Metro Pulse/Insights/Annexation

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by Joe Sullivan

The seemingly irreconcilable boundary dispute between the city of Knoxville and Knox County appears to be getting close to a peaceful resolution. While envoys for the city and county are sworn to silence, officials close to their negotiations report that a lot of progress has been made.

"We're making more progress than I thought we would," says Mayor Victor Ashe. From his vantage point as county law director, Mike Moyers concurs that "there's been enormous progress."

The envoys, Deputy to the Mayor Gene Patterson and County Commissioner Frank Leuthold, are reportedly in agreement on what would seem to be the stickiest of sticking points: namely, the size and shape of an urban growth boundary (UGB) within which the city would be free to annex over the next 20 years. According to informed sources, Patterson and Leuthold have conditionally accepted a UGB that approximates the 47-square-mile city expansion area recommended early this year by a Knox County Growth Policy Coordinating Committee.

That committee was mandated by a 1998 state law to divide the county's 425 square miles of land outside the present city limits into three parts: the UGB, a planned growth area in the county, and a rural area in which development would be constrained in the name of deterring sprawl. But the committee's recommendations were subject to approval by City Council and County Commission, and both of these bodies rejected them. City Council opted instead for a 115-square-mile UGB, while County Commission opposed any allowance for territorial expansion on the city's part.

Leuthold spearheaded the opposition to what he contended would be an unwarranted city land and revenue grab at the expense of county property taxpayers. And he was also instrumental in initiating a county lawsuit challenging the constitutionality of the state's 1998 growth plan law. So what's come over this veteran legislative leader since his fellow commissioners named him as their envoy in September to negotiations that seemed destined to go the same way as Israeli-Palestinian peace talks? Indeed, the negotiations were initiated amid an annexation binge on Ashe's part that had escalated city-county hostilities to the flash point.

Since Leuthold isn't talking, any assessment of his negotiating strategy is conjectural. But a key modifier to his acceptance of a city UGB of any size is the word "conditional." Heading the list of those conditions has to be restrictions on involuntary annexations. What form these might take, and for how long, isn't clear. But residential property might be singled out for more stringent restrictions than commercial, such as requiring neighborhoods targeted for annexation to approve it by referendum. Commercial annexations may be of less concern to the county since enactment of the 1998 state law because it protects, for 15 years, the county's entitlement to sales tax revenues—revenues the city had been systematically siphoning off through commercial strip annexations in years past.

It takes familiarity with state law to appreciate how much of a coup it would be on Leuthold's part if he can get the city to agree to restrictions on involuntary annexations. Up to now, anyone faced with annexation can challenge it in court with a high probability of success. But once the UGBs mandated by the 1998 law take effect, anyone within them who objects to being annexed loses the right to a jury trial and is saddled with an onerous burden of proof. Moreover, the law stipulates that UGBs must be in effect by next June 30 and provides that if cities and counties can't agree on them, then a three-judge panel shall be appointed to establish them by fiat. The secretary of state has already appointed such a panel for Knox County, and conventional wisdom has it that the panel is likely to adhere to the coordinating committee's recommendations.

So why should the city be prepared to settle for anything less? Since neither Ashe nor Patterson are talking (and rightfully so in the midst of sensitive negotiations), we can only conjecture once again. The possibility of political backlash from snatching large numbers of county dwellers into the city (and onto its tax rolls) against their will could be a factor. So might aversion to having a three-judge panel in Nashville impose a resolution of matters that should be decided locally. But the best guess is that maximizing the city's revenues weighs largest in the equation. And County Commission may be able to contribute more to the city's coffers, at least in the short run, than can be gained from annexation.

County Commissioner John Griess, to his great credit, set in motion the process that led to the current negotiations with a proposal he presented to commission in August. As the quid for a ban on involuntary annexations, Griess proposed a deal under which the county would dedicate $16 million in economic development funds to projects within the city and would also channel county property tax revenues resulting from the city's ambitious downtown redevelopment plan back into the city for five years. According to projections by downtown redevelopers Worsham Watkins, this revenue stream could amount to more than $3 million a year. Since the city is an integral part of the county, there may be some gall involved in holding out funding from the Knox County Development Corp. as an inducement to the city. But the fact is that all of the Development Corp.'s investments in industrial and business park sites up to now have been made outside the city limits.

All of this comes at a time when the city is hard strapped to pay for its new $160 million convention center plus a proposed $130 million for so-called public infrastructure to support Worsham Watkins' endeavors. And all of that doesn't leave much of anything left over for the city's other economic development aims, such as acquisition and refurbishment of the Coster Shops site adjacent to I-275. Regardless of whether the specifics of Griess' proposal have become the basis for Patterson and Leuthold's negotiations, it's a good bet there is money on the table.

There are no doubt other issues there as well, and the peace process is always full of pitfalls. But if Patterson and Leuthold succeed in reaching an agreement, as we fervently hope they can, the entire community should rejoice at our ability to shape our own destiny rather than have it imposed upon us.