How does annexation work in South Carolina?

In South Carolina, residents are afforded the opportunity to specifically request as an individual (or group of neighbors) to incorporate their homes into the surrounding City. Many "donut holes" of unincorporated properties exist in James Island, West Ashley, Johns Island, and Cainhoy. The City reaches out to the homeowners of those areas to offer them the advantages of annexation. "Donut holes" are small areas within the City that are touching city limits but are still under the jurisdiction of Charleston County.

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1. Do you really get a tax credit and reduced water rates if you join the City?
2. What does annexation mean?
3. How does annexation work in South Carolina?