Suburban Annexation is a Bailout

This story is not unique: a mid-sized Midwestern town is preparing to adopt a 50-year-old neighborhood. If you read between the lines, news of annexation often times read as case studies against low-density suburban development. This article from Mankato demonstrates (unintentionally) why these types of subdivisions can be so problematic.

All quotes related to the annexation were taken from the Free Press. I recommend reading it here first.

South View Heights No. 2 is not part of the city, everything surrounding it is. The 1960s subdivision has been leapfrogged by other development over the years, but has rejected opportunities to join city and receive services on the premise that taxes remain lower.

City v Not City

These are homes befitting the American Dream of the 1960s. The neighborhood has nice, modest homes and is surrounded by creeks and ravines. Nothing fancy, but residents genuinely care for their homes. Relative to the area, the homes in South View Heights are above average that range in value from around $170k to $290k. The median home price is approximately $213k, which is around $40k above the local average (thanks Zillow).

After the city adopts this neighborhood, the average house will pay around $2,800 per year in taxes (up from the current $2,000). Keep these numbers in mind and ask yourself, “Will the extra $800 in extra city taxes help cover the true long-term costs?” Water. Sewer. Roads. All in disrepair.

50 years has passed since homes in South View Heights were built, and as the newspaper accurately puts it; “The new addition to Mankato’s family of neighborhoods is handsome enough, but it’s showing its age.” 

“The water tower, obviously, is broken, and (roughly 85 percent of) the septic systems are non-compliant,” said [a homeowner]. “And we have a failing water line. And the road is shot.”

This is the end of the first life-cycle of infrastructure, and this hamlet of 61 homes is unable to tax itself the necessary amount to fix the things that need repair.
Homeowners petitioned the city to consider annexation. This move would hook the neighborhood up to city water and sewer lines and help fix the street. The City on Mankato estimates a hook up at around $2.66 million (approximately $40k per household).
“A recently completed feasibility report put the preliminary assessment against each property at $29,298 — which is down from earlier estimates that approached $40,000. (Most residents also will face several thousand dollars in costs for utility connections from their home to the city lines.)”