COA Rejects Town’s Request To Annex Territory For Possible Property Development

Olivia Covington for www.theindianalawyer.com

The Indiana Court of Appeals has ruled against a northern Indiana lakefront town seeking to annex roughly 2,800 acres for “potential” economic development, finding the town failed to prove the annexation was needed and could be used for development.

In November 2014, the town of Cedar Lake in Lake County adopted an ordinance that proposed to annex a 2,800-acre territory. A fiscal plan for the annexation that was approved in June 2015 projected a net increase in town tax revenues of more than $350,000 per year.

A group of landowners filed a remonstrance against the annexation, so at a subsequent trial, the town introduced evidence of five major projects that could possibly create future economic development in the territory. Those projects included the construction of an “Illiana Toll Road,” a South Shore commuter rail line, a new Amazon warehouse, an extension of a freight line and a “South Suburban Airport.” However, the town did not introduce evidence that developers had an interest in developing land in the annexation territory.

Instead, the property owners testified they had purchased land from developers for agricultural use. After hearing that testimony, the Lake Superior Court found there was “no probative evidence to support the Town of Cedar Lake’s allegations that the 2014 Annexation Territory is needed and can be used by the (town) for its development in the reasonably near future.”

The trial court set aside the annexation, so the town appealed in Town of Cedar Lake, Indiana v. Certain Cedar Lake 2014 Annexation Territory Landowners, 45A03-1703-MI-589. Cedar Lake claimed the trial court improperly determined the town failed to meet its burden of providing the annexed territory was needed and could be used in the reasonably near future, as is required under Indiana Code 36-4-3-13(c).

But in a Wednesday opinion, the Indiana Court of Appeals found the trial court’s decision was proper. Judge Cale Bradford, writing for the unanimous court, first noted the panel was tasked with resolving the appropriate standard of review for the case: “clearly erroneous” or “rational basis.” The court ultimately found the “rational basis” standard the town advocated for “is inappropriate in remonstrance cases because it does not involve the direct review of a legislative act.”

“Instead, we will apply the clearly erroneous standard…in a straightforward manner, keeping in mind, of course, that the Town’s judgment in annexation matters in entitled to be shown some deference,” Bradford wrote.

Using that standard, the appellate panel rejected Cedar Lake’s argument that the trial court did not apply the proper legal standard because it failed to show the proper amount of deference to the town’s legislative judgment. The town failed to establish the trial court did not show sufficient deference, Bradford wrote, yet there was ample evidence that the five projects “were either more in the realm of speculation than reality at this time… .”

“Moreover, the Remonstrators produced evidence tending to prove that no developer had yet expressed interested in the Annexation Territory or purchased any land …,” Bradford wrote.