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Nebraska Supreme Court Affirmed the City of Valley’s Annexation of Sanitary and Improvement District No. 196

on Friday, 10 April 2015 in Dirt Alert: David C. Levy, Editor

The Nebraska Supreme Court, in Sanitary and Improvement District No. 196 v. City of Valley, 858 N.W. 2d 553, 290 Neb. 1 (2015), held that a city may annex land on which a sanitary improvement district is located if the land is not agricultural, the land is contiguous and adjacent to the city, and the annexation was not for the sole purpose of raising tax revenue.

The Valley City Council passed Ordinance No. 611, which annexed six different areas, one of which included Sanitary and Improvement District No. 196 (“SID 196”). SID 196 sued Valley in Douglas County District Court challenging the validity of the ordinance and seeking to enjoin Valley from enforcing it. The district court granted summary judgment in favor of Valley.

SID 196 appealed. On appeal, SID 196 alleged: (1) some the land was not urban or suburban in character; (2) the parcel on which SID 196 was located was not contiguous and adjacent to Valley; and (3) the annexation was for an improper purpose.

Urban or suburban in character. A city of the second class such as Valley may not annex land that is agricultural and rural in character. SID 196 alleged the parcels at issue could not be classified as urban or suburban because their primary use was for mining operations and they were zoned as transitional agriculture. The Supreme Court held, however, that land need not already be zoned into a nonagricultural use before annexation and that under Nebraska law, mining operations have never been an agricultural use.

Contiguous or adjacent. In Nebraska, municipalities generally may annex multiple tracts provided one tract is substantially adjacent to the municipality and the other tracts are substantially adjacent to each other. SID 196 argued that Valley’s annexation was a “strip annexation,” an impermissible annexation where a city attempts to annex a strip or corridor of land to reach a larger area that is not contiguous with or adjacent to the annexing city. According to SID 196, Valley’s annexation was a strip annexation because SID 196 and Valley did not share a “community of interest.” The Supreme Court held, however, that its “strip annexation” cases hinge on the lack of substantial adjacency to an existing city border, not any requirement of community of interest. The court held SID 196 was contiguous or adjacent to Valley because SID 196 was within an annexation area that shared a significant border with the existing corporate boundary of Valley.

Improper purpose. Annexation is improper if a city’s sole motive is solely to increase tax revenue. SID 196 argued that Valley was motivated to annex SID 196 because of its extremely low debt, noting that Valley did not choose to annex another sanitary and improvement district with a much higher level of debt. The Supreme Court held that Valley would have been fiscally irresponsible not to consider the debt load of the areas it annexed and that the debt level of a sanitary and improvement district has no relation to the increase in tax revenues a city stands to gain from annexation. The court also held that Valley was partially motivated to annex SID 196 to equalize the burden on residents of Valley and SID 196 in financing recent improvements to the sewer system serving the region. Even though there was a connection to tax revenue, SID 196 failed to prove Valley’s sole motive was to increase tax revenue.

A full copy of the opinion is available here.

Pedro A. Salazar

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