City of Fort Wayne v. SW ANNEX. AREA LANDOWNERS

• Decision Date: 12 March 2002
• Docket Number: No. 02S05-0109-CV-412.,02S05-0109-CV-412.
• Parties: CITY OF FORT WAYNE, Appellant (Respondent Below), v. CERTAIN SOUTHWEST ANNEXATION AREA LANDOWNERS, Appellees (Petitioners Below).
• Court: Indiana Supreme Court

764 N.E.2d 221

CITY OF FORT WAYNE, Appellant (Respondent Below), v. CERTAIN SOUTHWEST ANNEXATION AREA LANDOWNERS, Appellees (Petitioners Below).

No. 02S05-0109-CV-412.

Supreme Court of Indiana.

March 12, 2002.

Mark E. GiaQuinta, Robert W. Eherenman, Haller & Colvin, P.C., J. Timothy McCaulay, Helmke, Beams, Boyer & Wagner, Fort Wayne, IN, for Appellant.

Edward L. Murphy, Jr., Larry L. Barnard, Miller Carson Boxberger & Murphy LLP, Fort Wayne, IN, for Appellee.

D. Randall Brown, Barnes & Thornburg, Fort Wayne, IN, for Amicus Curiae Indiana Association of Cities and Towns. SHEPARD, Chief Justice.

In 1996, the City of Fort Wayne annexed nearly thirteen square miles with a population of 22,500 residents, postponing the effective date to 2006. Remonstrators contested the annexation. The trial court found the Fiscal Plan for annexation legally deficient for several reasons, largely because it predicted the costs of services in 2006 by calculating current costs and adding inflation. This was in effect a "judicial audit" of a decision that is legislative in nature. We reverse.

Facts and Procedural History

On December 3, 1996, the Common Council of Fort Wayne passed Annexation Ordinance X-03-96 and approved a Fiscal Plan for annexation as required by Ind. Code Ann. § 36-4-3-13(d)(West Supp. 1996) ("Section 13(d)"). The Mayor of Fort Wayne signed the Ordinance into law on December 5, 1996. The Ordinance deferred the effective date of annexation to January 1, 2006, as Ind.Code Ann. § 36-4-3-8(1)(West 1997)("Section 8(1)") allowed.¹

On February 4, 1997, Remonstrators challenged the annexation, claiming that the Fiscal Plan was legally insufficient. On January 11, 2000, the trial court issued its Findings of Fact, Conclusions of Law, and Judgment in favor of the Remonstrators. The City appealed, arguing that there was insufficient evidence to support the trial court's conclusions that:

1. the City's Plan was deficient in calculating cost estimates for the planned services to be provided to the annexed area;

2. the City failed to provide in its Plan that it would deliver noncapital and capital improvement services to the annexation territory within the statutorily fixed periods of time;

3. the City improperly used a City-wide standard in comparing services to be provided to the annexation area to services currently provided within the City; and

4. the City was required by statute to provide a neighborhood park in the annexation area similar to a neighborhood park located in the comparable area of the City.

(See Appellant's Br. at 5-9.) The Court of Appeals affirmed, finding the first issue dispositive. In re Ordinance No. X-03-96, 744 N.E.2d 996, 1003 (Ind.Ct.App.2001). We granted transfer, vacating that opinion. 761 N.E.2d 412 (Ind.2001).

I. Standard of Review for Annexation Challenges

A. The Trial Court's Role. We recited the limited role courts play in annexations in today's decision in Bradley v. City of New Castle, 764 N.E.2d 212 (Ind. 2002). Annexation is essentially a legislative function. Rogers v. Mun. City of Elkhart, 688 N.E.2d 1238 (Ind.1997).

Indiana Code §§ 36-4-3-11 through 13 establish requirements for remonstrances;² give trial courts authority to hear and enter judgment on remonstrances;³ and direct courts to order annexation provided that the city meets specified requirements on matters such as contiguity and has adopted a fiscal plan showing that it will provide municipal services to the annexed area that are equivalent to those enjoyed by residents in similar areas of the municipality.⁴

Although the municipality bears the burden of proof when properly challenged, we afford the municipality's legislative judgment substantial deference. Therefore, a trial court should not "audit" a challenged fiscal plan. Rather, it should focus on whether that plan represents a credible commitment by the municipality to provide the annexed area with equivalent capital and non-capital services.

B. The Appellate Court's Role. When a trial court enters special findings, as is the case here, we review issues of fact for sufficiency of the evidence and look to the record only for evidence favorable to the judgment. Ind. Trial Rule 52; Rogers, 688 N.E.2d at 1240. We do not set aside findings and judgments unless they are clearly erroneous. T.R. 52. We review questions of law de novo. Rogers, 688 N.E.2d at 1240

.

II. What the Statute Requires

At the time the City passed the Ordinance, Section 13(d) required annexing municipalities to develop written fiscal plans and establish definite policies, by contemporaneous legislative resolutions, to include the following (1) The cost estimates of planned services to be furnished to the territory to be annexed.

. . . .

(4) That planned services of a noncapital nature, including police protection, fire protection, street and road maintenance, and other noncapital services normally provided within the corporate boundaries, will be provided to the annexed territory within one (1) year after the effective date of annexation, and that they will be provided in a manner equivalent in standard and scope to those noncapital services provided to areas within the corporate boundaries that have similar topography, patterns of land use, and population density.

(5) That services of a capital improvement nature, including street construction, street lighting, sewer facilities, water facilities, and stormwater drainage facilities, will be provided to the annexed territory within three (3) years after the effective date of the annexation, in the same manner as those services are provided to areas within the corporate boundaries that have similar topography, patterns of land use, and population density, and in a manner consistent with federal, state, and local laws, procedures and planning criteria.

Ind.Code Ann. § 36-4-3-13(d)(West Supp. 1996).

In Bradley v. City of New Castle, slip op. at 12, 764 N.E.2d at 227, we observed that Section 13 is a pretty straightforward directive: a court shall order annexation if a municipality satisfies Section 13's requirements. The question we address in this case is whether the trial court examined this Plan under too powerful a microscope.

III. A Credible Plan

A. Why Require Fiscal Plans? In City of Hobart v. Chidester, 596 N.E.2d 1374 (Ind.1992) ("Chidester I"), we outlined the three purposes of fiscal plans. First, "the publication of a written plan permits landowners to make an intelligent decision about whether to accept annexation or remonstrate." Id. at 1377-78. Here, this purpose of the Plan was plainly met because more than an adequate number of citizens in the annexation area raised a timely challenge.

Second, "requiring a written plan makes the opportunity for remonstrance and judicial review more realistic. As a practical matter, more than vague promises are needed for a court to test a city's ability to provide like services to the annexed territory." Id. at 1378. Here, the trial court's extensive findings and conclusions again make clear that this Plan allowed for thorough review.

Third, "a fiscal plan needs to be in writing to protect the right of landowners to institute proceedings to force an annexing city to provide the services promised under the plan." Chidester I, 596 N.E.2d at 1378. Our analysis of each of the City's contentions will focus on whether the Plan fulfills this third purpose.

B. Must Cities Forecast the Future? The trial court held that Section 13(d) requires annexing municipalities to project cost estimates forward to the effective annexation date. (R. at 532.) The Court of Appeals agreed, saying "we believe that cost estimates for noncapital services must be figured from one year after the effective date of annexation and for capital improvement services, three years after the effective date of annexation." In re Ordinance No. X-03-96, 744 N.E.2d at 1002. We think the statute is not so prescriptive as that. Section 13(d) does not speak in terms of projections, forecasts, or inflated costs; it merely requires cost estimates. These cost estimates are not, as the Court of Appeals said, "irrelevant and arbitrary" if they are stated in current dollars. Id. at 1003. They are the means by which the municipality demonstrates its financial capacity to provide the services described in Sections 13(d)(4) and (5) at the time it authorizes an annexation.⁵

Here, the City undisputedly provided cost estimates. The trial court found, "The written annexation Fiscal Plan for the Southwest Extended Annexation Territory... showed:.... B) Cost[ ] estimates of planned services to be furnished;...." (R. at 510.)

Nonetheless, the trial court found the estimates legally deficient because they reflected the status quo at the time the Ordinance was passed, inflated at an estimated rate of three percent annually.⁶ (R. at 532-34.) The essence of the trial court's rationale was: Section 13(d) speaks of services to be provided, so fiscal plans must forecast each individual service and its related costs. Projecting such services and costs ten or more years in advance is, as various City officials admitted, extremely difficult or impossible with any degree of accuracy. Therefore, the trial court reasoned, this annexation fails.

The trial court's reasoning creates an implicit limitation on annexation deferral periods. This runs counter to Section 8(1), which in 1996 explicitly allowed unlimited deferral. We will not read Section 13 in a way that effectively eliminates an option that Section 8(1) offered at the time the City passed the Ordinance.

We conclude that Section 13 does not require more than credible calculation of present costs of individual services adjusted forward to account for inflation. Based upon the finding of fact that the Plan did contain cost estimates of planned services to be furnished, the Plan passed legal muster in this respect.

C. A Commitment to Deliver. Although the trial court held against the...