Last updated on 08/17/2017

Why Omaha loves annexing

Annexations have become Omaha's go to strategy for growth.
Omaha heli
Published by Victor Cassone

The city of Omaha has steadily been increasing its revenue and population through the use of annexations. Since 2014, Omaha has increased its population by 27,000 people solely through the use of annexations. Omaha has been using annexations as one of its primary tools for growth.

Annexations are actually very common throughout Nebraska and the United States. Annexation is the procedure for bringing smaller unincorporated county areas into a city limit boundary. Once annexed, the area is now under the bigger city’s jurisdiction and must follow their laws and taxes. Annexations are tool used by cities to expand their boundaries and bring in new revenue sources.

The reason Omaha has favored annexations in recent years is because it’s a straightforward source of revenue for the city. The increased population results in more people who will have to submit to Omaha's taxes. This increased tax revenue will help the city have more cash on hand and help them raise more money through bonds.

Nebraska state law gives the cities within Nebraska their power to annex. The Nebraska State Legislature has favorable laws towards annexations. Nebraska uses a annexation strategy called involuntary annexations. Involuntary annexation allows large cities the ability to annex smaller surrounding cities without the smaller city’s consent. The only defense the annexed city has is to challenge the annexation in court and which is usually fruitless.

Nebraska is one of the few states that implements involuntary annexations. Most states across the nation have voluntary annexations. Voluntary annexation requires some sort of majority approval from the soon to be annexed area. In the past, a few organizations have pushed for Nebraska to adopt voluntary annexations. For example, Citizens for a Free Nebraska was a statewide movement of citizens organized against forced annexation. The organization didn’t gain much steam and dissolved in 2010.

The state law essentially allows Nebraska's largest cities the ability to absorb smaller cities that lay in their path of expansion. However this power has it's limits. A city with a population larger than 300,000 people can annex a surrounding city with a population of 10,000 people or less. Currently, the only city in Nebraska with a population over 300,000 is Omaha. Cities that have a population smaller than 300,000 people have different thresholds for the population they can annex.

Another constraint is the location of the land being annexed. According to the state law, the annexed land must be “over any contiguous or adjacent lands, lots, tracts, streets, or highways”. This means that a city can not annex an area that doesn’t fall in its immediate path of expansion. There must be a connecting point between the two areas. The land at this connecting point needs to be developed as either urban or suburban. Rural land can not be annexed.

There are several arguments a city like Omaha makes to justify annexations. Usually the biggest reason is for money. The math on this is simple. The more people you have within your city limits the more people you can tax which results in more revenue for the city. On the flip side, annexations can also lead to lower costs for city services such as public utilities, sanitation and roads. Many city services get cheaper as more people use them.

Non-annexed locations can also put unwanted strain on a city. For example, imagine a nearby non-city neighborhood with a very poor sewer system and everytime it rained the sewer system flooded causing damage to the surrounding city’s infrastructure. It might be cheaper for the city to annex the neighborhood and extend its prebuilt sewer system to fix the problem.

The arguments also extend beyond money. A city might want to annex a surrounding area because this would allow them to control the development of the annexed area moving forward. There also might be a scenario where a city might annex for political reasons. A sitting Mayor might want to annex a population that traditionally votes in favor of the their political party.

Out of all the reasons stated above, the most common reason Omaha continues to annex appears to be for financial gains. Some have claimed that Omaha is annexating for political reasons since west Omaha is overwhelming Republican and the current mayor is also Republicain. However, major annexations have happened during Democratic mayors and there is no evidence that points to this theory. It appears to be more of a coincidence rather than a valid theory.

It’s not all gains when it comes to annexations, there are many costs that need to be factored in. If the city being annexed has any debts then the annexing city will absorb these debt and pay them off. Omaha has postponed annexating many areas because their debts were too high.

The conditions of the physical infrastructure also need to be considered before an area is annexed. Inheriting poor roads, sewers and other city services could become a hefty cost. Repairing this faulty infrastructure might be a higher cost than the profits the city might receive from the new taxable base. However, it’s much cheaper to extend public services like roads and sewers rather than build new ones.

As the population grows through annexations, so does some of the long terms costs. The police and fire forces need to be expanded to be able to keep up with the rising population. Omaha tries to stick to the industry standard of 2 police officers per 1000 people. After a quick influx of people, that ratio decreases and more officers will need to be hired. The roads and other public services of the annexed area will need to be maintained when they wear down in 10 to 20 years. This might not cause immediate costs but it will in the future.

One of the biggest public concerns with Omaha’s annexation practices is the issue of westward expansion and urban sprawl. Omaha’s public transit system has been lackluster in the past. The westward expansion of Omaha through annexation makes it harder to implement a comprehensive public transit strategy throughout the whole city. Right now there aren’t any good public transit solutions for western Omaha. The area is too spread out for busses and bike lanes.

The vast majority of people out west get around by car. This puts a lot of strain on the rest of the city. Parking lots take up a lot of valuable real estate in eastern Omaha. It would be hard to make eastern Omaha more dense and less car-dependant without removing parking lots. However, less parking would alienate people from western Omaha and discourage them from going to the denser parts of the city.

Urban sprawl also puts more pressure on the city’s maintenance team. Right now, western Omaha has a low population density. There are more roads and less people using them. Roads will still wear down when people aren’t driving on them. The city will end up repairing roads that few people use which isn’t economical over the long term. Services like snow removal become spread more thin throughout the city because there is more road to cover.

According to a Smarter City report done by IBM in 2013, Omaha’s “reduced density affected the city's financial stability, the sustainability of service levels and the potential for long-term economic growth”. One of IBM’s main concerns was Omaha extending itself too far west and pulling resources from inner city development over the long term. Due to Nebraska’s lax annexation laws, Omaha could very easily find itself annexing a large majority to Douglas County in years to come.

There are worries that the gains from annexation are not spread evenly throughout the city. Omaha still has a large areas of high poverty, unemployment, and inadequate labor skills. Not investing enough human energy and money into these areas ends up hurting these residents and the city as a whole. Annexations do bring in more money to the city which could help these low income areas. However, the low population density areas out west will also need development which will require some of this newly gained capital.

The best alternative for growing the city involves bringing jobs into Omaha through business growth and entrepreneurship. Instead of physically growing the city through acquiring land, Omaha could instead double down on business related investments within the preexisting city. This growth would bring more people into the city and increase tax revenue. There would be less city maintenance costs compared to westward expansion and city planners would have more incentive to build up rather than out.

This all sounds good in theory but using government incentive to grow business in a city is really difficult. Even if you have a great strategy, the results aren’t guaranteed and will take years to fully mature. Annexations provide a reliable and predictable strategy for growing a city that the other growth strategies can’t provide.

Overall, there really isn’t much conclusive academic research that points to whether annexations have a positive or negative long term economic effect on a city. In the short term, if a annexation is done wisely, most evidence points to annexations being a net positive for a city. The questions remains over the long term whether too rapid of growth through annexations cause government glut and higher maintenance costs that eventually cost more than the initial gain achieved.

Moving forward, Omaha will most likely continue annexing northward and westward and try to fill in the space surrounding Elkhorn. Don’t expect any southward expansion any time soon. Due to the Nebraska Supreme Court ruling of Barton v. City of Omaha, city’s cannot annex across county lines. Even if Nebraska allowed such annexations, Bellevue, Papillion and La Vista would all be safe because they have populations larger than 10,000 people limit.

Unless something major happens, it’s hard to imagine Omaha growing without annexation in the years to come.