ANN ARBOR, MI – Ann Arbor’s attempts to annex dozens of “township island” properties within the city’s ultimate boundary are being met with opposition from the State Boundary Commission.

City Council voted 9-2 this week to push back, authorizing appeals of the denials.

Anne Bannister and Jeff Hayner, the two 1st Ward council members, were opposed.

They also were opposed in December 2018 when the council voted 9-2 to try to annex 88 township-island properties into the city.

The council’s move was met with resistance from some township residents concerned about paying higher property taxes, tens of thousands of dollars in utility connection fees, and new bills for water and sewer services they argued they don't need because they have functioning wells and septic systems.

For those concerned about large costs associated with hooking up to the city’s utility systems, the council agreed to give township islands a grace period of up to 10 years to connect to the city’s water system and up to 18 months to connect to the city’s sewer system.

Within the ultimate outer boundaries of Ann Arbor, many small pockets of land are still technically part of surrounding townships that border the city, and those are known as township islands.

The people who own them pay lower township taxes instead of city taxes. In many cases, they also have their own private wells and septic tanks instead of being connected to city utilities.

Plans to annex those properties have been in the works for decades, tracing back to a 1994 agreement with Ann Arbor Township and a 1979 agreement with Scio and Pittsfield townships.

In 2011, the City Council directed the city's staff to begin a strategic process of gradually annexing remaining township islands, and the first 20 city-initiated annexations went through a few years ago.

The city argues annexation of township islands results in a more equitable provision of public services.

"Currently, township island residents receive a number of city services without paying for them, such as road resurfacing and reconstruction, street lighting, stormwater management, and city parks," the annexation petitions state. "Annexing the properties will allow the city to more effectively plan and implement infrastructure improvements."

The city’s financial staff estimated in 2018 the 88 annexations would result in about $136,000 in new annual tax revenue for the city.

Following council’s approval in December 2018, the city filed the annexation petitions with the State Boundary Commission in March 2019, with three separate filings grouped by township.

Public hearings were held last June and the city then submitted rebuttal responses to oral arguments.

The commission met again in October and recommended denial of annexing the Pittsfield and Ann Arbor township properties, with the exception of one on Newport Road where the owner was in favor, though it OK’d the Scio Township annexations, which included 23 lots.

Consistent with the boundary commission’s recommendations, the state’s Department of Licensing and Regulatory Affairs issued final orders on the matter in November.

The state’s denials “are contrary to applicable law and are not supported by competent, material and substantial evidence on the record and should be reversed,” Senior City Attorney Timothy Wilhelm wrote in a memo seeking council’s support for appealing.

Council authorized the city administrator, city attorney and city clerk to take all actions necessary to try to reverse the denials.

In recommending the denials, the boundary commission noted assessed values would increase for properties brought into the city.

It also noted some properties have wells and septic systems that are less than five years old and they still would be required to connect to the city’s water and sewer systems if they were annexed, and owners argued that could cost them $20,000 or more.

Commission Chairwoman Robin Beltramini, a Troy resident, argued at the Oct. 16 meeting homeowners should not have to abandon their investments for wells and septic systems.

Commissioner Stefani Carter, a Washtenaw County representative, added it would be a large expense for something the homeowners don’t need, and other commissioners concurred.

Bannister and Hayner said they’re similarly sympathetic to the concerns raised by township island residents.

Council Member Jane Lumm, I-2nd Ward, said township island owners have enjoyed “a pretty sweet deal for a lot of years,” but there have been longstanding agreements to annex them. It’s an issue of equity, she said, noting there are people who live next door to township islands and pay Ann Arbor taxes while their neighbors do not.

Bannister had concerns about how much city staff time it might require to continue pursuing the matter. City Attorney Stephen Postema said it won’t be time-intensive to file the appeals.

When council was considering the round of 88 annexations in 2018, the city’s planning staff indicated there still were slightly more than 500 township island properties within the city’s ultimate boundary.

City Planner Jeff Kahan explained the history of how township islands came to be.

“After new water treatment and waste water treatment facilities were constructed in around the turn of the last century (around 1900), developers of subdivisions requested annexation into the City of Ann Arbor in order to obtain those services,” he wrote in an email.

“Over the course of the 20th century, many neighborhoods were platted and site planned and annexed into the city. However, a number of parcels didn’t request to be annexed. Today, we refer to these parcels as ‘township islands.’”

Read more Ann Arbor City Council stories.