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No. 104,441 IN THE COURT OF APPEALS OF THE STATE OF KANSAS JAMES BAGGETT, et al., Appellants, v. THE BOARD OF COUNTY COMMISSIONERS OF DOUGLAS COUNTY, KANSAS, Appellee, and MASTERCRAFT CORPORATION, A Kansas Corporation, and CITY OF LAWRENCE, KANSAS, Intervenors/Appellees.

SYLLABUS BY THE COURT 1. Our standard of review in an administrative review where the first level of review occurs in the district court requires us to first determine whether the district court observed the requirements placed upon it and then conduct a similar review of the board of county commissioners' action.

2. In reviewing a quasi-judicial decision, we must determine whether, as a matter of law, the board of county commissioners: (1) acted fraudulently, arbitrarily, or capriciously; (2) issued an order supported by substantial evidence; and (3) acted within the scope of its authority. The appellate court should not substitute its judgment for that 1

of the members of the board of county commissioners, who act as elected representatives and are able to observe and hear those who testify. The appellate court's role in annexation decisions is limited.

3. Under K.S.A. 12-520c, the governing body of any city may by ordinance annex land not adjoining the city if, among other conditions, the board of county commissioners of the county finds and determines that the annexation of such land will not hinder or prevent the proper growth and development of the area or that of any other incorporated city located within such county. A finding that annexation will not hinder proper growth is more than just a legislative decision that annexation is advisable; it is a quasi-judicial finding.

4. The statutory requirements of K.S.A. 12-521 and K.S.A. 12-520c are to be viewed separately; K.S.A. 12-520c is applicable to island annexations, and K.S.A. 12-521 is an alternative statutory route to annexations where no more specific procedure applies.

5. The city officials making the decision on how to zone land proposed for annexation do not represent the residents in outlying areas of the county. For the residents of outlying areas to have a voice in the land use, there must be some initial consideration of land usage and whether it hinders proper growth and development of the area by the board of county commissioners.

6. The proposed uses or reasons for a requested annexation must be considered by the board of county commissioners because the uses or reasons for annexation will affect

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the future growth of the area. In almost every case where there has been a request for island annexation, there will be a proposed use.

7. Where the developer of land in an island annexation cannot specify the intended uses of the land but provides only a category of potential uses, the board of county commissioners must examine those potential uses--or at least the most potentially deleterious uses--and determine whether those uses would hinder or prevent proper growth and development of the area. Failing in that examination, the annexation cannot survive judicial scrutiny under K.S.A. 12-520c.
Appeal from Douglas District Court. ROBERT W. FAIRCHILD, judge. Opinion filed September 30, 2011. Reversed and remanded.

Ronald Schneider, of Ronald Schneider, P.A., of Lawrence, for appellants.

Evan H. Ice and Laura E. Seaton, of Stevens & Brand, L.L.P., of Lawrence, for appellee Board of Douglas County Commissioners.

Michael M. Shultz, of Kaup & Shultz, Attorneys at Law, LC, of Lawrence, for intervenor/appellee City of Lawrence.

Before GREENE, C.J., MARQUARDT and STANDRIDGE, JJ.

GREENE, C.J.: James Baggett and a group of similarly situated individual landowners (Baggett Group) appeal the district court's decision to affirm the approval by the Board of Douglas County Commissioners (Board) of an island annexation of property to the City of Lawrence (City). The Baggett Group argues the district court erred by permitting the intervention of the developer of the property to be annexed and by failing to enforce certain discovery against that intervenor. They also challenge the Board's 3

decision as arbitrary, capricious, and unlawful, as unsupported by substantial competent evidence, and as contaminated by procedural error and ex parte communications. Concluding that the Board's decision is not adequately supported by evidence in the record, we reverse the district court's decision affirming the Board's annexation approval and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

On January 30, 2008, the business owners (the applicants) of approximately155 acres of land (the property) in Douglas County (the County) petitioned the City for the voluntary annexation of the property, which lies northwest of the Lawrence city limits, immediately north of the intersection of K-10 and the Farmer's Turnpike, near the Lecompton interchange of the Kansas Turnpike, later seeking rezoning for industrial development. The property does not adjoin the contiguous boundaries of the City, and therefore the proposed annexation constitutes an island annexation pursuant to K.S.A. 12520c. Before the annexation request, the property was undeveloped agricultural property used as pastureland and was zoned County A (Agricultural).

The Baggett Group consists of individual homeowners adjacent to or located within 1/2 mile of the property. Their property is zoned County A, with rural residential homes located along the existing county roads. Mastercraft Corporation, which successfully intervened in the proceeding in district court, is the developer of the property and has pursued the annexation and zoning in question on behalf of the applicants.

Among the initial actions reflected in the record, a staff report to the City Planning Commission recommended that annexation be deferred until a sector plan could be completed. Its report pointed out that sanitary sewer services, water services, and private utilities were needed for the property, and that a regional detention plan for each

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watershed on the property was needed but not yet developed. Finally, the report noted that the property was outside the existing service response districts.

On March 26, 2008, despite this strong recommendation from its staff, the City Planning Commission recommended annexation to the City Commission on a 6-2 vote. On April 15, 2008, pursuant to K.S.A. 12-520c, the City adopted Resolution No. 6764 (City Resolution) requesting that the Board find and determine that the annexation of the described property into the City would not hinder or prevent the proper growth and development of the area or that of any other incorporated city located within the County.

On May 14, 2008, the Board met in regular session to consider the City Resolution. After presentation by the Lawrence-Douglas County Metropolitan Planning Commission staff, the issue was opened for public comment, and many witnesses spoke either for or against the annexation. Jane Eldredge and Matthew Gough represented the applicants and Mastercraft, and Eldredge stated that annexation was sought by the owners: (1) to bring the property under the jurisdiction of the City and thereby regulate the development more stringently to protect the neighbors; (2) to provide for much needed industrial space for the long-term growth of the County; and (3) to provide more jobs and more tax revenue.

Ron Schneider, the attorney for the Baggett Group, stated that island annexations are rare. He argued that Eldredge had glossed over the critical determination to be made by the Board, stating, "Your determination is not whether or not this is a good zoning or bad zoning. It's precisely K.S.A. 12-520c, whether or not this will hinder or prevent the proper growth and development of the area or that of any other incorporated city located within such county." He asked that the Board refrain from making a decision due to the present lack of adequate water or sewage. He also emphasized that the Board was unaware of what type of development was going to occur on the property.

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Eldredge responded that she was unable to be specific as to the intended use of the property, only that it will be within the permissible uses under the industrial zoning classifications. Indeed, the applicants' initial letter to the Board had stated that "[t]he proposed uses of the Property are . . . limited to those uses permitted within industrial zoning classifications by the City." (Emphasis added). Although there was discussion about a distribution center of 100,000 to 500,000 square feet, Eldredge warned that "we're not talking about probably a single use on this site."

On May 21, 2008, the Board adopted Resolution No. 08-18 by a 2 to 1 vote, finding that the proposed annexation should be approved. In its findings, relevant to the proposed use, the Board stated:

"h. The reason for the proposed annexation is to construct an industrial park, which will help mitigate the shortage of available industrial space. "i. The owners of the Property, as developers, cannot reasonably identify the specific uses within the future industrial park, as such uses will be dictated by the demands of future businesses that elect to purchase or lease all or some portion of the Property; however, they do anticipate an initial warehouse distribution. "j. The potential future uses of the Property may include all uses permitted within the industrial zoning classifications and the Development Code of the City. "k. The use of the Property as an industrial park does not conflict with any other established development plan for the area." (Emphasis added.)

The Board concluded that the proposed annexation would not hinder or prevent proper growth and development of the area.

The Baggett Group appealed to the district court, which affirmed the Board's annexation decision. The Baggett Group appeals that decision.

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WAS THE BOARD'S DECISION UNSUPPORTED BY SUFFICIENT EVIDENCE OR OTHERWISE ARBITRARY, CAPRICIOUS, AND UNREASONABLE?

Standards of Review The Baggett Group argues that the Board's annexation decision cannot be supported by substantial evidence and is otherwise arbitrary, capricious, and unreasonable. Our standard of review requires us to first determine whether the district court observed the requirements placed upon it and then conduct a similar review of the Board's action. City of Topeka v. Board of Shawnee County Comm'rs, 252 Kan. 432, 434, 845 P.2d 663 (1993). In considering such quasi-judicial decision making, we must determine whether, as a matter of law, the Board: (1) acted fraudulently, arbitrarily, or capriciously; (2) issued an order supported by substantial evidence; and (3) acted within the scope of its authority. 252 Kan. 432, Syl.

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