CAN MY TOWNSHIP INCORPORATE AS A CITY?

By Couri, MacArthur & Ruppe, PLLP

With Columbus Township and New Scandia Township successfully incorporating in 2006, we are fielding many calls from Town Board members asking whether their Township can also incorporate as a city. Unfortunately, the answer to that question depends on the particular circumstances of each Township. However, there are many elements common to nearly all Townships that have successfully incorporated. The discussion below will attempt to provide a guide for Township officers to use in evaluating whether their Township should seriously consider incorporation. I. Recent Incorporations. Incorporations have been relatively few over the past 25 years. We are aware of only the following Townships that successfully incorporated since 1981: Otsego (incorporated by Andrew MacArthur of Couri, MacArthur & Ruppe in 1990) Oak Grove (1993) Grant (1996) St. Augusta (originally incorporated by Michael Couri of Couri, MacArthur & Ruppe as the City of Ventura in 2000) Columbus (2006) New Scandia (incorporated as the City of Scandia, 2006) Many other Townships have sought to incorporate during this time but have failed, including Forest Lake (1989 and 2000), Pike Bay, and Spring Lake (by petition of residents), to name a few. II. Legal Standard for Incorporation. Should a Township wish to incorporate into a city, a resolution or petition must be submitted to the Municipal Boundary Adjustments Division at the Minnesota Department of Administration, which then must schedule a hearing to consider a long list of criteria as to whether or not the requested incorporation should be granted. See Minn. Stat. 414.02. The Boundary Adjustment office is Prepared By: Couri, MacArthur & Ruppe PLLP, P.O. Box 369, St. Michael MN 55367 (763) 497-1930 Toll-free: (888)316-1176 -1-

currently using Administrative Law Judges (ALJs) to conduct these incorporation hearings. After all evidence has been presented at the hearing, the ALJ must make one or more of the following determinations: A. Is the Township urban or suburban or about to become so? B. Is incorporation in the best interests of the area to be incorporated? C. Is the existing Township form of government inadequate to protect the public health safety and welfare? In order for incorporation to be ordered, the ALJ must find that at either A, B, or C above is true. Even then, the ALJ does not have to order incorporation. Instead, the ALJ may find that all or part of the area to be incorporated can be better served by being annexed to an adjacent city, in which case the ALJ may annex all or part of the Township to the adjacent city. In short, when a Township seeks to incorporate, it must convince the ALJ that it is effectively operating as a city, and also convince the ALJ that no other city can better serve the Townships land area. III. Common Characteristics of Townships that Seek Incorporation. While each incorporation case is slightly different, most successful incorporations have several common characteristics, described below. Few Townships have all of these characteristics, but those that have many or most of these characteristics are much more likely to be incorporated than those that do not. These characteristics are: 1. A relatively rapid residential or commercial growth over the past decade. 2. A forecast of rapid residential or commercial growth in the next ten to twenty year period. 3. A population of approximately 2,500 or greater. 4. Full scale Township planning and zoning with a Township comprehensive plan, zoning ordinance and subdivision ordinance. 5. Existing sanitary sewer and municipal water service or a detailed plan for the installation of both of these utilities. Prepared By: Couri, MacArthur & Ruppe PLLP, P.O. Box 369, St. Michael MN 55367 (763) 497-1930 Toll-free: (888)316-1176 -2-

6. Urban Township powers under Minnesota Statute 368.01. 7. An existing contract for police services (usually patrol time) with the County Sheriff or some other police department. 8. Full or part-time paid administrative staff (clerk or deputy clerk). 9. Strong public support for incorporation from the Township residents. 10. Support of the County Board and adjacent cities and Townships for incorporation. 11. Sound financial condition of the Township, including the ability to fund the costs of incorporation, generally in the $100,000+ range. 12. A need for additional powers that cities possess and Townships do not. 13. The absence of a city bordering the Township that will be surrounded or otherwise have its future growth area cut off or severely hindered by the incorporation. 14. The ability to provide for its residents better than any neighboring cities. Ideally, the Township should be able to show that it is effectively operating as a city currently, and needs the formal powers of a city to better serve its residents. IV. Preparing for Incorporation. Contrary to what the public may perceive, incorporation is not a quick process. The hearing process is usually the culmination of several years worth of work toward incorporation, with the first several years of preparation being done without great fanfare or publicity. The starting point for any incorporation decision is an analysis by the Town Board as to the benefits and detriments of incorporation. This can usually be provided by an attorney who has been through the incorporation process. Having successfully incorporated Otsego and St. Augusta Townships, we at Couri,

Prepared By: Couri, MacArthur & Ruppe PLLP, P.O. Box 369, St. Michael MN 55367 (763) 497-1930 Toll-free: (888)316-1176 -3-

MacArthur & Ruppe can help the Town Board perform a benefit/detriment analysis if the Townships attorney is not experienced in incorporation issues. Once this is determined, the Town Board, in consultation with its residents, can decide whether incorporation may be beneficial to the Township residents, and whether the Township residents are willing to pay for the expense of incorporating. If the Town Board decides to move forward with incorporation, it should first update its comprehensive plan, zoning, and subdivision ordinances, and should have a plan for how municipal services will be provided (sewer and water). These steps will usually take a year or more to complete and will generally involve several public hearings and/or meetings with interested residents. All other aspects of Township government should also be examined, including finances, police service, building inspection, capital improvement plans, etc. The Town Board should also carefully cultivate its relations with its neighboring cities, townships, the County Board and the Metropolitan Council (if the Township is in the seven-county metro area). Ultimately, the Township will likely seek a resolution of support for the Townships incorporation from each of these entities. Obtaining these resolutions of support is very important and usually signals that the incorporation will be unopposed at the ALJ hearing. V. Incorporation Process. Incorporation is initiated with the filing of an incorporation petition under Minn. Stat. 414.02 with the Office of Administrative Hearings, Municipal Boundary Adjustments. Once the petition is filed an ALJ will be assigned and other parties, including cities or individuals, may enter the proceedings as a party. If no one contests the incorporation, the ALJ will likely set a one or two day hearing five to six months after the petition was filed. If one or more parties contest the incorporation, the ALJ will likely set a five to ten day hearing about nine months after the petition was filed. After the hearing, the ALJ will make detailed findings of fact and conclusions of law, and will ultimately issue an order either incorporating the Township as requested, incorporating part of the Township and annexing the remainder to another city, or denying the incorporation in its entirety (and perhaps

Prepared By: Couri, MacArthur & Ruppe PLLP, P.O. Box 369, St. Michael MN 55367 (763) 497-1930 Toll-free: (888)316-1176 -4-

annexing the entire Township to an adjacent city). While any party may appeal the ALJs order to District Court, very few of these orders are ever reversed. If the hearing is not contested, total Township costs will likely be in the $100,000 range. If the hearing is contested, particularly if a neighboring city is trying to annex some or all of the Township, the costs will likely be in the $150,000 range. VI. Chances of Successfully Incorporating. There is no guarantee that any Township will be incorporated. Even the best prepared Township may be denied incorporation (as in Forest Lake Township in 2000). However, there are several guidelines listed below which provide some predictability to the process. Please note that these guidelines are not hard and fast rules, as each Township and each incorporation proceeding is different. These guidelines are as follows: If the Township surrounds a neighboring city or will severely hinder its future growth, incorporation will likely not be granted. If one or more cities oppose the incorporation petition, incorporation will be difficult as the ALJ has the power to order the annexation of some or all of the Township to neighboring cities, and has done so in the past. If the Township is seeking to incorporate solely to avoid annexation in the future, incorporation will likely not be granted. The Township must present solid evidence that it needs municipal powers to efficiently function. If the Township has a shrinking population and little prospect for growth, incorporation will be difficult. If the Township does not have its own zoning and subdivision ordinances in place, incorporation will be difficult. Incorporation is more likely if the Townships administrative structure is similar to that found in cities, particularly with regard to the presence of Prepared By: Couri, MacArthur & Ruppe PLLP, P.O. Box 369, St. Michael MN 55367 (763) 497-1930 Toll-free: (888)316-1176 -5-

paid administrative staff, regular office hours, zoning and subdivision administration and building inspection administration. Incorporation is more likely if the Township can show that it has been working toward incorporation for a significant period of time and has put serious effort into the incorporation process. Incorporation is much more likely when incorporation enjoys wide public support among Township residents. A divided electorate is a recipe for trouble at an incorporation hearing.

Incorporation is much more likely when the Township can show that it has actively addressed (and preferably solved) the major issues that have arisen in the Township (failing septics, contaminated wells, poor roads, etc.).

While incorporation can sometimes be a difficult process, sound preparation and planning beforehand can greatly increase the chances of successfully incorporating. If your Township is considering the possibility of incorporation, please feel free to contact one of us at Couri, MacArthur & Ruppe for additional information and assistance in preparing for the incorporation process.

Prepared By: Couri, MacArthur & Ruppe PLLP, P.O. Box 369, St. Michael MN 55367 (763) 497-1930 Toll-free: (888)316-1176 -6-