Authorize Municipal Deannexation.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 3
HOUSE BILL 199
Committee Substitute Favorable 6/3/25
Committee Substitute #2 Favorable 6/30/26

Short Title: Authorize Municipal Deannexation. (Public)
Sponsors:
Referred to:
February 26, 2025
*H199-v-3*
A BILL TO BE ENTITLED 1
AN ACT PROVIDING A P ROCESS FOR MUNICIPAL ITIES AND PROPERTY O WNERS 2
TO INITIATE DEANNEXA TION OF PROPERTY FRO M THE CORPORATE LIMI TS 3
OF A MUNICIPALITY. 4
The General Assembly of North Carolina enacts: 5
SECTION 1. Chapter 160A of the General Statutes is amended by adding a new 6
Article to read: 7
"Article 4B. 8
"Deannexation of Corporate Limits. 9
"Part 1. Purpose. 10
"§ 160A-58.100. Purpose. 11
The purpose of this Article is to e stablish a uniform statutory procedure for the contraction 12
of municipal boundaries and to ensure transparency, fiscal responsibility, local accountability, 13
and fairness. Municipalities utilizing the provisions of this Article are exercising a legislative 14
function in accordance with the nature of annex ations conducted under Article 4A of this 15
Chapter. 16
"Part 2. Deannexations Initiated by Municipalities. 17
"§ 160A-58.101. Prerequisites to deannexation. 18
Before the public hearing required by G.S. 160A-58.102, the municipal governing board 19
exercising authority under this Part shall cause to be prepared a report containing all of the 20
following: 21
(1) A legible map of the area to be deannexed. 22
(2) A statement showing how the proposed deannexation will affect the 23
municipality's finances and services, including municipal revenue change 24
estimates. This statement shall be delivered to the clerk of the board of county 25
commissioners at least 30 days before the date of the hearing on any 26
deannexation under this Part. 27
(3) A plan for the continuation, transfer, or discontinuance of services to the area 28
proposed for deannexation. 29
"§ 160A-58.102. Procedure for deannexation. 30
(a) The municipal governing board shall adopt a resolution of intent of the municipality 31
to proceed with the deannexation of all, or part, of the area described in the report required by 32
G.S. 160A-58.101. The resolution of intent shall describe by metes and bounds the boundaries 33
of the area proposed for deannexation and fix a date for a public hearing on the question of 34
deannexation. 35
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(b) The municipal g overning board shall hold a public hearing before adopting any 1
ordinance deannexing an area from the municipality's corporate limits. A notice of public hearing 2
shall be issued as follows: 3
(1) The notice shall include at least all of the following: 4
a. The date, hour, and place of the public hearing. 5
b. A clear description of the boundaries of the area under consideration 6
for deannexation, including a legible map of the area. 7
c. A statement that the report required by G.S. 160A-58.101 will be 8
available at the office of the municipal clerk. 9
d. A summary of the deannexation process with time lines. 10
(2) The notice shall be published at least once not less than one week before the 11
date of the hearing. In addition, the notice shall be mailed at least four weeks 12
before the date of the hearing by any class of U.S. mail that is fully prepaid to 13
(i) the owners of real property as shown by the county tax records as of the 14
preceding January 1 and (ii) registered voters located within the area proposed 15
for deannexation. The person or persons mailing the notices shall certify to 16
the municipal governing board that fact, and the certificate shall become a part 17
of the public record of the deannexation proceeding and shall be deemed 18
conclusive in the absence of fraud. If a notice is returned to the municipality 19
by the postal service by the tenth day before the public hearing, a copy of the 20
notice shall be sent by certified mail, return receipt requested, at least seven 21
days before the hearing. Failure to comply with the mailing requirement of 22
this subdivision shall not invalidate the deannexation unless it is shown that 23
the requirements were not substantially complied with. 24
(c) At least 30 days before the date of the hearing, the municipal governing board shall 25
do all of the following: 26
(1) Approve the report provided for in G.S. 160A-58.101. 27
(2) Prepare a summary of the approved report for public distribution. 28
(3) Post in the office of the clerk all of the following: 29
a. The approved report provided for in G.S. 160A-58.101. 30
b. The summary of the approved report. 31
c. A legible map of the area to be deannexed. 32
d. The list of the property owners and registered voters , and associated 33
mailing addresses, in the area to be deannexed that the municipality 34
has identified and mailed notice. 35
(4) If the municipality has a website, post on that website all of the information 36
under this subsection. 37
(d) At any regular or special meeting held after the hearing, the municipal governing 38
board shall have authority to adopt an ordinance to reduce the corporate limits of the municipality 39
to include all, or part, of the area described in the notice of hearing which the governing board 40
has concluded should be deannexed. The deannexation ordinance shall: 41
(1) Describe the external boundaries of the area to be deannexed by metes and 42
bounds. 43
(2) Include a statement of the intent of the municipality to continue or discontinue 44
providing services or transition services to another provider in the area being 45
deannexed as set forth in the report required by G.S. 160A-58.101. 46
(3) A statement delineating how the proposed deannexation is in the public 47
interest. 48
(4) Fix the effective date for deannexation in accordance with G.S. 160A-58.106. 49
(5) Be delivered, together with the list of the real property owners of parcels and 50
registered voters within the area described in the deannexation ordinance to 51
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House Bill 199-Third Edition Page 3
which a notice was mailed under subsection (b) of this section, within five 1
business days to the tax assessor and the county board or boards of elections 2
of the county in which the deannexed area lies. 3
(e) From and after the effective date of the deannexation ordinance, the deannexed area 4
and its citizens and property shall not be subject to any debts, laws, ordinances, and regulations 5
in force in the municipality except to the extent that such debts, laws, ordinances, and regulations, 6
including, but not limited to, G.S. 160D-202, may apply to other similarly situated citizens and 7
property outside the corporate limits of the municipality. 8
(f) If a municipality is considering the deannexation of two or more areas, it may 9
undertake simultaneous proceedings under authority of this Part for the deannexation of those 10
areas. 11
"§ 160A-58.103. Referendum prior to deannexation ordinance. 12
(a) Upon receipt of a petition signed by twenty-five percent (25%) of the registered voters 13
residing in the area described in the deannexation ordinance , and within 90 days following the 14
adoption of the deannexation ordinance, the city clerk shall examine the petition to determine 15
whether the signers are qualified and registered to vote in the area defined in the deannexation 16
ordinance and certify the results of the clerk's examination. If the clerk certifies that upon 17
examination the petition appears to be valid , the municipality shall place the question of 18
deannexation on the ballot. The municipal governing board shall notify the appropriate county 19
board or boards of elections of the adoption of the deannexation ordinance and provide a legible 20
map and clear written description of the proposed deannexation area. 21
(b) The municipal governing board shall adopt a resolution setting the date for the 22
referendum and notify the appropriate county board or boards of elections. The municipality shall 23
reimburse the board or boards of election the costs of the referendum. 24
(c) The county board or boards of elections shall cause legal notice of the election to be 25
published. That notice shall include the general statement of the referendum . The referendum 26
shall be conducted, returned, and the results declared as in other municipal elections in the 27
municipality. Only registered voters of the proposed deannexation area shall be allowed to vote 28
on the referendum. 29
(d) The referendum of any numb er of proposed deannexations may be submitted at the 30
same election; but as to each proposed deannexation, there shall be an entirely separate ballot 31
question. 32
(e) The ballots used in a referendum shall submit the following proposition: 33
"[ ] FOR [ ] AGAINST 34
The deannexation of (clear description of the proposed deannexation area)." 35
(f) If less than a majority of the votes cast on the referendum are for deannexation, the 36
deannexation ordinance is void and the municipal governing bo ard may not proceed with a 37
separate deannexation process with respect to that proposed deannexation area for at least 24 38
months from the date of the referendum. If a majority of the votes cast on the referendum are for 39
deannexation, the deannexation is deemed valid. 40
"Part 3. Deannexations Initiated by Petition. 41
"§ 160A-58.104. Deannexation by petition. 42
(a) The governing board of any municipality may deannex by ordinance any area within 43
its corporate limits upon presentation to the governing board of a petition signed by the owners 44
of all the real property located within the area proposed for de annexation. The petition shall be 45
signed by each owner of real property in the area and shall contain the address of each real 46
property owner. 47
(b) The petition shall be prepared in substantially the following form: 48
DATE: 49
To the ________ (name of governing board) of the (City or Town) of ______ 50
1. We the undersigned owners of real property respectfully request that 51
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the area described in paragraph 2 below be deannexed from the (City or Town) of ____. 1
2. The area to be deannexed is within the corporate limits of the (City or Town) of ____ and the 2
boundaries of the area, including the (City or Town) rights-of-way, are as follows: 3
_________________________________________ and as shown on the attached map. 4
3. The area to be deannexed currently receives the following municipal services: 5
___________________________________________. 6
4. The undersigned owners of real property acknowledge that (i) the municipal services listed in 7
paragraph 3 above may be discontinued in whole or in part by the municipality, (ii) no liability 8
shall accrue to the municipality for its decision to discontinue providing services following the 9
effective date of the deannexation , and (iii) the owners may be responsible for providing those 10
services. 11
5. The undersigned owners attest to whether vehicular ingress and egress to the area to be 12
deannexed relies on a public street maintained by the (City or Town) or relies on another way of 13
ingress and egress as follows: _____________________________________________. 14
6. The undersigned owners attest that the area to be deannexed does not have upon it or running 15
over it infrastructure which is financed by, or which serves as collateral or security for, any 16
outstanding debt held or serviced by the (City or Town). 17
7. The undersigned owners attest that the deannexation would not result in the area to be 18
deannexed being completely surrounded by property within the (City or Town)'s corporate limits, 19
such corporate limits to include any public streets adopted for maintenance by the (City or Town). 20
(c) Upon receipt of the petition for deannexation , the city clerk shall examine the 21
sufficiency of the petition , to include the accuracy of services provided to the area to be 22
deannexed, the ownership of real property in the area to be deannexed, and the attestations of the 23
signers, and to certify the result of the examination. If the clerk certifies that upon examination 24
the petition appears to be valid, the municipal governing board shall fix a date for a public hearing 25
on the deannexation. Notice of the hearing shall be published once at least 10 days prior to the 26
date of the hearing. 27
(d) At the hearing , any person resident in or owning property in the area proposed for 28
deannexation and any resident of the municipality may appear and be heard on the questions of 29
the sufficiency of the petition and the desirability of the deannexation. If the governing board 30
then finds and determines that the petition meets the requirements of this section the governing 31
board may adopt an ordinance deannexing all, or part, of the area described in the petition. 32
(e) If the municipal governing board does not adopt an ordinance deannexing the area 33
described in the petition after making findings under this section, the municipal governing board 34
may not proceed with a separate deannexation process with respect to that proposed deannexation 35
area for at least 24 months from the date of the municipal governing board's findings. 36
(f) Except as required by a contractual relationship between the municipality and a 37
property owner or tenant of real property in the area to be deannexed, the municipality may, but 38
need not, continue to provide any services to all , or part, of the deannexed area following the 39
effective date of a deannexation under this Part . No liability shall accrue to the municipality by 40
virtue of the cessation of services by the municipality after the effective date of a deannexation 41
under this Part. 42
"Part 4. Other Local Government Consent. 43
"§ 160A-58.105. Consent of other local governments required in certain instances before 44
property may be deannexed by a municipality. 45
(a) Notwithstanding the provisions of this Article, if the deannexation of an area from the 46
corporate limits of a municipality would result in the transfer of one or more service obligations 47
previously provided by the municipality to (i) any other unit of loc al government as that term is 48
defined in G.S. 160A-460, (ii) any nonprofit volunteer fire department or rural fire protection 49
district, or (iii) any district, commission, or authority created under Chapter 153A of the General 50
Statutes or this Chapter , the property owners, for deannexations initiated under Part 3 of this 51
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Article, or the municipality, for deannexations initiated under Part 2 of this Article, shall obtain 1
the consent of the governing board of the entity to which the service obligation shall transfer. 2
(b) The party responsible for obtaining the consent required by this section shall obtain 3
and deliver to the city clerk evidence of that consent prior to or contemporaneous with the 4
approval of the report required by G.S. 160A-58.102(c)(1) or the filing of the petition allowed 5
by G.S. 160A-58.104, whichever shall apply. 6
"Part 5. Effective Date of Deannexations. 7
"§ 160A-58.106. Effective date. 8
A deannexation of property under this Article shall become effective on the first June 30 at 9
least 90 days following the adoption of the deannexation ordinance. 10
"Part 6. Property Tax Liability of Newly Deannexed Area. 11
"§ 160A-58.107. Tax of newly deannexed area. 12
Real and personal property in the newly deannexed area as of January 1 of the year in which 13
the deannexation becomes effective is not subject to municipal taxes for the taxes levied for the 14
fiscal year beginning July 1 of that year. Any liens of the municipality for ad valorem taxes or 15
special assessments outstanding before the effective date of the deannexation may continue to be 16
collected or foreclosed upon after the effective date of the deannexation under Article 26 of 17
Chapter 105 of the General Statutes or Article 10 of this Chapter, as applicable. 18
"Part 7. Municipal Services. 19
"§ 160A-58.108. Municipal services. 20
(a) If an area is deannexed under this Article and a public enterprise system operates in 21
the area as provided in G.S. 160A-312, a municipality may continue, transfer, or discontinue 22
municipal services to that area. 23
(b) A municipality may revise the rates for services provided by a public enterprise to the 24
deannexed area in accordance with G.S. 160A-314. 25
(c) As used in this section, the term "public enterprise" has the same meaning as it does 26
under G.S. 160A-311. 27
(d) If the municipality has accepted ownership of or maintenance responsibility for roads 28
that serve or connect to an area to be deannexed, exclusive of those with debt financing and 29
subject to G.S. 160A-58.104, then the municipality may determine to discontinue those services. 30
If the municipality so determines, the city may recover the undepreciated costs for road 31
maintenance provided within the last 10 years through assessments against the area to be 32
deannexed in the same manner provided in Article 10 of this C hapter; provided that the 33
requirement for a petition as provided in G.S. 160A-217 shall not apply. 34
(e) If the municipality owns or is responsible for facilities that are subject to the 35
requirements of a Municipal Separate Storm Sewer System (MS4) permit, the city may recover 36
the undepreciated costs for publicly owned facilities located on or providing service to the area 37
to be deannexed in the same manner provided in Article 10 of this Chapter; provided th at the 38
requirement for a petition as provided in G.S. 160A-217 shall not apply. The municipality is 39
authorized to take reasonable steps to maintain ownership and control of publicly owned facilities 40
as may be reasonably necessary to comply with the requirements of an MS4 permit. If, however, 41
the municipality does not maintain ownership and control of the publicly owned facilities serving 42
the deannexed area, any permit issued by a municipality for a stormwater management system 43
pursuant to G.S. 143-214.7, or approval of an erosion and sedimentation control plan pursuant to 44
G.S. 113A-61, shall terminate upon deannexation and the permittee or plan owner, as applicable, 45
shall be required to obtain a permit or plan approval from the jurisdiction within whi ch the real 46
property is located after deannexation, or the Department of Environmental Quality, as 47
appropriate. 48
(f) If the municipality determines to discontinue providing police, fire protection, 49
emergency management, or other public safety services to th e area to be deannexed, then the 50
municipality shall not be held liable for any act or omission related to a delay in responding to a 51
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call for public safety services, in referring the call to another local government or public safety 1
agency, or in refusing to respond to a call for public safety services. Nothing in this section shall 2
be construed to invalidate any otherwise lawful agreement or contract in the nature of mutual aid, 3
cooperative response, or coordinated provision of public safety services nor s hall this section 4
alter the municipality's liability for acts or omissions if it actually responds and provides public 5
safety services, as such liability would be determined under otherwise applicable law. 6
"Part 8. Recording and Reporting. 7
"§ 160A-58.109. Deannexation recording and reporting. 8
(a) Whenever the limits of a municipality are reduced in accordance with the provisions 9
of this Article, it shall be the duty of the mayor of the municipality to cause an accurate map of 10
the deannexed area, together w ith a copy of the deannexation ordinance duly certified, to be 11
recorded with the following: 12
(1) The office of the register of deeds of the county or counties in which the area 13
is situated. 14
(2) The office of the Secretary of State. 15
(3) The Local Government Commission. 16
(4) The tax assessor assigned to the area. 17
(5) The clerk of the governing board of any entity identified in G.S. 160A-58.105 18
as receiving a service obligation previously provided by the municipality. If 19
there is no clerk to the governing board, the chairperson of the governing 20
board or executive officer of the entity. 21
(b) The documents required to be filed with the Secretary of State under this section shall 22
be filed not later than 30 days following the effective date of the deannexation ordinance. All 23
documents shall have an identifying number affixed to them and shall conform in size in 24
accordance with rules prescribed by the Secretary. Failure to file within 30 days shall not affect 25
the validity of the deannexation. 26
(c) Any deannexation under this Article shall be reported as part of the Boundary and 27
Annexation Survey of the United States Census Bureau. 28
"Part 9. Judicial Review. 29
"§ 160A-58.110. Appeal. 30
(a) Any holder of interest in real property located within the corporate limits of the 31
municipality including the area to be deannexed who believes they will suffer material injury 32
because (i) the municipality failed to comply with the procedures set forth in this Article, (ii) the 33
governing body acted arbitrarily, capriciously, or without statutory authority in carrying out this 34
Article, or (iii) the governing body violated the State or federal constitution in carrying out this 35
Article may file a petition seeking review of the governing board 's action. The petition shall be 36
filed in the superior court of the county or counties in which the municipality is located within 37
30 days following the denial of a deannexation petition by the governing body or the certification 38
of an election wherein a referendum held under G.S. 160A-58.103 affirmed the validity of a 39
deannexation ordinance, or in the event the time for the filing of the petition under 40
G.S. 160A-58.103 has passed, within 120 days of the adoption of the deannexation ordinance. In 41
the event a municipality adopts a deannexation ordinance under G.S. 160A-58.102(d), the 42
petition shall not be filed until certification of the election where a referendum under 43
G.S. 160A-58.103 was held, or the time for filing such a referendum has passed, whichever may 44
apply. As used in this subsection, "material injury" shall not include an obligation to pay property 45
taxes for the area described in the deannexation ordinance or petition. 46
(b) The petition for review shall explicitly state what exceptions are taken to the action 47
of the governing board and what relief the petitioner seeks. Within 10 days after the petition is 48
filed with the court, the person seeking review shall serve copies of the petition by register ed 49
mail, return receipt requested, upon the municipality. 50
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(c) Within 15 days after receipt of the copy of the petition for review or within additional 1
time as the court may allow, the municipality shall transmit to the reviewing court a copy of the 2
record as described in G.S. 160D-1402(h). 3
(d) If two or more petitions for review are submitted to the court, the court may 4
consolidate all those petitions for review at a single hearing, and the municipality shall be 5
required to submit only one record as required in subsection (c) of this section. 6
(e) At any time before or during the review proceeding, any petitioner or petitioners may 7
apply to the reviewing court for an order staying the operation of the deannexation ordinance 8
pending the outcome of t he review. The court may grant or deny the stay in its discretion upon 9
such terms as it deems proper, and it may permit deannexation of any part of the area described 10
in the ordinance concerning which no question for review has been raised. 11
(f) The court shall fix the date for review of deannexation proceedings under this Article, 12
which shall be expeditious and without unnecessary delays. The review shall be conducted by 13
the court without a jury. The court may affirm or reverse the decision of the municipal governing 14
board, declare the decision void, or remand the decision to the governing board for further 15
proceedings to comply with this Article. In making these determinations, the court shall review 16
the whole record or the portions of it that are cited by any party. 17
(g) Any party to the review proceedings, including the municipality, may appeal to the 18
Court of Appeals from the final judgment of the superior court under rules of procedure 19
applicable in other civil cases. The superior court may, with the agreement of the mu nicipality, 20
permit deannexation to be effective with respect to any part of the area concerning which no 21
appeal is being made and which can be removed from the municipality without regard to any part 22
of the area concerning which an appeal is being made. 23
(h) If part or all of the area deannexed under the terms of a deannexation ordinance is the 24
subject of an appeal to the superior court, Court of Appeals, or Supreme Court on the effective 25
date of the ordinance, then the ordinance shall be deemed amended to m ake the effective date 26
with respect to such area the first June 30 at least six months following the date of the final 27
judgment of the superior court or appellate division, or the first June 30 at least six months from 28
the date the municipal governing boar d completes action to make the ordinance conform to the 29
court's instructions in the event of remand. For the purposes of this subsection, a denial of a 30
petition for rehearing or for discretionary review shall be treated as a final judgment. 31
(i) Any settlement reached by all parties in an appeal under this section may be presented 32
to the superior court in the county in which the municipality is located. If the superior court, in 33
its discretion, approves the settlement, it shall be binding on all parties with out the need for 34
approval by the General Assembly." 35
SECTION 2. This act becomes effective January 1, 2027. 36