the effective date of the annexation ordinance, an owner of the property in the area may petition the Local Government Commission for abatement of taxes to be paid to the city which have not been levied as of the expiration date of the one-year period, if such petition is filed not more than 90 days after the expiration of the one-year period.  If the Local Government Commission finds that any major municipal service was not extended as provided in the annexation services report by the end of the one-year period, it shall enter an order directing the city not to levy any further ad valorem taxes on the property until the fiscal year commencing after provision of all major municipal services as provided in the annexation services report.  In addition, if the Local Government Commission found that the provision of major municipal services was not completed by the end of the one-year period, and if it finds that for any fiscal year during the period beginning with the first day of the fiscal year in which the annexation ordinance became effective and ending the last day of the fiscal year in which the one-year period expired, the city made an appropriation for major municipal services from the fund or funds for which ad valorem taxes are levied, then the Local Government Commission shall order the city to release or refund an amount of the petitioner's property taxes for that year in question in proportion to the percentage of appropriations in the fund made for the major municipal service that was not provided."
Section 10.  G.S. 160A-50 is amended by adding a new subsection to read:
"( m)	Any settlement reached by all parties in an appeal under this section may be presented to the superior court in the county in which the municipality is located.  If the superior court, in its discretion, approves the settlement, it shall be binding on all parties without the need for approval by the General Assembly."
Section 11.  G.S. 160A-53 reads as rewritten:
"§ 160A-53.  Definitions.
The following terms where used in this Part shall have the following meanings, except where the context clearly indicates a different meaning:
(1)	‘Contiguous area' shall mean any area which, at the time annexation procedures are initiated, either abuts directly on the municipal boundary or is separated from the municipal boundary by a street or street right-of-way, a creek or river, the right-of-way of a railroad or other public service corporation, lands owned by the city or some other political subdivision, or lands owned by the State of North Carolina.
(2)	‘Used for residential purposes' shall mean any lot or tract five acres or less in size on which is constructed a habitable dwelling unit.
(3)	Water definitions:
a.	'Water distribution mains'. – Midsize water lines that run from transmission lines down individual streets or near individual properties to be served.
b.	'Water service lines'. – Smallest water lines that run from distribution mains onto property to be served.
c.	'Water transmission lines (also referred to as trunk lines or mains). –  Largest water lines that connect water treatment plant to distribution lines.
(4)	Sewer definitions:
a.	'Interceptor sewers' (also referred to as outfalls). – Largest sewers that connect to sewage treatment plant.
b.	'Collector sewers'. – Midsize sewers that run down individual streets or near individual properties to be served.
c.	'Service laterals'. – Smallest sewers that run from individual properties served to collector sewers."
Section 12.  G.S. 160A-54 reads as rewritten:
"§ 160A-54.  Population and land estimates.
In determining population and degree of land subdivision for purposes of meeting the requirements of G.S. 160A-48, the municipality shall use methods calculated to provide reasonably accurate results.  In determining whether the standards set forth in G.S. 160A-48 have been met on appeal to the superior court under G.S. 160A-50, the reviewing court shall accept the estimates of the municipality unless the actual population, total area, or degree of land subdivision falls below the standards in G.S. 160A-48:
(1)	As to population, if the estimate is based on the number of dwelling units in the area multiplied by the average family size in such area, or in the township or townships of which such area is a part, as determined by the last preceding federal decennial census; or if it is based on a new enumeration carried out under reasonable rules and regulations by the annexing municipality; provided, that the court shall not accept such estimates if the petitioners demonstrate that such estimates are in error in the amount of ten percent (10%) or more.
(2)	As to total area if the estimate is based on an actual survey, or on county tax maps or records, or on aerial photographs, or on some other reasonably reliable map used for official purposes by a governmental agency, unless the petitioners on appeal demonstrate that such estimates are in error in the amount of five percent (5%) or more.
(3)	As to degree of land subdivision, if the estimates are based  on an actual survey, or on county tax maps or records, or on aerial photographs, or on some other reasonably reliable source, unless the petitioners on appeal show that such estimates are in error in the amount of five percent (5%) or more."
Section 13.  G.S. 160A-237 reads as rewritten:
"§ 160A-237.  Authority to hold water and sewer assessments in abeyance.
(a)	The assessment resolution may provide that assessments levied under this Article for water or sewer improvements be held in abeyance without interest until improvements on the assessed property are actually connected to the water or sewer system for which the assessment was levied, or a date certain not more than 10 years from the date of confirmation of the assessment roll, whichever event first occurs.  Upon termination of the period of abeyance, the assessment shall be paid in accordance with the terms set out in the assessment resolution.  If assessments are to be held in abeyance, the assessment  resolution shall classify the property assessed according to general land use, location with respect to the water or sewer system, or other relevant factors, and shall provide that the period of abeyance shall be the same for all assessed property in the same class.
(b)	Owners of property subject to a water or sewer related assessment following annexation under Part 2 or Part 3 of this Chapter may request abatement of any water and sewer service assessments planned by the city until the property is transferred or the property owner connects to the water or sewer system.  A request for abatement under this subsection must be received by the city at least 30 days prior to adoption of the annexation ordinance.
(c)	All statutes of limitations are suspended during the time that any  assessment is held in abeyance without interest."
Section 14.  This act is effective when it becomes law.