Annexations aren't easy, but they're crucial if cities want to divert more state dollars to local coffers.
The Metropolitan Pima Alliance held a forum on annexations with lawmakers and municipal officials at the Viscount Suite Hotel in Tucson on Friday, Aug. 21.
State Rep. Frank Antenori, Kevin Kish from the town of Marana, Scott Nelson with Oro Valley, Nicole Fyffe with Pima County, Chief Bruce Whitehouse from the Corona de Tucson Fire Department and Albert Elias with the City of Tucson made up the panel of experts at the alliance's monthly breakfast event.
"The City of Tucson is always interested in annexations," Elias told attendees.
Elias said the city had its eyes primarily on commercial developments in unincorporated areas of Pima County, like the recently completed annexation of Raytheon, a company that manufactures guidance systems for missiles located near Tucson International Airport.
City officials have estimated the annexation of the defense giant would bring with it some $17 million in tax revenue over 10 years.
But the deal, years in the making, provides an example of the bargaining municipalities often engage in when seeking to annex a lucrative commercial property.
To solidify the agreement, the city has agreed to pay for $8 million worth of infrastructure projects on the Raytheon property over the next several years. The city would put aside a portion of the tax revenue Raytheon creates into a fund to pay for the improvements.
"To give breaks to a private business is definitely a concern," Fyffe said.
Oro Valley failed in its attempt to annex a portion of the county that included the Foothills Mall after the owners of the mall demanded a sales tax-sharing deal to go along with the annexation plan.
Other attempts fail because residents don't want to be annexed. For an annexation of a populated area to proceed, more than 50 percent of residents have to approve.
Residents of Catalina have long chafed at the idea of joining Oro Valley. The town has obliged them by not including the area in its long-term strategic planning.
The Corona de Tucson area, on the southeast side of Tucson, also has resisted annexation.
"Our objection to being annexed into the City of Tucson would be that we would lose everything that we've worked for," Whitehouse said.
The annexation of populated areas, like Corona de Tucson or Catalina, pose the promise not only of additional sales taxes, but a chance to capture more state-shared revenue.
The state transfers sales tax and automobile licensing funds to municipalities based on population figures — cities with more people get a larger cut of the money.
Non-incorporated areas don't receive state-shared revenue.
Maricopa County has 16 cities and towns, and 6 percent of its citizens are living in unincorporated areas.
Pima County has five incorporated cities and towns with as much as 36 percent of the population living in unincorporated areas.
The disparity means a greater portion of state dollars remain in the greater Phoenix area.
"We really need to encourage annexation," Antenori said. "Maricopa has for too long siphoned off the big players."
Even non-developed areas hold the promise of increased cash flows for cities and towns, as is the case with Oro Valley's now-stalled plan to annex 14-square miles of state land north of the town.
"The Arroyo Grande project is huge for the town," Nelson told the breakfast group.
Oro Valley has little land available for development, Nelson explained, perhaps about 15 percent. A move to the north would allow the town to expand and collect sizable impact fees in the process, a crucial component of Oro Valley's continued solvency because the town doesn't have a property tax of its own. Once people move into the developed areas, the town would get more state-shared revenue.
The annexation of Arroyo Grande has been delayed for at least the current fiscal year because of cuts to the State Land Department's budget.