Annexation

Cities and villages often expand boundaries through annexation of land of adjoining towns. Usually it is to accommodate planned growth anticipated on vacant land. But, developed land can also be annexed, and in Dane County there have been a few projects over the past years that resulted in the town being dissolve and with their territory going to incorporated municipalities. I worked on an intergovernmental agreement and Cooperative Plan between Fitchburg, and the town and city of Madison about 23 years ago (Fitchburg was approached by the town). Four years ago that plan was finalized when when Fitchburg and Madison took over the town of Madison specified in the agreement and plan. You could say, it went according to plan. After doing the intergovernmental agreement and cooperative plan with Fitchburg and the town of Madison in 2003 the city of Madison, a few years later, entered into one with the town of Blooming Grove. Madison, per the agreement, was to obtain all of the town next year. However, residents of the rural subdivision April Hills, which adjoins McFarland on one side, but Madison on two (and will be three with the northside quarry going to Madison in 2027), have petitioned the village of McFarland to annex their subdivision. The annexation is a bad deal for McFarland.

April Hills and Madison boundaries
Source:  Google Maps with words by author

The proposed annexation of April Hills to McFarland is a bad deal for McFarland residents for a few key reasons. With this annexation, the village will annex 139 homes, from which it will receive about 352 new residents, 4.2 miles of street, and add 4.2% to the village population. However, due to current state law and levy limits, in return it will receive only $21,559 per year in levy funds due to levy constraints set in statute. This constraint is based on Blooming Grove's current and extremely low mill rate. If one takes McFarland cost of service as its mill rate, the cost of service for this area, based on the last tax bill mill rate would come to $311,535. This means existing village residents will subsidize this annexation to the tune of $290,000, with a concomitant decrease in services with a four percent increase in residents. 

But, it gets even worse, when we get to the asterisk. Towns often rely on nearby cities for many services, and lack the public improvements as do urban areas. Many years ago a colleague called them "sponges." The town of Blooming Grove, over the past several years has been planning for their "going out of business" but doing only what is minimally required for public services. They have sold their town hall and maintenance facility and related equipment. Some public services are provided by nearby municipalities (Madison or McFarland) at an extraordinarily cheap rate as the residents of those communities often subsidize rural town service. With the fire sale, they have reduced their mill rate to less than a quarter of that of the Village of McFarland. It is this mill rate, or the one in effect at time of approval, at which the village gets to tax for the services it provides, hence the $290,000 subsidy by current village residents benefitting April Hills. April Hills could have attempted to annex to the village years ago, before the fire sale, and the mill rate would have been greater and require less subsidy by the village, but they chose not to. They desired their low mill rate, which now burdens the village. The residents chose to have the best of both worlds--low taxes to benefit them, and annex at the latest possible date to McFarland causing a greater service deficit to the village. The village has said it will talk to state law makers about an exception to state law to correct the levy issue. Even if that occurs, it is still likely a bad deal.

Cooperative Plan Map T of Blooming Grove and C of Madison
Madison memo of March 3 2026 (City Planning Director to alderpersons)

The subsidy is one thing, but the village still has to provide a variety of services. The Village will have to spread its services thinner to accommodate the growth. That means basic services will take longer to obtain in other parts of the village. Think of leaf pickup, snow plowing, and other key services. Given its low density, the 4.2 miles of street, is about 10% of the villages total street mileage. This means, they have to plow 10% more streets with what they have or subsidize new equipment to serve April Hills. Heck, the cost of refuse and recycling containers to serve April Hills, which occurred at the October meeting I attended, takes much of the tax revenue they will get for one year from the subdivision. 

There are other costs--both improvement and operating--that will come into play. When I talked to the village administrator, he flat out told me, when I inquired, that the public improvement costs would be fully assessed. I attended a meeting in mid-October on this issue, and found a nice small asterisk on the spreadsheet outlining costs (talk about spin!). The asterisk referred to the cost of public improvements, which would likely be phased in and take about twenty years, would be at the discretion of the village board. Hence, village residents could also end up subsidizing the cost of the improvements.

 

April Hills, Madison and McFarland
Source: Madison memo of March 3, 2026

Village Trustee Boyd, who resigned in late October, brought up the heretofore quiet asterisk--meaning of cost distribution for public improvements being at the discretion of the village. He hoped that a future board would be lenient and “ease the pain”. April Hills residents will have long memories and will remind future boards of his comments. We have a village administrator who told me, apparently not wanting to mention the asterisk, that the costs would be fully assessed. It seems that McFarland has no policy for such a situation, hence the asterisk. The spreadsheet compared costs to Madison, and Madison policy was well noted. As a result, existing village taxpayers, and utility ratepayers may well pick up improvement costs for April Hills, even though we cover our costs through the home or lot purchase. My guess is it will more likely be rate payers for sewer, water and storm water services, if current levy limits are not altered by the new legislature and governor. When the wife and I purchased our house and lot in McFarland, the price included the full cost of the public improvements initially paid for by the developer and which the developer recoups through sales of the lots. this would have included the developer's financing costs. Fully assessing the costs for April Hills would include financing but at lower government bond rates than private finance rates.

But, it gets worse. Madison can serve the area without a sanitary sewer lift station, and has several roads, and utility lines to the area. McFarland needs a lift station. This means an additional operating cost to pump sewage and maintain the lift station. Curious, on this same day I was at the village board meeting on April Hills the Village passed a resolution against the Madison Metropolitan Sewerage District's 10% rate increase. Apparently, they have no issue with the cost of service to April Hills being borne by all ratepayers. Madison can loop water main, which is important. McFarland has to take water main from one side (southside) under a four lane highway, and somewhat ironically, cross under a Madison water main. Mr Boyd, unknowingly, made the argument of why April Hills should be in Madison. Madison can serve April Hills with lower improvement costs.

The state Department of Administration, in its required, but recommendatory review, rightly noted that the village annexation is inefficient in services and boundary. Madison does not need a lift station to serve the property, McFarland does. Madison has water and storm sewer around much of the property. Rather ironically, a water main to serve the area from McFarland will need to cross under a Madison main. The McFarland administrator has said their analysis is flawed, but failed to explain the flaws.

 

Madison water main in blue
Source: Madison March 3 memo

McFarland had an intergovernmental agreement with Madison in 1997 which expired in 2018 (twenty years is a standard time frame). McFarland has chosen to not renew or revise the agreement, despite Madison's efforts. Hence, Madison has planned as you can see their subdivisions on two sides of April Hills to make a cohesive neighborhood. But, instead Madison now sees the residents desire to annex to McFarland. Residents argue they are served by the McFarland Post Office and schools. Here is a news flash, those entities do not decide municipal jurisdictional boundaries. Fitchburg has three different school districts that serve its large population, and has three post offices, with Madison having at least three different zip codes serving Fitchburg.

While levy limits may go away with the new legislature, that does not mean that the village should not be careful about how much it increases its levy to accommodate existing growth. The annexation of April Hills is a bad deal for McFarland.