A BILL TO BE ENTITLED
AN ACT to REFORM the INVOLUNTARY annexation laws of north carolina.
The General Assembly of North Carolina enacts:
SECTION 1.  Part 2 of Article 4A of Chapter 160A of the General Statutes is repealed.
SECTION 2.  Article 4A of Chapter 160A of the General Statutes is amended by adding a new Part to read:
"Part 7.
"Involuntary Annexation by Municipalities.
"§ 160A‑58.50.  Declaration of policy.
It is hereby declared as a matter of State policy:
(1)	That sound urban development is essential to the continued economic development of North Carolina.
(2)	That municipalities are created to provide the governmental services essential for sound urban development and for the protection of health, safety, and welfare in areas being intensively used for residential, commercial, industrial, institutional, and governmental purposes or in areas undergoing such development.
(3)	That municipal boundaries should be extended in accordance with legislative standards applicable throughout the State to include such areas and to provide the high quality of governmental services needed therein for the public health, safety, and welfare.
(4)	That areas annexed to municipalities in accordance with such uniform legislative standards should receive the services provided by the annexing municipality.
(5)	That in the provision services to protect the health, safety, and welfare is a  public purpose.
"§ 160A‑58.51.  Definitions.
The following terms in this Part shall mean:
(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.
"§ 160A‑58.52.  Authority to annex.
The governing board of any municipality may extend the corporate limits of such municipality under the procedure set forth in this Part.
"§ 160A‑58.53.  Prerequisites to annexation.
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‑58.55, prepare a report setting forth such plans to provide services to the area proposed to be annexed. 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 major trunk water mains and sewer interceptors and outfalls, and the proposed extensions of such mains, outfalls, and lines as required in subdivision (3) of this section. The water and sewer map shall bear the seal of a registered professional engineer.
c.	The general land-use pattern in the area proposed to be annexed.
(2)	A statement showing that the area proposed to be annexed meets the requirements of G.S. 160A‑58.54.
(3)	A statement setting forth the plans of the municipality for extending to the area proposed to be annexed each major municipal service and the method under which the municipality plans to finance the extension of major municipal services into the area proposed to be annexed as follows:
a.	Provision of police protection, fire protection, solid waste collection, and street maintenance services to the area proposed to be annexed on the date of annexation on substantially 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. A contract with a private firm to provide solid waste collection services shall be an acceptable method of providing solid waste collection services.
b.	Extension of water and sewer services to each lot or parcel in the area proposed to be annexed, with a proposed timetable for construction of such mains, outfalls, and lines within three and one half years of the effective date of annexation.
(4)	A statement of the impact of the annexation on any rural fire department providing service in the area proposed to be annexed and a statement of the impact of the annexation on fire protection and fire insurance rates in the area proposed 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 municipality not later than 30 days following a written request from the municipality all information in its possession or control, including operational, financial, and budgetary information, necessary for preparation of a statement of impact. The rural fire department forfeits its rights under G.S. 160A‑58.56 and G.S. 160A‑58.57 if it fails to make a good faith response within 45 days following receipt of the written request for information from the municipality, provided that the municipality's written request so states by specific reference to this section.
(5)	A statement showing how the proposed annexation will affect the municipality's finances and services, including municipal 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 the public informational meeting on any annexation under this Part.
"§ 160A‑58.54.  Character of area to be annexed.
(a)	A municipal governing board may extend the municipal corporate limits to include any area that meets all of the following criteria:
(1)	It shall 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 shall coincide with the municipal boundary.
(3)	No part of the area shall be included within the boundary of another incorporated municipality.
(4)	The total area to be annexed shall meet the requirements of any of the following:
a.	Part or all of the area to be annexed must be developed for urban purposes at the time of approval of the report provided for in G.S. 160A‑58.53. The area of streets and street rights‑of‑way shall not be used to determine total acreage under this subdivision. 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 and three‑tenths persons for each acre of land included within its boundaries.
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 three 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.
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 three acres or less in size.
4.	Is the entire area of any county water and sewer district created under G.S. 162A‑86(b1), but this sub‑subdivision only applies to annexation by a municipality if all of the following apply:
I.	The municipality has provided in a contract with that district that the area is developed for urban purposes.
II.	The contract provides for the municipality to operate the sewer system of that county water and sewer district.
III.	The municipality is annexing in one proceeding the entire territory of the district not already within the corporate limits of a municipality.
5.	Is so developed that, at the time of the approval of the annexation report, all tracts in the area to be annexed are used for commercial, industrial, governmental, or institutional purposes.
b.	Part or all of the area to be annexed 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.
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 sub‑subdivision a. of this subdivision.
The purpose of this sub‑subdivision 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.
c.	The total area to be annexed is completely surrounded by the municipality's primary corporate limits.
(b)	In fixing new municipal boundaries, a municipal governing board shall comply with all the following:
(1)	Use recorded property lines and streets as boundaries. Some or all of the boundaries of a county water and sewer district may also be used when the entire district is not already within the corporate limits of the municipality. 
(2)	Not use a connecting corridor consisting solely of a street or street right‑of‑way to establish contiguity to an outlying, noncontiguous area.
(3)	Not consider property in use for a commercial, industrial, institutional, or governmental purpose if the lot or tract is used only temporarily, occasionally, or on an incidental or insubstantial basis in relation to the size and character of the lot or tract.
(4)	Acreage in use for commercial, industrial, institutional, or governmental purposes shall include acreage actually occupied by buildings or other man‑made structures together with all areas that are reasonably necessary and appurtenant to such facilities for purposes of parking, storage, ingress and egress, utilities, buffering, and other ancillary services and facilities.
(5)	"Necessary land connection" means an area that does not exceed twenty‑five percent (25%) of the total area to be annexed. 
(6)	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.  This act becomes effective July 1, 2011, and applies to annexations for which a petition has been received under Part 1 or Part 4 of Article 4A of Chapter 160A of the General Statutes on or after that date.  Annexations for which a resolution of intent has been adopted under Part 2 or Part 3 of Article 4A of Chapter 160A of the General Statutes before that date shall terminate and may be reinitiated in compliance with Part 7 of Article 4A of Chapter 160A as enacted by this act.