Last week the North Carolina Court of Appeals issued a decision in Hughes v. Town of Oak Island, upholding the Superior Court’s decision that the Town of Oak Island’s involuntary annexation of property along the Long Beach Road Corridor was null and void.

According to the North Carolina General Statutes, "at least sixty (60) percent of the total acreage of a proposed annexation site, not counting the acreage used at the time of annexation for commercial, industrial, governmental, or industrial purposes, must consist of lots and tracts three acres or less in size." In the Statutes, "at the time of annexation" is defined as the date on which the municipality approved its annexation report.

The Town had classified the "Big Toy Storage" tract, which was 10.74 acres, as being "used for commercial purposes." As of the date that the municipality approved the annexation, there was a sign advertising the future storage facility and the developer had applied for and received driveway, storm water run-off and erosion control permits from the state, had contracted with an engineering firm to assist in the design and layout of the groundwater draining and water and sewer systems for the property, had entered into a listing agreement with a commercial real estate company, and had submitted a site plan for the development of the property to the sanitary district that was the zoning authority in the area at the time. However, there were no buildings on the site and there were other permits, including building, mechanical, electrical, and plumbing for which the owner had not applied.

The Petitioners, challenging the Ordinance, argued that the Big Toy Storage was vacant and undeveloped, rather than "used for commercial purposes" at the time of annexation and that accordingly, the annexation was illegal. Finding that the Big Toy Storage property had not been graded, no foundation had been laid, no storage or parking facilities of any kind had been constructed, no storage slips had been sold or offered for sale and the owners were deriving no commercial revenue from the property, the Superior Court agreed. The Court of Appeals upheld the Superior Court’s decision, explaining that even though the tract’s owners did intend to construct a storage facility on the property, they had not made sufficient progress for the property to qualify as "in use." The Court cited Southern Railway Co. v. Hook, 261 N.C. 517 (1964), in which the Supreme Court of North Carolina held that ownership and future plans are not relevant in determining a property’s use with regard to annexation.

The Superior Court had also held that the ordinance annexing the property was an impermissible "shoestring" annexation. A shoestring annexation is an annexation where a "municipality uses a narrow corridor to connect the municipality to an outlying, noncontiguous area that the municipality desires to annex." They are not legally permissible because they "contravene the contiguous boundary requirements set forth in the annexation statutes." The Superior Court in this case held that the Town had intentionally manipulated the configuration to violate the spirit and purpose of the contiguity requirement in the General Statutes. Judge Ammons noted that there were four properties located in the annexation area with a property tax value of at least one million dollars and that these properties were located at the far end of the annexation area. He found that while the Town included some property to provide contiguity, it also intentionally excluded several lots and tracts because of the negative effect that inclusion would have had on the Town’s compliance with the annexation statutes’ requirements. In doing so, Judge Ammons found that the Town had created the potential for confusion in the provision of emergency and other services to the annexation area and those excluded properties.

The majority of the Court of Appeals panel agreed with the trial court that the annexation was an illegal "shoestring." However, Judge Steelman dissented from this part of the Court’s decision. He insisted that only one appellate case has found an annexation to be an invalid shoestring annexation and in that case, Amick v. Town of Stallings, 95 N.C. App. 64 (1989), the Town of Stallings had used a strip of land 7,411 feet long and varying in width from fifty (50) to two hundred (200) feet, which had "no relationship to any urban or municipal purpose." Unlike the other two judges on the panel, Judge Steelman felt that the configuration of the annexation area in the case of the Town of Oak Island, did not "rise to the level of flouting the intent of the statute" and that unlike the narrow shoestring corridor in Amick, the proposed annexation here followed a commercial corridor which ran along a major roadway.