A new study from a consultant—ordered by the Mobile City Council—seemed to confirm what city of Mobile officials have been saying for months: that annexing a broad swath of territory west of the city was necessary to grow the city’s revenues and prevent the city from becoming locked into its current footprint.

“Without annexation, the entire metropolitan area could suffer and (there could be) a reduction in services in Mobile without annexation,” Mayor Sandy Stimpson said Monday in a press conference regarding the study.

The consultant, PFM Group Consulting, LLC, analyzed the city’s projections of how each of the four annexation scenarios proposed by the administration would impact the city’s revenues, service demand, expenditures and demographics. In January, the city published four maps detailing the potential scenarios: annexation study area “A” would annex 25,806 residents, study area “B” would annex 19,789 residents, study area “C” would annex 18,265 residents and study area “D” would annex 16,738 residents.

Using data provided by the city and state statutes, PFM agreed with the city’s projection that the additional revenue from annexing territory west of the city would be greater than the increased expenditures that come from the larger population. In addition, the study concluded that, without annexation, the city would face the risk of continued population loss, which could “harm the economic and fiscal wellbeing of the city and the overall metropolitan area.”

Stimpson’s comments and the study sets up for some highly anticipated city council meetings and a decision that could kickstart one of the most consequential annexation proposals in Alabama’s history.

If approved by voters in a special election, Mobile would leapfrog Birmingham and Montgomery and become the second-largest city in Alabama, trailing only fast-growing Huntsville. A supermajority vote of five council members is needed to trigger a special election for the annexation plan to get on the ballot.

But a reduction in the percentage of the city’s majority-minority voting age population could resurrect similar concerns that led to the collapse of the last annexation plan less than four years ago. PFM did not analyze the potential demographic changes, but in each of the four proposed annexation scenarios provided by the city, the city would remain majority-Black, and a plurality of the city’s voting age population would be Black, but by a razor-thin margin. In study area “A,” the city’s voting age population with the annexed territories would be 46.8% Black and 46.7% white.

In the study, PFM noted that, from 2010 to 2020, the city of Mobile’s population decreased by 4.14%, and the projections are that it will continue decreasing. By contrast, in all four of the proposed annexation scenarios, the population in that territory increased between 13-14% between 2010 and 2020, and those areas are projected to keep increasing in population.

Stimpson said the PFM report achieved the administration’s goals of what it wants to achieve in annexation: Preserve Mobile’s status as a Black majority city, ensure the voting age population of Mobile’s four of seven council districts remains “majority minority,” bring Mobile’s overall population above 200,000, and ensure any annexation would be revenue positive.

“I hope there is a sense of urgency toward doing this,” Stimpson said of the council’s actions, specifically setting up a special election for an annexation vote. “You don’t know when the next opportunity will be and there is no time like the present to get something done,” he said.

Economic analysis

In the first year after annexation, the city of Mobile projected (and PFM confirmed) that, assuming a baseline 5% annual growth in sales tax revenue, the city would net $7.1-8.4 million in sales tax revenue from the annexed territories, depending on which territory is annexed. Ten years after annexation, the city is projected to net $11-13 million in sales tax revenue from the area, depending on territory.

Sales tax is the largest source of revenue for the city. The city currently collects sales tax from territory west of Mobile (but still within the city’s police jurisdiction) at a rate of 2.5%. That amount would increase to 5% if that territory becomes part of the city limits.

However, the city would not be able to collect ad valorem (property) tax revenue from property owners in the annexed territory for five years. Starting in year six, the city projects that it could collect between $1.2 and $2 million in property tax revenue from the annexed areas.

The city of Mobile would have to take on about $1.3-1.6 million in up-front capital costs if any territory were to be annexed, the study notes. Those expenses would be one-time and primarily for garbage collection equipment and public works maintenance equipment.

But the city would not have to take on any additional police expenditures, because the potentially annexed territory already sits in the city’s police jurisdiction. The city also currently provides fire services but not emergency medical services. In the study, the city argues that it can provide emergency medical services without any additional expenditures.

Overall, the study anticipates that the city would add between $24.8-26.8 million in new expenditures over ten years if it were to annex territory, compared with $135.5-$146.5 million in new revenue.

Bigger grant opportunities

Stimpson, as he did in 2019, touted the economic benefits of annexation and the potential grant opportunities for bringing in more residents.

The PFM analysis seemed to back this up. With a population size above 200,000 residents, Mobile could have received more community-development block grant money under the American Rescue Plan Act.

Federal Transit Administration funding is also affected. If the city is over 200,000 in population, it would receive direct funding from the federal agency, rather than through state administrators who oversee funding needs to cities under the 200,000 threshold.

Stimpson also touted the cost advantages of annexation. He said the revenue projections show Mobile coming out ahead, and residents in the unincorporated areas receiving additional municipal services like garbage and trash removal, and emergency medical service.

In addition, areas like King’s Branch – which is a large subdivision west of Mobile and slightly to the east of Semmes – would be eligible to receive a boost in sidewalk work, drainage and other capital improvements within the city’s budget.

“There are (capital improvement plan) dollars that can be spent in that community that are not spent there today,” Stimpson said, adding that Mobile County does not have as “robust plans” as the city to maintain and upgrade the area.

Expectations and concerns

The council is set to meet at 1 p.m. on April 10, to discuss the report with PFM, but reactions are also expected during Tuesday’s council meeting. One of two people signed up to speak about the issue during the meeting, is former Mobile County School Board member Robert Battles.

“My first impression is that the information we received was what I expected,” said Councilwoman Gina Gregory. “The report is lengthy, and I want a chance to study it.”

Mobile City Councilman Scott Jones, who supports annexation, said the study is a validation of the information council members got from Stimpson’s staff a year ago.

“The areas in the county that we are looking at bringing into the city grew between 2010 and 2020,” said Jones. “Our city did not. There will be a significant increase in revenue, even after expenditures. Population growth will also be a huge benefit.”

But much like the last annexation showdown in 2019 – and the debate last year over redistricting – the city could be faced with another racially sensitive matter.

Mobile City Councilman William Carroll said concerns remain from Black residents in Mobile about “flipping the voting age population.” A voting age population analysis was not included ahead of the 2019 proposal but has been provided by the city ahead of the latest plan’s consideration.

“Many of the groups have been concerned about it,” Carroll said. “It will weigh heavily on any decision when it comes to annexation. It may weigh heavily on which areas are considered over others.”

Jones said, “When our city does well, each of our districts benefit. That is all we need to know to move this forward. Nothing else matters, to include demographics. In watching many cities go through this same process, Mobile is the only one who had special interest groups try to stop annexation because of a racial demographic discussion.”

The last time annexation was before the council in 2019, a plan to add approximately 13,000 new residents crumbled amid concerns over shifting racial demographics. Under that year’s plan, the city’s overall racial demographics were set to become 48.8% Black, 46.7% white.

Carroll, like Gregory, said he had not had a chance to dive fully into the report. He said “everything is on the table” when it comes to a final annexation plan and whether city officials will be willing to consider smaller annexation proposals.

Jones said it’s time for the council to move forward with a vote.

“It is time to get this on the agenda and allow the people in every area we are looking at in the proposed areas of the county the opportunity to vote on joining our city as soon as possible,” he said.