The Florida Supreme Court decided that cities can make property owners in unincorporated areas join the city in order to get access to city utilities. This helps spread the costs of utilities to more people and prevents county residents from enjoying city benefits without paying city taxes. This is a controversial issue that continues to be debated. County residents and businesses often don’t want to join a city because it means more taxes and not much extra benefit. Cities have to decide whether to let nonresidents use their services without paying or make them join the city. The Florida Supreme Court said that cities can make nonresidents sign up to join the city in order to get city services. In a specific case, a person wanted sewer service from Clearwater, but the city said they had to join the city first. The Supreme Court said that was okay. The court case of Allen’s Creek has made it uncertain for cities to require nonresidents to annex in exchange for utility service. The court mentioned two exceptions when a city would have to serve a nonresident without any conditions. This decision makes it difficult for cities to require annexation for utility service and collect taxes from non-residents. The city has to go through a difficult process to determine if it can require customers to annex. The court’s decision needs to be reviewed to clarify the city’s right to compel annexation and make the process simpler. City utility services are important for the city’s residents and their tax payments help fund these services. If nonresidents want to use city utilities, they should also contribute through taxes. Additionally, the city needs to control its growth so that it can plan for future improvements and infrastructure. Requiring nonresident customers to request annexation allows the city to plan for future development and make sure there is enough water and sewer capacity for everyone. When a city provides utilities to people outside its borders, it can require those people to petition for annexation in order to receive the service. The city can also charge higher rates to nonresident customers for the extra costs of serving them. When cities operate outside their borders, they are acting like a business and are governed by contract law. It’s not clear who regulates city utilities outside their borders, but in Colorado, the state court ruled that no board has the power to regulate city utilities operating outside their jurisdiction. The Florida Public Service Commission (PSC) doesn’t regulate municipal utilities like it does with other utility companies because city residents already have control over their own utility. However, some people think that the PSC should also regulate city utilities when they serve customers outside of the city. A recent court case called Allen’s Creek suggests that the courts might step in to protect nonresident owners from the rules set by a city utility. This could prevent a city utility from forcing nonresident customers to annex into the city. Florida law also allows cities to set their own terms and conditions for connecting to their utilities, including possibly requiring annexation. The court’s decision about whether a city can require annexation before providing utilities is limited by a few factors. The court said it’s okay for Clearwater to require annexation because the property could get utilities from somewhere else, but this goes against the state’s policy of preventing utility overlaps. The court also said it’s okay because Clearwater only serves small areas outside the city, not large ones. And the city has to apply the annexation requirement consistently. But there are two exceptions to this rule: if the city is “holding itself out” as a public utility, or if there’s a contract in place. Overall, the court’s decision is limited by these factors. The Allen’s Creek court ruled that if a city holds itself out as providing water services, it can’t refuse to provide service based on annexation. This means that a city can’t pick and choose who it provides water to if it presents itself as a public utility. Even though Florida law doesn’t consider government-owned utilities as public utilities, the courts have changed this, subjecting them to similar rules as private companies. It’s not clear what actions would show a city intends to serve beyond its boundaries, but it could include agreements, permits, or special laws. The Allen’s Creek decision says that if a city creates a special district and makes all property owners connect to city sewer, the city has to provide good service for a fair price. This means they can’t force people to join the city if they want to use the sewer. In some states, cities only have to serve customers outside the city if there’s a written contract. Oral agreements don’t count. Interlocal agreements between cities and the county can bind a city to provide services to areas outside its limits. To encourage annexation, cities offer incentives to utility customers, like lower surcharges or impact fee waivers, but these incentives can lead to legal challenges. So, cities have to be careful when offering these incentives. The city might be able to make exceptions to the rule that all customers must be annexed into the city in certain situations, like if they were already being served by a private utility that the city bought, or if they live in older neighborhoods that are expensive for the city to provide services to. But this could be risky because it might not be fair to everyone and could create little pockets of people who aren’t part of the city. Simply put, cities in Florida have the power to decide whether or not they want to provide utility services outside of their city limits. They can do this as long as they don’t discriminate against their customers and have a good reason for their decision. This power comes from the laws and regulations that govern municipal utilities. In some cases, it may be necessary for a customer to agree to be annexed into the city in order to receive utility services. This is because providing utilities is related to the city’s growth, development, and the safety of its residents. Overall, cities have the discretion to decide when and where they will provide utility services. In most cases, annexation of a city needs to be voluntary. However, there are some situations where it can be involuntary, like for enclaves or if there are only a few voters in the area. A city can also refuse to provide services if it doesn’t have the capacity. Rates charged by a city for utilities outside its limits are not reviewed by the courts, unless they are unreasonable or discriminatory. City utilities can always be monitored because of the Sunshine Law and the Public Records Act. Cities don’t need Chapter 180 for power. The city can only mandate connection to sewer within five miles from a city’s border according to Florida law. Water infrastructure was already installed, making connection to an alternative source extremely expensive. People who do not comply with a utility’s reasonable rules do not have a property interest in water. Catherine D. Reischmann is a lawyer who specializes in city, county, and local government law and real estate law. She works with the cities of Lake Mary and Casselberry, as well as other governments. She is dedicated to serving the public and improving the justice system.
Source: https://www.floridabar.org/the-florida-bar-journal/up-allens-creek-without-a-paddle-can-cities-leverage-utility-service-for-annexation/
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