                    IN THE SUPREME COURT OF MISSISSIPPI

                                NO. 2007-AN-01547-SCT

IN THE MATTER OF THE EXTENSION OF THE
BOUNDARIES OF THE CITY OF LAUREL,
MISSISSIPPI: CITY OF LAUREL, MISSISSIPPI

v.

SHARON WATERWORKS ASSOCIATION, SHADY
GROVE UTILITY DISTRICT, SHADY GROVE
WATER ASSOCIATION, OTHER OBJECTORS


DATE OF JUDGMENT:                          08/06/2007
TRIAL JUDGE:                               HON. CHARLES D. THOMAS
COURT FROM WHICH APPEALED:                 JONES COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT:                   JERRY L. MILLS
                                           WILLIAM S. MULLINS, III
                                           NORMAN GENE HORTMAN
ATTORNEYS FOR APPELLEES:                   JOSEPH EDGAR FILLINGAME
                                           TIM HANCOCK
NATURE OF THE CASE:                        CIVIL - MUNICIPAL BOUNDARIES &
                                           ANNEXATION
DISPOSITION:                               AFFIRMED - 01/15/2009
MOTION FOR REHEARING FILED:
MANDATE ISSUED:




       EN BANC.

       RANDOLPH, JUSTICE, FOR THE COURT:

                     FACTS AND STATEMENT OF THE CASE

¶1.    On June 18, 1997, the City of Laurel (“the City”) filed with the Chancery Court of

Jones County a complaint in the nature of a petition to ratify and confirm the extension of

its boundaries. The City proposed to annex three parcels of land (“the PAA”): 1. the Southern
Parcel (a/k/a the Pendorff area); 2. the Western Parcel (a/k/a the Sports Complex area); and

3. the Northern Parcel (a/k/a the Shady Grove area and the Sharon area). The Shady Grove

Utility District filed a Motion to Dismiss the annexation petition stating the petition was

improper as it split the utility district in violation of legislative prohibition.

¶2.    The Honorable R.B. Reeves, Jr., senior status judge appointed as Special Chancellor,

issued a decision. City of Laurel v. Sharon Waterworks Ass’n, 918 So. 2d 1269, 1270 (Miss.

2005). In his decision, the chancellor stated that the City had not properly complied with

Section 12 of House Bill 1730, 1996 Miss. Local & Private Laws, ch. 970 (House Bill 1730)

which required that either all or none of the land in a district be annexed,1 and gave the City

twenty days in which to comply with House Bill 1730. City of Laurel, 918 So. 2d at 1270.

Subsequently, the City filed an Amended Complaint in which it added a remaining portion

of the Shady Grove Utility District which was located in the Northern Parcel. Id. at 1270-71.

The area sought to be annexed expanded from ten point nine square miles to seventeen

square miles.

¶3.    Thereafter, the case came on for hearing. On March 20, 2002, Chancellor Reeves

issued an opinion in which he found the annexation of only the Pendorff area in the Southern

Parcel to be reasonable. Id. at 1271. On May 30, 2003, a final judgment was issued wherein


       1
        The pertinent portion of House Bill 1730 states:
       None of the territory lying within the district shall be subject to an annexation
       by any city, town or village unless all of the territory of the district is annexed,
       in which event the city, town or village shall assume the operation and
       maintenance of the facilities of the district with respect to the payment of any
       outstanding bonds of the district and all other contractual obligations of the
       district.
       (Emphasis added)

                                                2
the enlargement and extension of the boundaries of the City was approved as to the Pendorff

area only. Id.

¶4.    The City filed an appeal asserting the following issues:

       I.        Whether the provision of House Bill 1730 violates Article 4, Section 88
                 of the Mississippi Constitution of 1890.2
       II.       Whether the Chancellor was manifestly wrong in limiting the
                 annexation of the City to the Pendorff area.

Id.

¶5.    This Court found that the chancellor’s ruling

       did not set out a clear basis explaining why a particular parcel should or should
       not be annexed. A few of the indicia of reasonableness do have sufficient
       information, but as a whole, there is not enough information concerning the
       twelve indicia of reasonableness to make an informed determination.
       Therefore, this Court does not have enough information to determine whether
       the chancellor’s reasoning and rulings as to the parcels provides substantial
       evidence that the annexation should be either granted or denied.

Id. The trial court further did not issue a ruling on whether House Bill 1730 was

constitutional, therefore, this Court did not consider the issue on appeal. Id. at 1272. This

Court vacated the chancellor’s ruling and remanded the case so he could clarify his findings.

Id. at 1271.

¶6.    After remand, Judge Reeves recused due to health reasons. Senior Status Judge

Charles D. Thomas was then appointed special chancellor for the case. Chancellor Thomas

reviewed the record and required the parties to submit briefs.




       2
       A notice of claim of unconstitutionality of a certain local and private act was
provided by the City to the Attorney General of Mississippi. The Attorney General filed a
Notice of Intervention to defend the constitutionality of relevant statutes and joinder. City
of Laurel v. Sharon Waterworks Ass’n, 918 So. 2d 1269, 1270 n. 1 (Miss. 2005).

                                                3
¶7.    In a written opinion, Chancellor Thomas addressed the twelve indicia of

reasonableness as established by this Court in In Re Extension of the Boundaries of City

of Ridgeland v. City of Ridgeland, 651 So. 2d 548, 550 (Miss. 1995). The chancellor found

that it was reasonable for the Pendorff area (the Southern Parcel) and the Sports Complex

area (the Western Parcel) to be annexed. After weighing all factors, the chancellor held that

it was unreasonable for the Shady Grove and Sharon areas (the Northern Parcel) to be

annexed.

¶8.    The chancellor further found that House Bill 1730 is not violative of Section 88 of the

Mississippi Constitution of 1890 as “[a]nnexation is a legislative affair.” The Matter of the

Boundaries of the City of Jackson, 551 So. 2d 861, 863 (Miss. 1989). In his lengthy

analysis, the chancellor additionally found that “[a]lthough general legislation authorizes the

creation of utility districts, it has been held that the creation of such a district through local

and private legislation does not violate Section 88.” See In re Validation of Utility District

Revenue Board v. Gautier Utility District, 456 So. 2d 1003 (Miss. 1985).

¶9.    The City subsequently filed a Motion to Alter or Amend the Judgment. A hearing was

held on this motion, and both parties presented brief arguments. The chancellor denied the

motion on all substantive issues and required the judgment to be altered, to include the legal

descriptions of each parcel authorized to be annexed.

¶10.   The City of Laurel then appealed to this Court, presenting the following issues:

       I.      Whether the Chancellor erred in finding that the Legislative action
               contained in House Bill 1730 does not violate Article 4, Section 88 of
               the Mississippi Constitution of 1890.




                                                4
       II.    Whether the Chancellor’s finding was manifestly wrong and without
              credible evidence that it was not reasonable to allow the City to annex
              the Northern Parcel.

                               STANDARD OF REVIEW

¶11.   In annexation matters, “[t]his Court's standard of review is very limited. The Court can

only reverse the Chancery Court's findings as to the reasonableness of an annexation if the

chancellor's decision is manifestly wrong and is not supported by substantial and credible

evidence.” In re Enlargement & Extension of the Municipal Boundaries v. City of Biloxi,

744 So. 2d 270, 276 (Miss. 1999). “The burden of proving the reasonableness of the

annexation is on the party asserting the annexation.” Id. at 277.

                                        ANALYSIS

I.     Whether the provision of House Bill 1730 violates Article 4, Section 88 of the
       Mississippi Constitution of 1890.

¶12.   The City submits to this Court that the chancellor erred in finding that House Bill

1730 was not violative of Article 4, Section 88 of the Mississippi Constitution of 1890,

which provides:

       The Legislature shall pass general laws, under which local and private interest
       shall be provided for and protected, and under which cities and towns may be
       chartered and their charters amended, and under which corporations may be
       created, organized, and their acts of incorporation altered; and all such laws
       shall be subject to repeal or amendment.

¶13.   The City contends that House Bill 1730 contains a “poison pill” provision that

requires all or none of the Shady Grove utility district to be annexed. The City submits that

this provision imposes a condition on annexation which is in violation of Section 88 of the

Mississippi Constitution. Without citation to authority, the City states that “general



                                              5
legislation is required on the subject of annexation.” However, the language of Article 4,

Section 90 of the Mississippi Constitution does not support such a proposition, as it reads,

“[t]he Legislature shall not pass local, private, or special laws in any of the following

enumerated cases, but such matters shall be provided for only by general laws,” and lists

twenty-one instances in which general laws are required. None of these cases include

annexation. See Miss. Const. Art. 4, § 90 (1890).

¶14.   The City further argues that the provision of House Bill 1730 is an “attempt to prevent

the chancellor from exercising his statutory and constitutional authority to deny the portion

of the annexation that he deems unreasonable.” The City asserts that the chancellor

committed manifest error because once it was determined that House Bill 1730 required the

all or nothing approach, he ignored 2.2 miles of the Shady Grove area that was not in the

Shady Grove Utility District. 3 The City asserts this 2.2 square mile area should have been

considered separately and that consideration of this area separately would have led to the

conclusion that the annexation was reasonable.

¶15.   The Shady Grove objectors submit that House Bill 1730 simply recognized the need

to maintain the financial integrity of the legislatively approved utility district “in view of the

uncertainty of the viability of the portion which would not be annexed.” Shady Grove argues

that the Legislature did provide a means for annexation of the Shady Grove Utility District.



       3
        Subsequent to the final judgment being issued, a hearing was had before Chancellor
Thomas on the City’s Motion to Alter or Amend Judgment. The objectors argued that the
City was “coming in after the fact trying to isolate a certain area,” as this 2.2 square mile
area was not specifically addressed in the original action. The City’s response was that it
“did not isolate” the area, but “provided the court information that would allow [the court]
to exercise its option of decreasing the territory.”

                                                6
Additionally, Shady Grove submits that the Legislature also understood that if only part of

the district were to be annexed, “the entire district could be placed in a situation in which it

is no longer viable or sustainable.”

¶16.   Shady Grove finally asserts that, “[l]egislative acts are, however, cloaked with a

presumption of constitutionality, and unconstitutionality must appear beyond reasonable

doubt.” City of Belmont v. Miss. State Tax Comm'n, 860 So. 2d 289, 307 (Miss. 2003)

(citations omitted).

¶17.   This Court has held that “[a]nnexation is a legislative affair.” In Re Enlargement and

Extension of the Mun. Boundaries of Biloxi, 744 So. 2d 270, 277 (Miss. 1999). Further, this

Court has ruled,

       The contention that the constitution of 1890 in any manner abridged or limited
       the power of the legislature in reference to municipal corporations is based
       upon a total misconception of the real meaning and design of that instrument.
       Munnicipal [sic] corporations are now, as they have always been in this state,
       purely creatures of legislative will; governed, and the extent of their powers
       limited, by express grants; invested, for purposes of public convenience, with
       certain expressed delegations of governmental power; their granted powers
       subject at all times to be enlarged or diminished; having no vested rights in
       their charters which are subject at all times to amendment, modification, or
       repeal; their powers, their rights, their corporate existence, dependent entirely
       upon legislative discretion, acting as it may deem best for the public good.
       This conclusion has been so repeatedly announced by our own courts, and has
       been so uniformly approved by text-writers, and decided by courts of last
       resort in other states, that it has become crystallized into settled law, and now
       receives recognition as a universally accepted rule of constitutional
       construction. . . .

Adams v. Kuykendall, 83 Miss. 571, 590, 35 So. 830, 834 (1904). The Adams Court also

held, “[w]e adhere to the time-honored and firmly established doctrine that all municipalities

are within legislative control, and that sec. 88 placed no limitation on that power.” Id. at 593.



                                               7
¶18.   The Court also addressed this issue in In Re Validation of $7,800,000 Combined

Utility System Revenue Bond v. Gautier Utility District, 465 So. 2d 1003 (Miss. 1985).

Objectors in Gautier Utility District argued the district lacked authority to issue bonds and

that the local and private acts creating the authority to do such were violative of the

Mississippi Constitution. Id. at 1015. Quoting Harris v. Harrison County Board of

Supervisors, 366 So. 2d 651, 654 (Miss. 1979), the Gautier Utility District Court stated,

       Although general laws are preferred over private laws, the function of deciding
       the wisdom and propriety of enacting special laws is in the legislature and not
       in the courts, and courts will not refuse to enforce such [private] laws merely
       because it may be felt that a general law would have been more suitable.

Gautier Util. Dist., 465 So. 2d at 1016.

¶19.   The Court further held, “[t]his idea of legislative authority emanates from Article IV,

Section 89 which sets forth the procedure for enactment of a local and private act. When the

legislature has complied with those requisites, the courts shall not, because of its local,

special, or private nature, refuse to enforce it, unless it contravenes Section 90.” Gautier Util.

Dist., 465 So. 2d at 1016. As explained supra, the chancellor’s ruling does not contravene

the mandate of Section 90 of the Mississippi Constitution.

¶20.   The chancellor’s finding comports with the law in holding that “[u]nder our

constitutional scheme, there is no prohibition upon the Legislature’s enacting upon a given

subject matter by both a general law and a local and private law.” Id. Based on the foregoing

reasons, we find no fault with the chancellor’s finding that “[i]t is clearly within the

Legislature’s power to protect the vitality of the Shady Grove Utility District by including

the language in Section 12 [of House Bill 1730] that states that the district may not be



                                                8
annexed unless in its entirety. Section 12 of House Bill 1730 does not offend the mandate of

Article IV, Section 88 of the Mississippi Constitution, and neither is it at odds with the

general laws regarding annexation.”

II.    Whether the chancellor’s finding that it was not reasonable to allow the City to
       annex the Northern Parcel was manifestly wrong and without credible evidence.

¶21.   “This Court has set forth a list of factors or so called indicia of reasonableness to

guide the chancellor in his determination of the reasonableness of a city's annexation request.

The Court first enumerated these factors in Dodd v. City of Jackson, 238 Miss. 372, 396-97,

118 So. 2d 319, 330 (1960), and in later decisions has expanded the list.” In re Enlargement

& Extension of the Municipal Boundaries v. City of Biloxi, 744 So. 2d 270, 276 (Miss.

1999). The Court has stated, “‘[t]hese factors, however, are only indicia of reasonableness,

not separate and distinct tests in and of themselves.’ Bassett v. Town of Taylorsville, 542 So.

2d 918, 921 (Miss. 1989). The chancellor must consider all of these factors and determine

whether under the totality of the circumstances the annexation is reasonable.” City of Biloxi,

744 So. 2d at 276. The chancellor appropriately considered the twelve indicia of

reasonableness as it pertained to the four areas sought to be annexed. We examine each

indicia of reasonableness as it applies to the areas at issue, the Sharon area and the Shady

Grove area.

1)     The Need to Expand

       a) spillover growth

¶22.   The chancellor found that the testimony of Michael Slaughter, who was accepted as

an expert in the field of urban regional planning and civil engineering, that the factor of



                                              9
spillover growth weighed in favor of the City regarding the Shady Grove parcel, but not the

Sharon parcel.

¶23.   Regarding the Sharon parcel, former Laurel Mayor Susan Vincent testified that there

was not much development in the Sharon parcel. Mayor Vincent further testified that the

commercial areas along 5th Avenue heading north out of the city of Laurel to Sharon Road

have been vacant for years. Slaughter testified that there were only two businesses in the

Sharon parcel that would generate tax revenue for the city. Slaughter and Mayor Vincent also

testified that no one from the Sharon parcel-- developers or otherwise-- had asked to be

annexed in order to receive the benefit of City services and that no organized subdivisions

existed in the Sharon parcel. The chancellor stated that “the absence of any subdivision

within the Sharon parcel calls into question the city of Laurel’s claims of spillover growth.”

¶24.   Aside from quoting the opinion of the chancellor, and stating that the chancellor did

not address the 2.2 square mile area outside of the Shady Grove Utility District, the City did

not address the spillover findings by the chancellor.

¶25.   The findings of the chancellor were supported by substantial and credible evidence.

       b) internal growth

¶26.   The chancellor found that “the City’s growth is within its downtown area, and it is

reasonable that its focus should be there.” Shady Grove’s expert, Joe Lusteck, testified that

based upon his personal inspections, the City did not have a need to expand to accommodate

any additional housing or population growth and there was no need for territorial expansion

by the City.




                                             10
¶27.   Sharon’s expert in municipal planning, Jim Elliot, testified “there are several big

buildings that are vacant. . . . I would say in terms of commercial property, the City has no

need to expand for commercial, retail, residential property.”

¶28.   The chancellor found, contrary to the City’s argument, that 27.6 percent of the land

within the City was not developed and that there are many businesses within the City which

have boarded up and closed.

¶29.   The City presents no argument regarding the internal growth factor.

¶30.   We hold that the findings by the chancellor on the internal growth factor were

supported by substantial and credible evidence.

       c) population growth

¶31.   The chancellor found, and all parties agree, that the City has experienced a continual

decline in population over the last forty years. The chancellor found that this decrease in

population weighs against annexation. The City’s counter argument was that the population

decline has slowed over the past decade.

¶32.   The chancellor found that: a) the amount of construction of new residential units

within the City did not justify a need for expansion; b) that the median age of the City’s

residents has increased from 26.9 to 34.9; c) that the median age of the citizens is not

significantly different at 33.6; d) that there was an increase in the number of citizens over

fifty and beyond child-bearing age; and e) that a loss of jobs in the City had affected the

population.

¶33.   Substantial and credible evidence supports the chancellor’s finding that this factor

does not support the need for annexation.


                                             11
       d) The City’s need for development land

¶34.   The chancellor cited Slaughter’s testimony that the PAA (approximately seventeen

square miles) is larger than the existing size of the City (about sixteen square miles). The

chancellor further cited Slaughter’s testimony that the City was not “choked down” and that

he believed “there was a need to expand from within.” However, Slaughter did not prepare

a land use analysis showing how much each of the areas proposed for annexation was

needed, nor did he calculate the rate of consumption of land within the City. The chancellor

also considered the testimony of Sharon’s expert, Jim Elliot, who testified that there was

more than 150 acres of vacant land suitable for commercial development.

¶35.   The City argues its level of build out constitutes a need for expansion, and that the

City is 72.4 percent developed. The City acknowledged “there is no magic build out number,

and Joseph Lusteck, an urban planner hired by the objectors has consistently testified that ‘a

city should generally be looking at expansion when it is two-thirds built out, and to

expanding when it is three-fourths built out,” as recognized by this Court in City of Jackson

v. City of Ridgeland (In re Extension of the Boundaries of Ridgeland), 651 So. 2d 548, 556

(Miss. 1995).

¶36.   The City further claims the case sub judice is analogous to this Court’s decision in In

Re Extension of Boundaries of City of Winona, 879 So. 2d 966, 977 (Miss. 2004).

However, in Winona, this Court affirmed the chancellor’s decision based on the following

factors: “that spillover growth occurred in the ‘Winona Elevator Property,’ each parcel of

land was immediately adjacent to the City, each piece of property is “prime for commercial




                                             12
development,” and that each parcel of land is in the path of growth of the City.” Id.

However, substantial and credible evidence of these factors is not found in this case.

¶37.   Substantial and credible evidence supports the chancellor’s finding that this factor

does not support annexation:

       Most annexations involve a growth component with significant demand for
       real estate to accommodate either new population or new economic growth,
       neither of which is present in this attempt at annexation. The City of Laurel has
       experienced decline and continues to experience some decline, and the
       evidence indicates an alternative strategy for redevelopment is available to the
       City by taking what is no longer being used and put to its highest potential use.


       e) The need for planning in the annexation area

¶38.   The chancellor’s opinion recognizes that this Court considers a variety of factors when

addressing the need for planning and that this Court has both approved and disapproved of

municipalities which provide no zoning. There was evidence submitted that there is no

zoning in unincorporated Jones County, but the City has standard building and housing

codes, a comprehensive plan, and zoning ordinances to direct and guide growth.

¶39.   The chancellor, in detailing the need for planning in each parcel, called specific

attention to the City’s lack of argument regarding the need for planning in the 2.2 square

miles of the Shady Grove parcel or in the Sharon parcel. Similarly, the City presents no

argument to this Court regarding the need for planning in the entire Shady Grove parcel nor

the Sharon parcel. The chancellor found this factor weighed against the need for annexation

in these two parcels and the City offered no evidence or legal authority in opposition thereto.

       f) Increased traffic counts



                                              13
¶40.   The chancellor, based on the testimony of Slaughter and Mayor Vincent, found that

traffic counts were increased in the Pendorff and Western parcels only. Regarding the

northern portion of the Shady Grove area, the chancellor found the traffic count was less than

half that of the Western parcel. The chancellor further found that based on Slaughter’s data,

the Sharon parcel had the least traffic. Mayor Vincent also testified similarly.

¶41.   The City states that traffic count increases were not limited to the Western parcel and

the Pendorff area, but provided no evidentiary data to support this position.

¶42.   Because the City provided no evidence that traffic counts had increased in the Shady

Grove or Sharon area, the chancellor found that this factor did not weigh in favor of

annexation.

       g) Need to maintain and expand the City’s tax base

¶43.   The chancellor found that due to Laurel’s position as the economic hub of Jones

County and because of the spillover growth into the Pendorff, Western and original Shady

Grove parcels, that this factor favored annexation into those three areas.

¶44.   Shady Grove provides little argument in response to this factor except to state that

Slaughter testified that the City does not need to annex to maintain its financial viability.

¶45.   The Sharon objectors concur with the chancellor’s finding that their area should not

be annexed. The Sharon objectors state that, of 150 businesses in the PAA, only two of them

are in the Sharon area.

¶46.   Substantial and credible evidence supports the chancellor’s findings.




                                              14
       h) Limitations due to geography and surrounding cities

¶47.   The chancellor found, based on an exhibit we are not provided with,


        that the City is locked in by flood plains on its east boundary and on its west
       boundary. These surrounding areas could be developed, but at an increased
       cost; therefore these areas are less desirable. This leaves the City, if it is to
       expand, to go to the north or south, and to a limited extent to the west within
       the Western parcel. . . . This factor favors the city of Laurel’s need to expand
       into all of the particular parcels in this case.


The Sharon objectors provided no argument challenging that finding.

¶48.   The chancellor further found there are a lack of streets connecting the City to the

Shady Grove parcel and that there was evidence showing the City did not plan on developing

any streets in the Shady Grove parcel. In the City’s plan for Phase I and Phase II, it stated it

would improve existing streets. The chancellor found that this “weakened” the effect of

reasonableness as to the Shady Grove parcel.

¶49.   We find no error in the chancellor’s finding that this factor favored annexation of the

Sharon parcel. However, we find the chancellor erred regarding this factor supporting the

annexation of the Shady Grove parcel, based on the chancellor’s own recognition of a lack

of connecting streets and no evidence that any will be built by the City. This Court has found

that “interconnection by transportation corridors” is a factor when determining

reasonableness. In re Enlarging, Extending & Defining the Corporate Limits &

Boundaries of the City of Meridian, 992 So. 2d 1113, 1118 (Miss. 2008).

       i) Remaining vacant land within the municipality




                                              15
¶50.   As to this factor, the chancellor cited his observations regarding the “need for

development of land” and “internal growth” factors. The chancellor also stated that the

demolition of 400 dwelling units caused an increase in vacant lots. However, Mayor Vincent

testified that “because there is no excess of property, we’re having to tear down old buildings

to find places to build the new ones.

¶51.   The chancellor additionally cited testimony that several apartment complexes have

been constructed in the City and “that apartment complexes house more people within a

smaller footprint than individual housing units.”

¶52.   The City provides no argument in response to these findings.

       j) Environmental influences

¶53.   The chancellor found this factor did not weigh in favor of annexation, as the City

offered no evidence as to this factor. Likewise, the City makes no argument to this Court that

the chancellor erred as to this factor.

       k) The City’s need to exercise control over the PAA

¶54.   For this factor, the chancellor adopted his discussion of factor (e), the need for

planning. Only the Sharon objectors address this issue, arguing that this factor is one-sided,

as there is never any mention of the unincorporated area of the county’s need to exercise

control over the PAA.

       i) Increased new building permit activity




                                              16
¶55.   The chancellor cited Slaughter’s testimony, as well an exhibit which this Court was

provided, supporting a steady trend for new residential and commercial construction in the

City. However, the chancellor went on to state that this factor only weakly supports

annexation into each of the parcels as Slaughter testified some of these permits could have

been issued for decks, patios, additions, carports or storage sheds.

¶56.   Neither the City of Laurel, nor Shady Grove, provide argument or evidence regarding

this factor. The Sharon objectors argue that by stating the factor weakly supports annexation,

that this factor does not support annexation. Furthermore, the Sharon objectors point out that

the number of businesses in Laurel has decreased by 313.

¶57.   Although the evidence presented regarding this factor is limited, it supports the

chancellor’s limited finding.

       Conclusion of factors regarding the need for expansion:

¶58.   The chancellor conducted a thorough analysis of each of the required factors and held

that the foregoing factors did not support of the City’s need for expansion. His analysis was

supported by substantial and credible evidence, therefore, we are constrained to find no

reversible error in his decision.

2)     The Path of Growth

¶59.   The chancellor relied on his findings in “spillover growth” and “limitations due to

geography and surrounding cities.” The chancellor found annexation was reasonable as to

the Shady Grove, Western and Pendorff areas.




                                             17
¶60.   Additionally, when addressing the Shady Grove parcel, the chancellor found that due

to the population of the Shady Grove parcel, that parcel would naturally experience spillover

growth from the City. However, the Shady Grove objectors submit that the path of growth

is downtown, not toward the City’s outer boundaries and that this factor does not support

reasonableness. This Court has set out a number of factors to be considered when

determining path of growth, such as: “(1) spillover development in annexation area; (2)

annexation area immediately adjacent to City; (3) limited area available for expansion; (4)

interconnection by transportation corridors; (5) increased urban development in annexation

area; (6) geography; and (7) subdivision development.” Id. Substantial and credible evidence

supports the Shady Grove objectors’ argument that annexation is not reasonable as to their

parcel, taking the previously addressed factors into consideration. We therefore find that the

chancellor erred when determining this factor was reasonable as to the Shady Grove parcel.

¶61.   Regarding the Sharon parcel, the chancellor found it was not experiencing any

significant growth and that annexation was not reasonable as to the Sharon parcel. Mayor

Vincent testified that there have been no new subdivisions planned for the Sharon area. The

City presents no argument regarding this factor beyond re-stating the chancellor’s finding.

¶62.   The chancellor’s finding regarding the unreasonableness of the annexation of the

Sharon parcel was supported by substantial and credible evidence.

3)     Health Hazards

       This Court has established a number of factors to be considered when
       evaluating the reasonableness as related to potential health hazards which may
       or may not include: (1) potential health hazards from sewage and waste
       disposal; (2) a large number of septic tanks in the area; (3) soil conditions

                                             18
       which are not conducive to on-site septic systems; (4) open dumping of
       garbage; and (5) standing water and sewage.

In re Enlargement & Extension of the Boundaries of the City of Macon v. City of Macon,

854 So. 2d 1029, 1038 (Miss. 2003).

¶63.   The chancellor found “evidence of potential health hazards from the disposal of solid

waste in other parts of the Pendorff, Western and Shady Grove parcels.”

¶64.   However, regarding the annexation of the Shady Grove parcel, the chancellor found

the health hazard factor did not support annexation by the City. The chancellor stated there

was no evidence that anyone in the Shady Grove parcel is without adequate water service.

The chancellor further found that Shady Grove is mostly rural and that septic tanks provide

the most effective way of treating sewage and that he knew of no one in the area who had

gotten sick because of improper treatment of sewage. The chancellor cited testimony from

the superintendent of education for Jones County, members of the board of supervisors and

residents who testified they were satisfied with their present services and that they knew of

no one who had suffered any illness as the result of the use of septic tanks.

¶65.   Regarding the Sharon parcel, the chancellor cited testimony from environmental health

specialist Jim Westin that a certain area in the Sharon parcel gave him concern regarding soil

suitability and the use of septic tanks. However, Westin testified that there was only one main

area of concern when you “look at the big picture of Sharon.” Additionally, there was

testimony from Elliot who stated that the few septic tank problems were violations of state

regulations and could be dealt with by the Mississippi Department of Health if it would take

these few landowners to Jones County Justice Court.

                                              19
¶66.   The chancellor found that the septic tank problems “were limited to a small area and

not the sort of problems such that annexation would be the only remedy.” Further, this Court

has held the septic tank issue is “rather insignificant in the overall test of reasonableness.” In

re Enlargement & Extension of the Mun. Boundaries v. City of Biloxi, 744 So. 2d 270, 280

(Miss. 1999) (citations omitted). The City argues that the PAA is in need of a central sewer

system and that installation of a central sewer system will address the sewer needs of the PAA

in a timely manner. As will be discussed infra, the City also has no plans to implement this

system in the immediate future.

¶67.   Shady Grove cited testimony from a member of the city council that three weeks prior

to trial, “all of the manholes on Fifth Avenue were overflowing.” The city council member

also stated he witnessed another manhole in the City overflowing and he went back to check

it twice. Both times, he found the manhole still overflowing and raw sewage coming out of

the manhole and flowing out of the street. Shady Grove contends that if the City is having

these problems of their own, it should not annex more territory.

¶68.   The chancellor’s findings as to this factor were supported by substantial and credible

evidence.

4)     Financial ability to provide municipal services

¶69.   Mayor Vincent testified that the City had set aside $10 million for the first phase of

services it intended to provide to the PAA. She testified that the City’s “financial condition

is healthy and robust. And we can afford to pay for these improvements.”

¶70.   The chancellor found that the City provided a thorough breakdown of its present

financial condition, bonding capacity, projected revenue to be received from taxes in the PAA,

                                               20
and the financial plan and department reports proposed for implementing the annexation.

However, the chancellor found it was the City’s burden to break down the costs of the

annexation as to each parcel, and after searching the trial record, the chancellor found no such

breakdown. The chancellor’s opinion stated, “[t]he evidence showed that the city has no real

idea of the cost of annexation or how the costs will be paid.”

¶71.   The chancellor did find, however, that in light of the services needed, this factor

favored annexation of the Western and Pendorff parcels. The chancellor found that the

evidence showed that the Sharon parcel may not benefit from the services provided, as

services such as a “backbone” sewage service may or may not be provided within the City’s

five-year time frame.

¶72.   The chancellor found that the annexation of the Shady Grove parcel would mean that

the City would have to take over the obligation of the Shady Grove Utility District to provide

water service. The chancellor found this would be a burden to the City and that “the

annexation of Shady Grove would hamper the City in meeting its needs and increase costs to

current residents.” Furthermore, former Mayor Vincent testified she was not sure the City

would be responsible for paying for the utility district and that it may only be required to pay

the bond of indebtedness.

¶73.   The City submits that the evidence is undisputed that it is in good financial condition,

submitting numerous exhibits to demonstrate same. The City also cites testimony from

Demery Grubbs, an expert in municipal finance, wherein he stated, “[t]he City of Laurel is

in excellent financial posture and has the ability to function as a viable municipal entity

today.” A credit profile issued by Standard and Poor’s found that the City has “five


                                              21
consecutive years of positive financial operations.” Further, at the time of trial, “the City of

Laurel had $12,579,945 in remaining general fund bonding capacity under the 15% rule”

pursuant to Mississippi Code Annotated Section 21-33-303 (Rev. 2007). The City has

demonstrated that it is in good financial condition overall.

¶74.   Accordingly, we find that the chancellor’s findings are supported by substantial and

credible evidence.

5)     The need for zoning and planning in the PAA

¶75.   The chancellor cited his previous findings in the “need for planning in the annexation

area” factor. The chancellor found this factor favored annexation of the Western and Pendorff

parcels, but not of the Shady Grove and Sharon parcels, because those parcels are largely

rural. Furthermore, Sharon argues that since only 2 of the 150 businesses in the PAA are in

their parcel, they have no need for the City’s zoning ordinances.

¶76.   All parties agree that Jones County has no zoning in place.4 The City argues generally

that all parcels would benefit from the zoning ordinances the City has in place and that its

“regulations are better suited to an urbanizing area.”However, based on the exhibits presented

to this Court and the previous evidence examined by the chancellor, Sharon and Shady Grove

are not “urbanizing areas.”

¶77.   We find that the chancellor did not err in finding annexation was not reasonable as to

the Sharon and Shady Grove parcels, as his finding was supported by substantial and credible

evidence.



       4
       However, a data report prepared by Slaughter reveals that Jones County does have
subdivision regulations.

                                              22
6)     The need for municipal services

¶78.   The chancellor found that the need for municipal services should be focused on the

Western and Pendorff parcels. The chancellor found this factor did not favor annexation as

to the Sharon and Shady Grove parcels.

¶79.   The Ordinance for Enlarging, Extending and Defining the Corporate Limits and

Boundaries states:

       The City of Laurel shall make the following improvements in said annexed
       territory to be completed within a reasonable time, not to exceed five years
       from the effective date of this ordinance, unless delayed by war or military
       preparedness:
       (a) improve existing streets or drainage;
       (b) install water lines, water service, sewage disposal lines, sewage treatment
       facilities and street lighting, where necessary and economically feasible;
       (c) said services shall be furnished in the same manner and to be the same
       extent as such services are being furnished to the present citizens of the
       municipality.

¶80.   The City refers to this provision as Phase I of the annexation.

¶81.   The ordinance further states:

       That the City of Laurel shall furnish to the said annexed territory the following
       municipal and public services in the same manner and to the same extent as
       such services are being furnished to the present citizens of the municipality,
       such services to begin on the effective date of this Ordinance, to wit:

              (a) Police protection;
              (b) Fire protection;
              (c) Garbage removal;
              (d) Trash and other debris removal;
              (e) Pest control;
              (f) Maintenance of existing streets;
              (g) The right to exercise the ballot in municipal elections upon
              registering and meeting all statutory and constitutional
              requirements and upon proper approval of the changes created by
              this Ordinance under the Voting Rights Act of 1965, as amended,
              and the use and benefit of all other municipal services and

                                              23
                 facilities furnished by the City of Laurel, Mississippi to all the
                 present citizens of the municipality.

¶82.   Slaughter prepared a Summary of Services Offered by the City of Laurel vs. Services

Offered to County Residents. He stated that the City would provide the following services

which are not presently provided in the PAA:

                 a) comprehensive planning
                 b) zoning
                 c) sign regulations
                 d) building codes
                 e) a housing code
                 f) building inspections
                 g) electrical code
                 h) plumbing code
                 i) mechanical code
                 j) gas code
                 l) fire code
                 m) swimming pool code
                 n) unsafe building abatement code
                 o) sewer ordinance
                 p) contractors examination, licensing and bonding
                 q) mosquito and pest control 5

¶83.   The City additionally asserts that it would provide significantly better police

protection, since it has sixty-one sworn officers, while the Sheriff’s Department serving the

PAA has sixty officers to serve all of Jones County. The City submits it will add three patrol

officers, one juvenile officer, one civilian clerk and two dispatchers. Since we do not have this

portion of the record, it is difficult to tell if the PAA would benefit from the City’s police

protection as Shady Grove and the City cite conflicting testimony. Shady Grove states that

Laurel’s Police Chief, Tim Waterson, testified that there was not a definite need for law

enforcement in the PAA. In the City’s brief, it cites the testimony of the Police Chief Johnson

       5
           The chancellor’s opinion states that the county does provide pest control.

                                                24
that there is a need for regular municipal police patrol in the PAA. In his opinion, the

chancellor stated that the superintendent of education for Jones County, the members of the

board of supervisors representing the Shady Grove area, and several residents of the Shady

Grove area testified they are satisfied with their law enforcement services. They testified that

even the school in Shady Grove has its own officers who are deputy sheriffs.

¶84.   The City asserts that fire protection will improve with annexation. The City is currently

rated significantly higher in fire protection than the PAA. The City is rated a Class 5 in fire

protection and the PAA is rated Class 8 and Class 10. The City states that in the first year

following annexation, the City will purchase a tanker truck and that a new fire station will be

located in the PAA and be staffed by ten full-time professional firefighters. Shady Grove

counters this argument by pointing to evidence that the City has neglected to construct a new

fire station in North Laurel even though it had been recommended that it do so; that the City

had to sell land and use the money to make necessary repairs to bring its Twenty-Sixth Street

Station back up to standard; and that the City had had to close one fire station without

building a new one. Shady Grove cites the testimony of Larry Clark of the Mississippi State

Rating Bureau, wherein he testified that “there are some deficiency points assigned to the City

of Laurel for inadequate hydrants.” Regarding the Sharon parcel, Laurel Fire Chief Steve

Russell testified that most areas in Sharon would not have access to water for firefighting

purposes, and that even after annexation, a great deal of the Sharon parcel would still be

provided a form of rural fire protection. Chief Russell testified that the City would use a

tanker to carry water to the PAA, although Shady Grove already has multiple tankers.




                                              25
¶85.   The City asserts that the Laurel City Council has committed to a program to improve

both water and sewer service. The City further asserts that 33 percent of the dwellings in the

PAA already receive sewer service from the City. Mayor Vincent stated in her testimony, and

the City states multiple times throughout its brief, that it is committed to making such

improvements within the first five years of the annexation.

¶86.   Shady Grove cites the testimony of Robert C. Lunardini, a consulting engineer, who

testified that under the City’s plan, 72.6 percent of the PAA’s residents would not be receiving

municipal level water services after five years; that it would cost the City between 36.6 and

59 million dollars for the City to provide sewer services in the PAA. Lunardini also testified

there was nothing in the City’s services and facilities plan as to when 69 percent of the

citizens would receive service. Furthermore, Sharon cites the testimony of Charles King, the

City’s water and sewer services expert that only limited services would be offered during

Phase I and that “Phase I is a backbone plan, not a service plan.”

¶87.   In his opinion, the chancellor recognized that the Sharon parcel is mostly rural and

municipal services are not wanted or needed. He further recognized that the Shady Grove area

is satisfied with the county services it receives. This Court has held,

       The evidence shows that the residents of the proposed annexation area are
       already provided with the most basic and necessary of the municipal services.
       They currently have water services, garbage collection through the county, and
       police and fire protection. There is no substantial, credible evidence that a
       central connected sewer -- the service that is not provided, but most needed --
       would be provided by Batesville within a reasonable time. Therefore, there is
       little evidence that better municipal services would result if annexation were
       allowed. . . .




                                              26
Committee Opposed to Annexation v. City of Batesville (In re Extension of Boundaries),

760 So. 2d 697, 705 (Miss. 2000).

¶88.   We find the chancellor did not err in finding that annexation of the Shady Grove and

Sharon parcels is not reasonable as to this factor.

7)     Natural Barriers

¶89.   Regarding this factor, the chancellor cited his findings as to “Limitations Due to

Geography and Surrounding Cities.” The chancellor found that this factor supported

annexation of all areas of the PAA. None of the parties present a contrary argument.

However, regarding “Limitations Due to Geography and Surrounding Cities,” we rejected the

chancellor’s finding that annexation of the Shady Grove area is reasonable as to this factor,

based on the chancellor’s own recognition that there are a lack of connecting streets and lack

of evidence that any will be built by the City. Because of the same finding as to this factor,

we find annexation was reasonable as to the Sharon parcel, but not the Shady Grove parcel.

8)     Past Performance

¶90.   In his opinion, the chancellor adopts the arguments of the objectors from Sharon and

Shady Grove wherein they state that the past performance of the City has not been good

because of the City’s failure to provide adequate sewer service and failure to maintain the

infrastructure within its own limits. Sharon’s expert, Elliot, testified that the City has severe

infiltration and inflow problems. Further, the fire chief testified of a fire in the City wherein

the City had to rely on assistance from volunteer fire departments. Sharon and Shady Grove

argue the City’s failures should not be “rewarded” by allowing it to annex an area that would

more than double the size of the municipality.

                                               27
¶91.   Nonetheless, the chancellor found that “[t]he City of Laurel has provided in a timely

fashion for the capital improvements and municipal services required, and is dealing with

problems common to all cities in a responsible manner.” Substantial and credible evidence

supported the chancellor’s finding that this factor weighed in favor of annexation.

9)     Economic or Other Impact on Residents and Property Owners

¶92.   The chancellor found that the economic or other impact factor favors annexation in the

Western and Pendorff parcel, and “weakly favors” annexation of Sharon and Shady Grove.

He concluded by stating, “[t]his factor favors the annexation of the Sharon and Shady Grove

parcels, but to a much lesser degree.” The Sharon objectors state“weakly” favoring should be

viewed as not being favored at all.

¶93.   The Shady Grove objectors point out that if annexed, their citizens will have to pay ad

valorem taxes to the City. They further argue that even if improvements occur, they will not

occur until Phase II, yet the residents would have to begin paying city taxes.

¶94.   This Court has held,

       the mere fact that residents in the PAA will have to pay more taxes is
       insufficient to defeat annexation. Rather, this Court will “balance the equities
       by comparing the city's need to expand and any benefits accruing to the
       residents from the annexation with any adverse impact, economic or otherwise,
       which will probably be experienced by those who live in and own property in
       the annexation area.”

In re Enlargement & Extension of the Mun. Boundaries v. City of Biloxi, 744 So. 2d 270

at 284 (citations omitted). While the chancellor did use the word “weakly,” we find the

chancellor balanced the equities, and did not err when he found that this factor favors

annexation as to Sharon and Shady Grove.



                                             28
10)    Impact on Minority Voting

¶95.   In the case of In re The Extension of the Boundaries of the City of Columbus vs. the

City of Columbus, 644 So. 2d 1168, 1180 (Miss. 1994), this Court held that this factor must

be raised by a person with standing. In the case sub judice, this issue was raised by Louis

Goins, an African-American resident of the PAA, and James Jones, an African-American who

is the former President of the Laurel and Jones County Chapters of the NAACP, as well as

a former member of the Laurel City Council. Goins and Jones testified in opposition to the

annexation.

¶96.   A data sheet reflecting the 2000 census shows the population of the City of Laurel to

be 59.4 percent non-white and 40.6 percent white. The chancellor’s opinion states that the

proposed annexation would bring into the City a population that is 73.2 percent white and

26.8 percent non-white.

¶97.   The chancellor stated that the City’s brief and the transcript do not reveal the racial

makeup of the Shady Grove parcel, and that the Shady Grove parcel is by far the largest parcel

in the PAA, with a population of at least 4,500. The chancellor further added that the Sharon

parcel was left out of the discussion, as a survey by Elliot revealed that almost 100 percent

of the 124 houses there were occupied by whites.

¶98.   Both the chancellor and the objectors cite the testimony of Lusteck, who testified that

in his involvement in many annexation cases, this case involved the largest dilution of black

voting strength he had ever seen.

¶99.   Jones testified that it “takes greater than 65% to 70% minority vote to be elected” and

that if the annexation is successful, African-Americans will not be able to hold office for long.

                                               29
Shady Grove additionally cites the testimony of Jones Brogdon, who was a member of the

Laurel City Council at the time the annexation was proposed. Brogdon testified that he

recalled “talk about the school system. That we needed more whites in the school system. And

that was the main reason, if I remember it, was to annex to get more whites into the City of

Laurel.”

¶100. In response, the City of Laurel submits that “the evidence established that the City of

Laurel configured the proposed annexation so that no potential minority voters that were

within any reasonable path of growth were excluded.” Mayor Vincent testified that “to her

knowledge, annexation will not have an impact on the black voting strength in Laurel.”

¶101. Aside from asserting that the predominantly white Pendorff area is the wrong area

which to grant annexation, the City makes no argument as to the reasonableness of this factor

as applied to the Shady Grove and Sharon parcels.

¶102. The City cites the United States Supreme Court case of City of Richmond v. United

States for the proposition that “it would be difficult to conceive of any annexation that would

not change a city’s racial composition at least to some extent.” City of Richmond v. United

States, 422 U.S. 358, 368, 95 S. Ct. 2296, 2302, 45 L. Ed. 2d 245, 254 (1975). The City

further stated,

       In short, annexations do not violate Section 5 of the Voting Rights Act if:
       a) The purpose is not discriminatory
       b) There are now objectively verifiable, legitimate reasons for the annexation
       c) Wards are used to preserve voting strength of protected minorities




                                              30
See Id. at 375, at 2306, at 259. The City quoted City of Richmond extensively, and stated in

conclusion that it had “clearly established the non-discriminatory purposes of the annexation,”

but provides no evidence in support of this statement.

¶103. Based on the evidence provided to this Court, we find substantial and credible evidence

supports the chancellor’s finding that this factor was not reasonable as applied to the Sharon

and Shady Grove parcels.

11)       Enjoyment of Economic and Social Benefits of the Municipality without Paying
          a Fair Share of Taxes

¶104. The chancellor found this factor favored annexation as to all parcels, as Laurel is the

“economic hub of Jones County,” providing the seat for county government, a recreation

program, hospitals, churches and shopping.

¶105. However, the objectors state that when residents of the PAA enter the City, they pay

sales taxes on the items they purchase and these sales taxes should qualify as their “fair

share.”

¶106. This Court in Municipal Boundaries v. City of Madison, 650 So. 2d 490, 504 (Miss.

1995), stated,

          Certainly these residents. . . use businesses located within the city. They shop
          at the grocery store and the drug store. They take their clothes to the laundry.
          They take their children to schools located within the city and to day care
          centers. They attend church in the city and other events and activities. . . .

          But in any event, certainly these citizens derive benefits from the close
          proximity to the City of Madison, and certainly they have done so without
          paying any taxes. And in the opinion of the court, if they're going to bring their
          dirty laundry into town, they ought to at least help pay for the streets. The
          evidence suggests the reasonableness of the annexation.




                                                 31
¶107. The chancellor’s finding is supported by substantial, credible evidence, and we find

annexation is reasonable as to the Sharon and Shady Grove parcels regarding this factor.

12)    Other Factors

¶108. The chancellor found that no other factors were necessary to reach a decision as to the

reasonableness of the annexation.

       Conclusion of Indicia of Reasonableness:

¶109. In annexation cases, this Court has held that “where there is conflicting, credible

evidence, we defer to the findings below.” Bassett v. Town of Taylorsville, 542 So. 2d at 921

(citations omitted). Additionally, we have stated, “Findings of fact made in the context of

conflicting, credible evidence may not be disturbed unless this Court can say that from all the

evidence that such findings are manifestly wrong, given the weight of the evidence.” Id. at

921. “We only reverse where the Chancery Court has employed erroneous legal standards or

where we are left with a firm and definite conviction that a mistake has been made.” City of

Biloxi, 744 So. 2d at 277.

¶110. The chancellor’s opinion provided a thorough analysis of each of the twelve factors.

Based on the evidence presented, the chancellor did not apply an erroneous legal standard and

his findings were based on substantial, credible evidence. We affirm the chancellor’s finding

that annexation was not reasonable as to the Sharon and Shady Grove parcels.

                                      CONCLUSION

¶111. The chancellor erred neither in his finding that House Bill 1730 is reasonable nor in

his decision that annexation was unreasonable as to the Shady Grove and Sharon parcels.

Accordingly, the judgment of the chancellor is affirmed.

                                              32
¶112. AFFIRMED.

    WALLER, C.J., CARLSON AND GRAVES, P.JJ., DICKINSON, LAMAR,
KITCHENS, CHANDLER AND PIERCE, JJ., CONCUR.




                              33
