1.1                          A bill for an act 
  1.2             relating to local government; providing procedures and 
  1.3             criteria for municipal annexation of unincorporated 
  1.4             land; providing certain exceptions; amending Minnesota 
  1.5             Statutes 2002, sections 414.011, subdivision 5; 
  1.6             414.031; 414.033, subdivision 2; 414.0335, 
  1.7             subdivisions 1, 2; 414.035; 414.036; proposing coding 
  1.8             for new law in Minnesota Statutes, chapter 414. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2002, section 414.011, 
  1.11  subdivision 5, is amended to read: 
  1.12     Subd. 5.  [PROPERTY OWNER.] "Property owner" means the fee 
  1.13  owner of land at least a 50 percent fee interest in real 
  1.14  property, or the beneficial owner of land whose interest is 
  1.15  primarily one of possession and enjoyment.  The term includes, 
  1.16  but is not limited to, vendees under a contract for deed, and 
  1.17  mortgagors.  Any reference to a percentage of property owners 
  1.18  shall mean in number. 
  1.19     Sec. 2.  Minnesota Statutes 2002, section 414.031, is 
  1.20  amended to read: 
  1.21     414.031 [ANNEXING UNINCORPORATED PROPERTY BY DIRECTOR'S 
  1.22  ORDER.] 
  1.23     Subdivision 1.  [INITIATING THE PROCEEDING.] (a) A 
  1.24  proceeding for the annexation of unincorporated property 
  1.25  abutting a municipality may be initiated by submitting to the 
  1.26  director and the affected township one by any of the following 
  1.27  methods: 
  2.1      (a) by submitting to the director and the affected township 
  2.2   one of the following: 
  2.3      (1) a resolution of the annexing municipality; 
  2.4      (2) a resolution of the township containing the area 
  2.5   proposed for annexation; 
  2.6      (3) a petition of 20 percent of the property owners or 100 
  2.7   property owners, whichever is less, in the area to be annexed, 
  2.8   accompanied by a resolution of the annexing municipality 
  2.9   supporting the petition; 
  2.10     (4) a resolution of the municipal council together with a 
  2.11  resolution of the township board stating their desire to have 
  2.12  the entire township annexed to the municipality. 
  2.13     (b) by submitting to the director and the proposed annexing 
  2.14  municipality a resolution by the town board of the township 
  2.15  containing the area proposed for annexation; 
  2.16     (c) by submitting to the director a joint resolution 
  2.17  adopted by both the municipal council and the township board 
  2.18  stating their mutual desire to have the entire township annexed 
  2.19  to the municipality. 
  2.20     (b) Subd. 1a.  [PETITION FORMAT.] The Any petition, or 
  2.21  resolution submitted pursuant to subdivision 1 shall set forth 
  2.22  the boundaries of the territory proposed for annexation, the 
  2.23  names of all parties entitled to notice under section 414.09, 
  2.24  and the reasons for requesting annexation. 
  2.25     (c) If the proceeding is initiated by a petition of 
  2.26  property owners, the petition shall be accompanied by a 
  2.27  resolution of the annexing municipality supporting the petition. 
  2.28     Subd. 1b.  [SUPPORTING DOCUMENTS.] Except for annexations 
  2.29  initiated pursuant to subdivision 1, paragraph (b), in addition 
  2.30  to the petition or resolution required in subdivision 1, the 
  2.31  annexing municipality must also submit to the director the 
  2.32  following information: 
  2.33     (a) a map showing the area proposed to be annexed and its 
  2.34  relation to the current municipal boundaries; 
  2.35     (b) a report detailing the urban characteristics of the 
  2.36  area subject to the proposed annexation and the reasons for the 
  3.1   proposed annexation; 
  3.2      (c) a proposed update to the municipality's comprehensive 
  3.3   land use plan to include the area subject to the proposed 
  3.4   annexation; 
  3.5      (d) a report describing, as applicable to both the annexing 
  3.6   municipality and the area proposed to be annexed, the general 
  3.7   physical land use pattern, current and proposed land uses, 
  3.8   current and proposed land use controls, projected growth, 
  3.9   service needs applicable to both the current and expected growth 
  3.10  status, environmental impact issues, and transportation impact 
  3.11  issues; 
  3.12     (e) a service provision plan.  At a minimum the service 
  3.13  provision plan must include an outline of the annexing 
  3.14  municipality's intent and ability to provide the following 
  3.15  services to the area proposed to be annexed: 
  3.16     (1) law enforcement; 
  3.17     (2) fire protection; 
  3.18     (3) water and wastewater services, including a map showing 
  3.19  existing and proposed service boundaries; a summary of the 
  3.20  current capacity of any municipal treatment plant; a listing and 
  3.21  map indicating areas currently within the municipality but not 
  3.22  serviced by municipal water and wastewater services and the 
  3.23  amount of capacity necessary to service such areas; and an 
  3.24  estimate of the amount of capacity needed to fully service the 
  3.25  area proposed to be annexed; 
  3.26     (4) street maintenance; and 
  3.27     (5) other municipal services currently being or proposed to 
  3.28  be offered by the annexing municipality. 
  3.29  The plan must discuss how such services will differ from the way 
  3.30  the services are currently provided within the township, 
  3.31  including a cost comparison, and must provide a time line not to 
  3.32  exceed two years during which each component of the service plan 
  3.33  is implemented; 
  3.34     (f) a property tax comparison between current and expected 
  3.35  municipal levies as they would apply to the area proposed to be 
  3.36  annexed and the area's existing township levy; and 
  4.1      (g) a report and map showing the quantity of undeveloped 
  4.2   land existing within the annexing municipality and the intended 
  4.3   use, including a service extension plan, for each area. 
  4.4      Subd. 1c.  [NOTICE OF INTENT TO ANNEX.] Except for 
  4.5   annexations initiated pursuant to subdivision 1, paragraph (b), 
  4.6   at least ten days before submitting to the director a petition 
  4.7   or resolution pursuant to subdivision 1, the annexing 
  4.8   municipality shall provide written notice of the intent to annex 
  4.9   to the township and the county by mailing or delivering the 
  4.10  notice to the town clerk and county auditor.  The notice must 
  4.11  clearly identify the boundaries of the area proposed to be 
  4.12  annexed and must be accompanied by a copy of each of the 
  4.13  supporting documents required under subdivision 1b. 
  4.14     At least ten days before submitting to the director a 
  4.15  petition or resolution pursuant to subdivision 1, a notice of 
  4.16  the intent to annex must also be mailed or delivered to each 
  4.17  property owner within the area subject to the proposed 
  4.18  annexation.  The notice must clearly identify the boundaries of 
  4.19  the area proposed to be annexed, explain how a copy of the 
  4.20  supporting documents required under subdivision 1b can be 
  4.21  obtained, the right of the property owner to participate in a 
  4.22  contested case proceeding, and the right to petition for a 
  4.23  referendum on the annexation pursuant to subdivision 3a if 
  4.24  applicable.  At least ten days before submitting a petition or 
  4.25  resolution to the director, a copy of the notice mailed to each 
  4.26  property owner must also be published in a qualified newspaper 
  4.27  of general circulation within the township. 
  4.28     The annexing municipality must provide all required notices 
  4.29  except for annexations initiated by subdivision 1, paragraph 
  4.30  (b), in which case the town board must provide the notice. 
  4.31     Subd. 3.  [PUBLIC HEARING TIME, PLACE, MANNER.] Upon 
  4.32  receipt of a petition or resolution initiating an 
  4.33  annexation under subdivision 1, the director shall designate a 
  4.34  time and a place for a hearing in accordance with section 
  4.35  414.09. order a joint public hearing of the city council of the 
  4.36  annexing municipality and the town board of the township 
  5.1   containing the land proposed to be annexed.  The time, date, and 
  5.2   place of the public hearing must be determined jointly by the 
  5.3   town chair and the annexing municipality's mayor.  The hearing 
  5.4   must be scheduled not earlier than 20 days and not later than 60 
  5.5   days after the director's receipt of the petition or 
  5.6   resolution.  The chair of the affected township and the mayor of 
  5.7   the annexing municipality must serve as the cochairs for the 
  5.8   hearing.  Notice of the time, date, place, and purpose of the 
  5.9   hearing must be posted by the town clerk in the township's 
  5.10  designated posting place, and by the city clerk in the city's 
  5.11  designated posting place.  In addition, except for annexations 
  5.12  initiated under subdivision 1, paragraph (b), the city must also 
  5.13  be responsible for publishing notice of the time, date, place, 
  5.14  and purpose of the hearing in a qualified newspaper of general 
  5.15  circulation within both the city and the township.  For 
  5.16  annexations initiated pursuant to subdivision 1, paragraph (b), 
  5.17  the township must provide published notice of the time, date, 
  5.18  place, and purpose of the hearing in a qualified newspaper of 
  5.19  general circulation in both the city and the township.  All 
  5.20  notice required by this subdivision must be provided at least 
  5.21  ten days before the date for the public hearing. 
  5.22     At the public hearing, all persons appearing must have an 
  5.23  opportunity to be heard.  The city council for the annexing 
  5.24  municipality, the town board for the affected township, and any 
  5.25  resident or affected property owner, may be represented by 
  5.26  counsel and introduce any evidence, including, but not limited 
  5.27  to, expert testimony, into the record of the hearing.  The 
  5.28  township clerk must record minutes of the proceedings of the 
  5.29  hearing and the city must tape record the hearing.  The township 
  5.30  must provide the director and the city with a copy of the 
  5.31  printed minutes and the city must provide the director and the 
  5.32  township with a copy of the tape recording. 
  5.33     Subd. 3a.  [LIMITED ANNEXATION REFERENDUM.] (a) For 
  5.34  annexations initiated pursuant to subdivision 1, paragraph (a), 
  5.35  clause (1) or (2), if less than 51 percent of the property 
  5.36  owners sign the petition, if at any time within 45 days 
  6.1   following the conclusion of the public hearing held pursuant to 
  6.2   subdivision 3, a petition signed by 35 percent or 100, whichever 
  6.3   is less, of the property owners within the area proposed to be 
  6.4   annexed is submitted to the director requesting an election on 
  6.5   the proposed annexation, the director, upon verification of the 
  6.6   required number of signatures, must designate a date and place 
  6.7   within the township for an election to be held on the proposed 
  6.8   annexation.  The election must be held no more than 90 days 
  6.9   after the verification of the petition.  To determine the 
  6.10  required number of signatures, a person may be counted only 
  6.11  once, and may sign the petition only once, regardless of the 
  6.12  number of parcels owned within the area proposed to be annexed. 
  6.13     (b) The director must require the town clerk to post notice 
  6.14  of the date, time, and location of the annexation election at 
  6.15  least ten days before the election in at least three public 
  6.16  places within the township, and must cause notice of the 
  6.17  election to be published at least once per week for two weeks in 
  6.18  a qualified newspaper of general circulation within the township.
  6.19     (c) The director must appoint the necessary election judges 
  6.20  from the county's list of eligible election judges for the 
  6.21  affected township from the most recent election.  The polling 
  6.22  place selected by the director for the election must whenever 
  6.23  possible be the polling place used by the township for the most 
  6.24  recent general election.  The polling place must be open at 
  6.25  least 13 hours and until at least 8:00 p.m.  The director must 
  6.26  ensure that the election is conducted in compliance with this 
  6.27  subdivision and to the extent practical and not otherwise 
  6.28  inconsistent with this subdivision, with all other statutes 
  6.29  governing special elections, including the use of absentee 
  6.30  ballots. 
  6.31     (d) Upon giving notice of the annexation election, the 
  6.32  director must suspend all other proceedings under this chapter 
  6.33  affecting any of the same property subject to the election.  The 
  6.34  suspension must continue in effect until the election results 
  6.35  have been determined and ordered pursuant to this section.  
  6.36  Following the determination and order of the election, any 
  7.1   proceeding suspended under this section may continue but the 
  7.2   boundaries for the proposed annexation must be modified to 
  7.3   exclude any property that was subject to the election.  An order 
  7.4   based on the election results has the same effect as any other 
  7.5   order authorized by this section. 
  7.6      (e) Only eligible voters as defined by section 201.014 and 
  7.7   residing or owning property within the area proposed to be 
  7.8   annexed are entitled to vote.  A person eligible to vote in the 
  7.9   annexation election under this section may only vote once 
  7.10  regardless of the number of parcels the person owns within the 
  7.11  area proposed to be annexed. 
  7.12     (f) The ballot for the annexation election must bear the 
  7.13  words "For Annexation" and "Against Annexation" with a square to 
  7.14  the left of each phrase so that the voter may indicate by a mark 
  7.15  the voter's choice.  The ballots and election supplies must be 
  7.16  provided and the election judges must be paid by the annexing 
  7.17  municipality and the affected township in equal shares. 
  7.18     (g) The ballots must be counted and canvassed in the manner 
  7.19  provided for general elections.  The election judges must 
  7.20  certify the time and place of the holding of the election, that 
  7.21  they have canvassed the ballots cast, and the number of cast 
  7.22  both for and against the proposed annexation.  The election 
  7.23  judges must file the certificate with the director. 
  7.24     (h) If the certificate shows the majority of the votes cast 
  7.25  were for "For Annexation," the director must order the 
  7.26  annexation.  If the certificate shows the majority of votes cast 
  7.27  were "Against Annexation," the director must deny the petition 
  7.28  or resolution and not order the annexation.  Whenever an 
  7.29  annexation is denied under this subdivision, no subsequent 
  7.30  petition or resolution for annexation of any of the same 
  7.31  property may be submitted for at least two years following the 
  7.32  election unless the property is made subject to an orderly 
  7.33  annexation agreement pursuant to section 414.0325. 
  7.34     (i) The director must, upon receipt of the certificate, 
  7.35  notify all parties of record of the election results. 
  7.36     Subd. 4.  [RELEVANT FACTORS, ORDER ADMINISTRATIVE HEARING.] 
  8.1   (a) For all annexation proceedings under this section not 
  8.2   subject to an election under subdivision 3a, the director must 
  8.3   designate a time and place for a hearing in accordance with 
  8.4   section 414.09. 
  8.5      (b) In arriving at a decision, the director shall consider 
  8.6   the following factors: 
  8.7      (1) present population and number of households, past 
  8.8   population and projected population growth of the subject area 
  8.9   and adjacent units of local government; 
  8.10     (2) quantity of land within the subject area and adjacent 
  8.11  units of local government; quantity of available land within the 
  8.12  annexing municipality; and natural terrain including 
  8.13  recognizable physical features, general topography, major 
  8.14  watersheds, soil conditions and such natural features as rivers, 
  8.15  lakes and major bluffs; 
  8.16     (3) degree of contiguity of the boundaries between the 
  8.17  annexing municipality and the subject area; 
  8.18     (4) present pattern of physical development, planning, and 
  8.19  intended land uses in the subject area and the annexing 
  8.20  municipality including residential, industrial, commercial, 
  8.21  agricultural and institutional land uses and the impact of the 
  8.22  proposed action on those land uses; 
  8.23     (5) the present transportation network and potential 
  8.24  transportation issues, including proposed highway development; 
  8.25     (6) land use controls and planning presently being utilized 
  8.26  in the annexing municipality and the subject area, including 
  8.27  comprehensive plans for development in the area and plans and 
  8.28  policies of the metropolitan council, and whether there are 
  8.29  inconsistencies between proposed development and existing land 
  8.30  use controls and the reasons therefore; 
  8.31     (7) existing levels of governmental services being provided 
  8.32  in the annexing municipality and the subject area, including 
  8.33  water and sewer service, fire rating and protection, law 
  8.34  enforcement, street improvements and maintenance, administrative 
  8.35  services, and recreational facilities and the impact of the 
  8.36  proposed action on the delivery of said services; 
  9.1      (8) existing or potential environmental problems and 
  9.2   whether the proposed action is likely to improve or resolve 
  9.3   these problems in a more cost-effective method than could be 
  9.4   achieved without the proposed annexation; 
  9.5      (9) plans and programs by the annexing municipality for 
  9.6   providing needed governmental services to the subject area and 
  9.7   the actual ability of the annexing municipality to provide the 
  9.8   services, including, but not limited, to wastewater treatment at 
  9.9   a level equal to all applicable state and federal discharge 
  9.10  standards, in a timely and cost-effective manner; 
  9.11     (10) an analysis of the fiscal impact on the annexing 
  9.12  municipality, the subject area, and adjacent units of local 
  9.13  government, including net tax capacity and the present bonded 
  9.14  indebtedness, and the local tax rates of the county, school 
  9.15  district, and township; 
  9.16     (11) relationship and effect of the proposed action on 
  9.17  affected and adjacent school districts and communities; 
  9.18     (12) adequacy of town government to deliver services to the 
  9.19  subject area; 
  9.20     (13) analysis of whether necessary governmental services 
  9.21  can best be provided through the proposed action or another type 
  9.22  of boundary adjustment; and 
  9.23     (14) if only a part of a township is annexed, the ability 
  9.24  of the remainder of the township to continue or the feasibility 
  9.25  of it being incorporated separately or being annexed to another 
  9.26  municipality; and 
  9.27     (15) all testimony and evidence made a part of record at 
  9.28  the public hearing conducted pursuant to subdivision 3. 
  9.29     (b) Based upon the factors, the director may order the 
  9.30  annexation on finding: 
  9.31     (1) that the subject area is now, or is about to become, 
  9.32  urban or suburban in character; 
  9.33     (2) that municipal government in the area proposed for 
  9.34  annexation is required to protect the public health, safety, and 
  9.35  welfare; or 
  9.36     (3) that the annexation would be in the best interest of 
 10.1   the subject area; or 
 10.2      (4) the subject township initiated or supported the 
 10.3   proposed annexation pursuant to subdivision 1, paragraph (a) or 
 10.4   (d). 
 10.5      (c) If only a part of a township is to be annexed, the 
 10.6   director shall consider whether the remainder of the township 
 10.7   can continue to carry on the functions of government without 
 10.8   undue hardship and may deny the annexation if an undue hardship 
 10.9   would be created.  
 10.10     (d) The director shall deny the annexation on finding that 
 10.11  the increase in revenues for the annexing municipality bears no 
 10.12  reasonable relation to the monetary value of benefits conferred 
 10.13  upon the annexed area, or that the annexing municipality cannot 
 10.14  or likely will not be able to extend municipal services, 
 10.15  including water and wastewater treatment services that comply 
 10.16  with all applicable state and federal regulations, in a timely 
 10.17  and cost-effective manner, or that the municipality is currently 
 10.18  not providing such services to at least 95 percent of its 
 10.19  existing properties.  
 10.20     (e) The director may deny the annexation on finding: 
 10.21     (1) that annexation of all or a part of the property to an 
 10.22  adjacent municipality would better serve the interests of the 
 10.23  residents of the property; or 
 10.24     (2) that the remainder of the township would suffer undue 
 10.25  hardship proposed annexation will not significantly increase the 
 10.26  protection of the public health, safety, and welfare; or 
 10.27     (3) that the city has sufficient existing areas of 
 10.28  undeveloped or underdeveloped land to meet current growth and 
 10.29  land use plans. 
 10.30     (f) The director may alter the boundaries of the area to be 
 10.31  annexed by increasing or decreasing the area so as to include 
 10.32  only that property which is now or is about to become urban or 
 10.33  suburban in character or to add property of such character 
 10.34  abutting the area proposed for annexation in order to preserve 
 10.35  or improve the symmetry of the area, or to exclude property that 
 10.36  may better be served by another unit of government. 
 11.1      (g) The director may also alter the boundaries of the 
 11.2   proposed annexation so as to follow visible, clearly 
 11.3   recognizable physical features.  
 11.4      (h) If the director determines that part of the area would 
 11.5   be better served by another municipality or township, the 
 11.6   director may initiate and approve annexation by conducting 
 11.7   further hearings and issuing orders pursuant to subdivisions 3 
 11.8   and 4 this section.  
 11.9      (i) In all cases, the director shall set forth the factors 
 11.10  which are the basis for the decision. 
 11.11     (j) If an annexation is ordered or approved pursuant to 
 11.12  this section, the order must include a listing of all services 
 11.13  to be extended into the annexed area, and a time line not to 
 11.14  exceed two years for the extension.  At a minimum, the order 
 11.15  must address how water and wastewater services are to be 
 11.16  provided. 
 11.17     Subd. 4a.  [PROVIDING FOR ELECTION OF NEW MUNICIPAL 
 11.18  OFFICERS.] (a) Any annexation order under this section for 
 11.19  annexation by a single municipality of an entire township shall 
 11.20  include a provision for the election of new municipal officers 
 11.21  in accordance with section 414.09.  The director of the office 
 11.22  of strategic and long-range planning, or the director's 
 11.23  designee, may also order an election of new municipal officers 
 11.24  in accordance with section 414.09 as part of any other 
 11.25  annexation order under this section if the director or the 
 11.26  director's designee determines that such an election would be 
 11.27  equitable.  
 11.28     (b) The expanded municipality shall be governed by the home 
 11.29  rule charter or statutory form which governs the annexing 
 11.30  municipality, except that any ward system for the election of 
 11.31  council members shall be inoperable.  
 11.32     (c) The ordinances of both the annexing municipality and 
 11.33  the township shall continue in effect within the former 
 11.34  boundaries until repealed by the governing body of the new 
 11.35  municipality. 
 11.36     (d) Notwithstanding any other provision of law to the 
 12.1   contrary, the director of the office of strategic and long-range 
 12.2   planning, or the director's designee, may provide for election 
 12.3   of council members by wards, not less than three nor more than 
 12.4   seven in number, whose limits are prescribed in the director's 
 12.5   order, upon a finding that area representation is required to 
 12.6   accord proper representation in the municipality because of 
 12.7   uneven population density in different parts thereof or the 
 12.8   existence of agricultural lands therein which are in the path of 
 12.9   suburban development; but after four years from the effective 
 12.10  date of an annexation the council of the municipality may by 
 12.11  resolution adopted by a four-fifths vote abolish the ward system 
 12.12  and provide for the election of all council members at large. 
 12.13     (e) Until the effective date of the annexation order, the 
 12.14  town board and other officers of the town shall continue to 
 12.15  exercise their powers and duties under the town laws in that 
 12.16  portion of the municipality that was formerly the town, and the 
 12.17  council and other officers of the annexing municipality shall 
 12.18  continue to exercise their powers and duties in that portion of 
 12.19  the expanded municipality that was formerly the municipality.  
 12.20  Thereafter the town board and the council of the annexing 
 12.21  municipality shall have no jurisdiction within the municipality, 
 12.22  and the new municipal council and other new officers shall act 
 12.23  in respect to any matters previously undertaken by the town 
 12.24  board of supervisors or municipal council within the limits of 
 12.25  the expanded municipality, including the making of any 
 12.26  improvement and the levying of any special assessments therefor 
 12.27  in the same manner and to the same effect as if such improvement 
 12.28  had been undertaken by the municipality. 
 12.29     (f) The new municipal council may continue or discontinue 
 12.30  any board that may have previously existed in the town or former 
 12.31  municipality. 
 12.32     Subd. 6.  [EFFECTIVE DATE OF ANNEXATION.] The annexation 
 12.33  shall be effective as of the date fixed in the annexation 
 12.34  order or on a later date fixed in the annexation order. 
 12.35     Subd. 7.  [COPY TO COUNTY AUDITORS.] A copy of the 
 12.36  annexation order must be delivered immediately by the director 
 13.1   to the appropriate county auditors. 
 13.2      Subd. 8.  [TIMING FOR TAX LEVY.] For the purposes of 
 13.3   taxation, if the annexation becomes effective on or before 
 13.4   August 1 of a levy year, the municipality may levy on the 
 13.5   annexed area beginning with that same levy year.  If the 
 13.6   annexation becomes effective after August 1 of a levy year, the 
 13.7   town may continue to levy on the annexed area for that levy 
 13.8   year, and the municipality may not levy on the annexed area 
 13.9   until the following levy year. 
 13.10     Sec. 3.  Minnesota Statutes 2002, section 414.033, 
 13.11  subdivision 2, is amended to read: 
 13.12     Subd. 2.  [CONDITIONS.] A municipal council may by 
 13.13  ordinance declare land annexed to the municipality and any such 
 13.14  land is deemed to be urban or suburban in character or about to 
 13.15  become so if: 
 13.16     (1) the land is owned by the municipality.  Property 
 13.17  annexed under this section must not be transferred to private 
 13.18  ownership during the first ten years following the annexation; 
 13.19     (2) before June 1, 2003, the land is completely surrounded 
 13.20  by land within the municipal limits and is land not owned by the 
 13.21  township; or 
 13.22     (3) the land abuts the municipality and the area to be 
 13.23  annexed is 60 acres or less, and the area to be annexed is not 
 13.24  presently served by public sewer wastewater facilities or public 
 13.25  sewer wastewater facilities are not otherwise available, and the 
 13.26  municipality receives a petition for annexation from all the 
 13.27  property owners of the land; or.  Under clause (3), any fee 
 13.28  interest is an ownership interest.  A property owner must not 
 13.29  petition for more than one annexation every two years under this 
 13.30  provision for any contiguous parcels of land of 60 acres or 
 13.31  less, nor for any noncontiguous parcels of 60 acres or less that 
 13.32  had been part of a larger parcel within the past two years.  
 13.33     (4) the land has been approved after August 1, 1995, by a 
 13.34  preliminary plat or final plat for subdivision to provide 
 13.35  residential lots that average 21,780 square feet or less in area 
 13.36  and the land is located within two miles of the municipal limits.
 14.1      Sec. 4.  Minnesota Statutes 2002, section 414.0335, 
 14.2   subdivision 1, is amended to read: 
 14.3      Subdivision 1.  [ANNEXATION-BY-ORDINANCE ALTERNATIVE.] If a 
 14.4   determination or order by the pollution control agency, under 
 14.5   section 115.49 or other similar statute is made, that 
 14.6   cooperation by contract is necessary and feasible between a 
 14.7   municipality and an unincorporated area located outside the 
 14.8   existing corporate limits of a municipality, the municipality 
 14.9   required to provide or extend through a contract a governmental 
 14.10  service to an unincorporated area, during following the 
 14.11  statutory 90-day period provided in section 115.49 to formulate 
 14.12  a contract, may, if no contract is successfully negotiated, in 
 14.13  the alternative to formulating a service contract to provide or 
 14.14  extend the service, declare the unincorporated area described in 
 14.15  the pollution control agency's determination letter or order 
 14.16  annexed to the municipality by adopting an ordinance and 
 14.17  submitting it to the director. 
 14.18     Sec. 5.  Minnesota Statutes 2002, section 414.0335, 
 14.19  subdivision 2, is amended to read: 
 14.20     Subd. 2.  [DIRECTOR'S ROLE.] The director may review and 
 14.21  comment on the ordinance but shall approve the ordinance within 
 14.22  30 days of receipt, unless the director finds upon appeal by the 
 14.23  township that the municipality failed to negotiate in good faith 
 14.24  in which case no annexation may be finalized under this 
 14.25  section.  The ordinance is final and the annexation is effective 
 14.26  on the date the director approves the ordinance.  
 14.27     Sec. 6.  Minnesota Statutes 2002, section 414.035, is 
 14.28  amended to read: 
 14.29     414.035 [DIFFERENTIAL TAXATION FOR UP TO SIX YEARS.] 
 14.30     Whenever an order or other approval, under section 414.031, 
 14.31  414.0325, or 414.033, this chapter annexes part or all of a 
 14.32  township to a municipality, the order may or approval must 
 14.33  provide that the tax rate of the annexing municipality on the 
 14.34  area annexed shall must not be increased in substantially equal 
 14.35  proportions over not more than six years to equality with the 
 14.36  tax rate on the property already within the municipality.  The 
 15.1   appropriate period, if any, shall be based on the time 
 15.2   reasonably required to effectively provide full municipal 
 15.3   services to the annexed area above the amount of the levy for 
 15.4   the same land as imposed by the township until municipal water 
 15.5   and wastewater treatment services, and all other ordered 
 15.6   services, have been extended to the annexed property. 
 15.7      Sec. 7.  Minnesota Statutes 2002, section 414.036, is 
 15.8   amended to read: 
 15.9      414.036 [MUNICIPAL REIMBURSEMENT TO TOWN FOR ANNEXED 
 15.10  TAXABLE PROPERTY.] 
 15.11     When an order or other approval under section 414.0325 this 
 15.12  chapter annexes part of a town to a municipality, the orderly 
 15.13  annexation agreement between the town and the order or approval 
 15.14  must provide that the municipality may provide a reimbursement 
 15.15  from the municipality to the town for all or part of the taxable 
 15.16  property annexed as part of the order the outstanding value of 
 15.17  all special assessments assigned by the township to the annexed 
 15.18  property, and for the property's equitable share of payment as 
 15.19  determined by the director towards all outstanding debt 
 15.20  instruments held by the township for which payment is not 
 15.21  covered by the special assessments.  The director must also 
 15.22  order reimbursement for the proportionate value, including 
 15.23  construction or installation costs, for any infrastructure, 
 15.24  including but not limited to, roads and wastewater treatment 
 15.25  services, constructed or installed by or under the direction of 
 15.26  the township when the infrastructure primarily benefits the 
 15.27  municipality after the annexation.  The reimbursement shall be 
 15.28  completed in substantially equal payments over not less than two 
 15.29  nor more than six years from the time of annexation the 
 15.30  remaining terms of the applicable special assessment or debt 
 15.31  instrument.  This section does not prohibit an annexing 
 15.32  municipality and an affected township from negotiating a 
 15.33  different reimbursement agreement that must then be included in 
 15.34  the order or approval in place of the director's reimbursement 
 15.35  assignment. 
 15.36     Sec. 8.  [414.037] [DETACHMENT AND REVERSION OF ANNEXED 
 16.1   LAND TO TOWNSHIP.] 
 16.2      If the municipal services, including water and wastewater 
 16.3   treatment, to be provided to any parcel within the annexed area 
 16.4   are not at least 95 percent complete as required by any order or 
 16.5   approval under this chapter, including orderly annexation 
 16.6   agreements, that parcel is detached and reverts to the township 
 16.7   upon approval by the director and the affected township of a 
 16.8   request of the property owner in the annexed area.  If the 
 16.9   services are not at least 95 percent complete in more than 50 
 16.10  percent of the annexed area, the town board of the affected 
 16.11  township may make the request with regard to all parcels not 
 16.12  being served in accordance with the order or approval.  A 
 16.13  request for detachment and reversion may be made at any time 
 16.14  after two years after the effective date of the order or 
 16.15  approval.  The request must be made in writing and filed with 
 16.16  the director, provided to the municipality, to all affected 
 16.17  property owners in the annexed area who are not making the 
 16.18  request, and, if the request is by a property owner, to the town 
 16.19  board of supervisors.  If the director of the office determines 
 16.20  that the services have not been provided or are not 
 16.21  substantially complete as required by the order for annexation, 
 16.22  the director must approve the detachment and reversion and 
 16.23  notify all parties, the secretary of state, the state 
 16.24  demographer, the county auditor for each affected county, the 
 16.25  commissioner of revenue, and any other person who has requested 
 16.26  notice.  The detachment and reversions are effective upon the 
 16.27  director's order approving the request.  The detached area that 
 16.28  reverts is relieved of responsibility for any debt or other 
 16.29  obligations of the municipality and may be required to assume 
 16.30  responsibility for debt and other obligations of the township.  
 16.31  For taxation, if the detachment becomes effective on or before 
 16.32  August 1 of a levy year, the towns acquiring the detached area 
 16.33  may levy on it beginning with that same levy year.  If the 
 16.34  detachment becomes effective after August 1 of a levy year, the 
 16.35  municipality may continue to levy on the detached area for that 
 16.36  levy year, and the towns acquiring the detached area may not 
 17.1   levy on it until the following levy year.  No detachment and 
 17.2   reversion may be ordered under this section if the annexing 
 17.3   municipality can show that the required services would have been 
 17.4   provided or substantially completed within the required two 
 17.5   years if not for the intervention of a natural disaster or other 
 17.6   delay not under the control of the municipality or its 
 17.7   contractors assigned to provide the required services. 
 17.8      Sec. 9.  [414.038] [EFFECT OF ANNEXATION OF TOWNSHIP 
 17.9   ROADS.] 
 17.10     Whenever a municipality annexes property abutting one side 
 17.11  of a township road, the segment of road abutting the annexed 
 17.12  property must be treated as a line road and is subject to 
 17.13  section 164.14.  Whenever a municipality annexes the property on 
 17.14  both sides of a township road, that portion of road abutting the 
 17.15  annexed property ceases to be a town road and becomes the 
 17.16  obligation of the annexing municipality.  This section does not 
 17.17  prohibit the annexing municipality from contracting with the 
 17.18  township for continued maintenance of the road.  Any portion of 
 17.19  a township road that ceases to be a township road pursuant to 
 17.20  this section may still be counted as a township road for the 
 17.21  road-and-bridge account revenues for the year in which the 
 17.22  annexation occurs. 
 17.23     Sec. 10.  [414.039] [EFFECT OF ANNEXATION ON EASEMENTS.] 
 17.24     If a municipality annexes property in which the affected 
 17.25  township holds any easement for the benefit of the public, the 
 17.26  township's easement interest continues unless otherwise agreed 
 17.27  to by the township.