“Satellite” annexation authority provides an exception to the normally strict rule that only territory abutting a municipal boundary can be annexed. This power comes with some unique requirements, one of which is that if part of the property to be annexed is “subject to subdivision regulation,” then the entire subdivision must be included in the annexation petition. Taken to its logical extreme, defining “the entire subdivision” can become a bizarre exercise in property records analysis. But do we have to take this rule to its logical extreme? Read on, dear readers…
Context
Since 1974, North Carolina municipalities have had the authority to annex certain property that does not abut their municipal boundary, a practice known as “satellite” annexation. In many ways, annexation of satellite areas works similarly to annexation of areas contiguous to the municipality. In fact, the procedure for satellite annexation is identical to that for voluntary contiguous annexation: land owners who wish their property to be annexed sign a petition, the clerk reviews it, and the town’s governing board holds a public hearing before voting to approve or deny the petition. However, as outlined in G.S. 160A-58.1(b), property to be annexed as a satellite area must meet certain standards that contiguous property does not.
Among these standards is a rule in paragraph (4) that, if a portion of a proposed satellite area “is subject to subdivision regulation…,” the entire subdivision must be included in the annexation petition. While the language of this rule may at first seem straightforward, looking at a couple of hypothetical examples reveals a sneaky ambiguity.
Example 1: Jan’s Project
First, imagine Jan owns property near (but not adjacent to) the Town of Sampleboro that she would like to subdivide and to develop into Katabasis, a new mixed-use community with residences, shops, offices, maybe even a movie theater. Jan wants to annex at least some of this property into Sampleboro so that at least part of the Katabasis development will be connected to Sampleboro’s great city services: water, sewer, trash collection, and road maintenance.
In Jan’s case, applying this “whole subdivision” rule is fairly straightforward. Her property is not contiguous to the town, so this is a satellite annexation. Since she is subdividing the entire property, the entire Katabasis project is subject to subdivision regulation and Jan must apply for all of the Katabasis property to be annexed.
Example 2: Melanie’s Place
Let’s take another example, based on a recent real-world inquiry from a practicing attorney: Melanie wants to start up a new brewing company on property she recently purchased in Hesperus II, an industrial park near Sampleboro that was subdivided and developed in 1974. In order to obtain the fresh water the brewing process requires, Melanie also wants to connect to the town’s utilities and other services.
Again, since her property is not contiguous with Sampleboro’s main border, Melanie must petition for annexation by the satellite method. Melanie only owns one lot in Hesperus II and only wants that one lot to be annexed, but the industrial park, like a residential “subdivision,” was subdivided and developed together as part of a single development project. Does that mean that she has to ask all of the other owners in the Hesperus II industrial park to sign on to her petition and request annexation?
Melanie thinks that having to get all of the other property owners in Hesperus II to join her petition is absurd – after all, the subdivision of Hesperus II was 50 years ago! To her point, nearly every parcel of developed property has been subdivided from some larger parcel at some point in the past. If G.S. 160A-58.1(b)(4)’s “entire subdivision” rule really applies here, what if the industrial park property was divided off from another estate back in 1968 – that is a subdivision, too, is it not? Unless it pre-dates the subdivision ordinance, do all of the property owners in the former 1968 estate need to join the petition? If so, where does the search for all of the owners in the area subject to subdivision rules end – with the Lords Proprietors? Regardless of where the chain of subdivision ends, it seems like a lot of effort and politicking just to get municipal water service.
Breaking down the statute
Thankfully for Melanie, the statute might not apply to completed subdivisions. As we will see, breaking down the language of the statute suggests that it applies to subdivisions that are in the approval and development process (perhaps even to those that have preliminary subdivision approval), but it is unclear whether the statute would apply to any subdivisions that have been completed.
The “plain language” of the statute
As most readers of judicial opinions will tell you, the first rule of interpreting a statute is to examine the words it uses and their usual meaning. The annexation statute refers to property “subject to subdivision regulation as described in G.S. 160D-802…” G.S. 160D-802, in turn, states that:
“subdivision regulations shall be applicable to all divisions of a tract or parcel of land into two or more lots, building sites, or other divisions when any one or more of those divisions is created for the purpose of sale or building development, whether immediate or future [subject to certain exemptions]”
This language states that subdivision regulations apply to “divisions of … land,” not to land that was previously divided or might be divided in the future. This suggests that it should apply to Jan’s property that is in the process of being divided, but perhaps not to Melanie’s parcel of property that was created 50 years ago.
Legislative history
One can also look to a statute’s legislative history for guidance, although that is of little help when it comes to the “entire subdivision” clause.
From 1973 until 2022, the language of the statute read “If the area proposed for annexation, or any portion thereof, is a subdivision as defined in G.S. 160A-376, all of the subdivision must be included.” In 2022, after moving the grant of subdivision authority to the new Chapter 160D of the General Statutes, the General Assembly updated a number of cross-references to subdivision and other statutes that had been moved into Chapter 160D.
When the legislature updated G.S. 160A-58.1 to refer to the subdivision authority now in Chapter 160D (in S.L. 2022-62, Section 45), it also updated the language of this statute. Where the prior version referred to annexation of an area that “is a subdivision as defined in G.S. 160A-376,” the new language referred to property that “is subject to subdivision regulation as described in G.S. 160D-802.” The General Assembly could have just replaced “as defined in G.S. 160A-376” with “as defined in G.S. 160D-802,” but instead they made the change to “subject to subdivision regulation as described in G.S. 160D-802.”
This updated language offers little additional guidance. A change from “subdivision” to “subject to subdivision regulation” suggests that the statute may be focused more about divisions of land that are being regulated in present rather than established subdivisions of property. It also could be read just to clarify that the “whole subdivision” rule does not apply to divisions that are exempt from the definition of “subdivision.”
Legislative intent
A third approach is to attempt to identify the goal of the legislation. This rule of adding the entire satellite subdivision may seem strange, but consider this: in Jan’s mixed-use community, there is likely going to be a significant amount of stormwater, sewer, water supply, road, and maybe sidewalk infrastructure that is built as part of the development. Typically, all of this infrastructure is built by the developer and taken over by the city that approves the subdivision. Particularly for residential portions of the development, having only a patchwork of lots included in the annexation would result in gaps in service areas, causing inefficiencies and confusion in the provision of city services.
As a consequence, requiring an entire subdivision and development project to petition for annexation at once makes for a much clearer and smoother integration of the new development into the fabric of the municipality. If this was indeed the legislature’s intent, it suggests that the “whole subdivision” rule should apply to completed subdivisions, which does not agree with our “plain language” reading above. It also raises the question of how to define the scope of the “subdivision” and how far back to go back in time to find the “subdivision” at issue.
We might try to avoid the problem of defining the “whole subdivision” by just taking whatever is the most recent subdivision of the property. This would be the pending subdivision in Jan’s case and probably the 1974 industrial park subdivision in Melanie’s case. This interpretation alleviates the problem of having to go back to centuries-old land grants, but it has its own issues. There could be some administrative difficulty if the last subdivision was not relatively recent. Moreover, we have to change the tense of the statutory language to make it fit this alternate interpretation. The statute does not refer to property that has been a division of property subject to subdivision regulation; it refers to property that is a division subject to subdivision regulation.
Conclusions
Where does all of this leave us? The language of G.S. 160A-58.1(b)(4) could perhaps be clearer, but there are two interpretations of the statute that stand out. Each, naturally, has its own challenges:
Option 1: The rule should only apply to subdivisions that are in the review process. This interpretation is most closely aligned with the wording of the statute. Under this view, once a final plat is approved, the property is no longer “subject to” the rules regarding the subdivision process.
This interpretation avoids Melanie’s challenge of having to obtain signatures from everyone in a 50-year-old subdivision. However, it might allow Jan to avoid application of the rule by obtaining final plat approval for Katabasis and then annexing potentially scattered pieces of annexed property that was developed under a common plan. As described above, this could cause an administrative challenge in the provision of city services.
Option 2: The rule should apply to subdivisions under review and to the most recently completed subdivision of property. This interpretation may align with the probable intent of the legislation, where portions of the same development project must be annexed as a unit.
This interpretation avoids Jan being able to circumvent the rule. On the other hand, it would require Melanie to identify (and the city clerk to confirm) the lots that were subdivided as part of Hesperus II half a century ago, then get the rest of the industrial park to petition for annexation. That in itself might be a significant challenge that makes an otherwise reasonable annexation nonviable. It also could cause an administrative challenge in defining the applicable subdivision, both for the applicant and for the municipal clerk that must confirm the sufficiency of the petition. It also requires reading “is subject to subdivision regulation…” as though it read “is currently or was part of a regulated subdivision of land,” and we generally avoid reading words into statutes that do not appear in the text.
Takeaways
As with many murky statutory rules, there is no one clear best answer. While the inclination is often to follow the intent of a rule, the safer legal approach is often following the “plain” reading of the language in the statute.
As a practical matter, some jurisdictions may be tempted to apply one interpretation or the other on a case-by-case basis. This approach would fit Melanie’s situation and Jan’s situation to the respective interpretations that seem like the most reasonable result for each case. It is risky, however. Judges tend to discourage interpreting the same language differently from one case to the next, and some might consider that kind of application to be arbitrary or capricious.
One final caveat: Note that this rule only applies to satellite annexations. Annexations by petition of property contiguous to the city and annexations initiated by the municipality are not subject to the requirement to include all of an area subject to subdivision regulation.
