NEW ULM – A new Orderly Annexation Agreement (OAA) with Milford Township was approved Tuesday by the New Ulm City Council.

The purpose of an OAA is to plan for the city’s future growth and development into the abutting Milford Township. The OAA establishes the requirements for annexation.

New Ulm Community Development Director David Schnobrich said the OAA will expedite any potential annexation. Without the agreement, every time the city wanted to annex land from Milford a public hearing would be needed, delaying the process by up to 30 days.

Schnobrich said OAA agreements do not come before the council often, usually because the terms are for 10 to 20 years. The last time the city discussed an OAA with Milford Township was July 2005. That agreement is set to expire Dec. 31, 2024.

Schnobrich highlighted the difference between the new OAA and the expiring agreement.

First, the new agreement is for 10 years instead of 20. Schnobrich said the township requested a 10-year agreement over a 20-year agreement to allow quicker reaction to changes in development. City staff felt 10 years was an appropriate term.

The second change was to reduce the minimum requirement for an “agricultural development” from 40 acres to 10 acres. The OAA exempts agricultural developments from the annexation requirements. Schnobrich said by reducing the size requirement for agricultural developments, some properties would be exempt from the agreement, but based on the number of properties between 10 and 40 acres, staff did not see this as a significant issue. In addition, Brown County already classifies properties exceeding 10 acres as agricultural developments. New Ulm wanted to be consistent with Brown County’s legal definitions.

Schnobrich said in the 2005 agreement the land area impacted was 1,200 acres. In the last 20 years, New Ulm has annexed 252 from this initial 1,200 acres. Some landowners have requested their land be removed from the new OAA as they do not want to be annexed. Staff recommended honoring these requests. This reduces the amount of land in the agreement to 610 acres.

“We think this is sufficient land area,” Schnobrich said.

An additional sentence was added to the agreement requiring any land being annexed to abut the city. If the property being annexed does not abut New Ulm, the land between the parcel and the city would also be annexed. This would avoid creating an island of township property.

Councilor David Christian asked if the staff anticipated a problem with annexing any islands of property. There is one section of land north of New Ulm on the Milford annexation map that was surrounded by property except from annexation.

Schnobrich said this island property was an electrical service station owned by Xcel Energy. He did not anticipate this being an issue as the city would likely annex property closer to the city first.

The last change to the new agreement was to provide the township with a property tax reimbursement for annexed property for up to five years.

Mayor Kathleen Backer asked how the tax reimbursement is determined.

Schnobrich said the reimbursement would be based on how much the annexed property is being taxed. In the first year, the city would reimburse the township 90% of the taxes; 70% in the second year; 50% in the third year; 30% in the fourth year, and 10% in the fifth year.

City Attorney Robert Scott reviewed the agreement and felt it was fair. He said the most important part of an OAA is to have clear triggering events that result in annexation. Those requirements are addressed in the agreement.

“It looks like a lot of work is going into our future in the Milford area,” Councilor Les Schultz said. He made the motion to approve the OAA agreement with a second from Councilor Larry Mack.

The Milford Township Board previously approved the OAA during their Dec. 12 meeting.

Schnobrich informed the council staff was working on an OAA with Cottonwood Township. He anticipated this agreement would be brought before the council in January.