Commission on Local Government reviews Marion–Smyth voluntary settlement agreement proposing annexation of about 409 acres

The Commission on Local Government met May 13, 2014 in Marion to review a voluntary settlement agreement between the Town of Marion and Smyth County that would annex approximately 409 acres to the town, allow for the possible incorporation of roughly 100 additional acres, and set terms for revenue sharing, property conveyances and water rights.

The agreement presented by Marion officials aims to provide land for commercial development near Interstate 81 exits 45 and 47, which Town Manager Bill Rush said are "prime for commercial development." Rush said most town services would not be materially affected and that "the financial impact of the proposed agreement should be minimal." He told the Commission that about 59 percent of the land in the primary annexation areas is already Town-owned and about 41 percent is privately owned.

The Town outlined short-term revenue expectations for two of the annexation areas, estimating additional real estate tax receipts of $2,150 for Area B and $11,361 for Area C. The most significant potential revenue source is Area D, which the Town and County propose to tie to the Smyth Crossings Community Development Authority (CDA) so that revenues from Area D would be diverted to CDA bond payments while bonds are outstanding.

County Administrator Michael Carter, who also serves as chair of the Smyth Crossings CDA, and County Attorney Michelle Clayton described the CDA history and said the CDA structure is intended to support development when the private developer is ready. Clayton said it is "critical for this annexation to occur when Area D develops so that the infrastructure can be funded jointly with Town and County revenues." Both Clayton and Rush said bond repayment could take decades; the parties stated their intent that revenues be shared on a 50/50 basis after bond repayment, and that revenue-sharing provisions could be modified only by mutual agreement and only at 25-year intervals.

Town Attorney Mark Fenyk and Rush described land and water-right transfers proposed in the agreement. The Town would subdivide a long-held spring property so that the spring portion would go to the County, a ballfield portion would remain with the Town, and the Adkins Ruritan Club would receive the parcel containing their building. Fenyk answered staff questions about severing water rights and said the Town expects other water sources (including the Holston River) would provide alternatives; staff and commissioners suggested deed restrictions or clearer contract language to address future sale and well-construction concerns.

Commission staff raised policy concerns the Commission has historically watched closely: lengthy waivers of annexation and city-status rights and the duration of such waivers. Robbins noted that the Commission has discouraged waivers longer than 15 or 20 years; Rush responded that the Town views a town-initiated annexation as unlikely for a long period, explaining the parties’ rationale for the chosen waiver periods.

Staff also asked about public-safety impacts. Rush said Marion police already patrol some of the properties proposed for annexation and that existing mutual-aid arrangements should minimize service impacts; he added that Marion's officer-to-citizen ratio is stronger than many regional localities, providing some capacity to absorb additional demand.

The Commission’s record on the matter was left open until close of business May 30, 2014. Commissioners and staff said they would consider the supplemental materials filed by the Town and County; the parties jointly requested a 60-day extension for the Commission’s report, and staff indicated the Commission would endeavor to issue its report to affected local governments at the Commission’s September 2014 meeting. The meeting recessed at 3:17 p.m. for a 7:00 p.m. public hearing that evening.

Next steps: the Commission will consider written materials submitted through May 30 and take the matter up in a future meeting with a goal of delivering a written report in September 2014.