Three neighborhoods south of Seymour targeted for annexation will remain outside the city’s boundaries for now.

The city council had limited discussion Monday on a proposal to annex the Ashwood area behind Home Depot, the Hoover subdivision off South Walnut Street and The Highlands southwest of the city on the former Elks Country Club property.

The annexations would have increased the city’s size by more than 1,000 acres and its population by around 250 households with the expectation for more homes to be built in the future.

To proceed with the process, the council first needed to adopt a fiscal plan detailing how much money the city would have to spend to provide services to the areas and how it would pay for the growth. Adoption of that plan was shot down by the council in a 5-1 vote with one member, Lloyd Hudson, absent.

The biggest expense would come from extending city water service to the Ashwood neighborhood and adding fire hydrants there to provide improved firefighting capability. That cost was estimated to be around $1.1 million and would be shared with Indiana American Water Co.

The city’s portion would be around $400,000, according to a cost analysis prepared by Reedy Financial.

Other expenses would include the need for an additional police officer ($60,000); costs for road maintenance ($30,000); and the purchase of additional trucks for trash and yard waste collection and snow removal ($720,000).

Total revenue from the annexations would generate around $200,000 the first year. That amount would increase to roughly $300,000 in six years.

New council member Darrin Boas voted in favor of the plan because, he said, it would have given the council and the public more time to discuss the issue.

Although he hasn’t been on the council long, Boas said, it was his understanding the city wanted and needed to grow and had been preparing for at least some of the annexations.

He said with the city paying for upgrades to the sewer system in Ashwood a year ago, he believed it was the city’s intent to annex the area. He also said the Hoover addition needs to be annexed if the city wants to build a south extension to Burkart Boulevard.

“And I’m sure all the legwork that has been done on these projects has put some costs on the table for us,” he said.

The fiscal plan was introduced by council member John Reinhart, who later said he had reservations about the whole project.

He said his biggest concern is the funding. He said there was no guarantee residents will hook up to city water, which would reduce the income generated by user fees.

Reinhart also said there may be an additional cost if the city has to purchase the water line infrastructure in the Hoover addition from a rural water provider.

“The income there is kind of maybe will, maybe won’t,” he said. “I’m not sure this annexation is in the best interest of the city at this time. I’m just not prepared for this, and I don’t think any amount of discussion right now will move it along.”

Nick Kyle with Barnes and Thornburg law firm, the city’s bond counselors and representation for annexation, explained why the matter was urgent and needed to be discussed at this time.

“There’s a bill pending currently in the General Assembly (SB 330) that would make annexation much more difficult if not impossible to pass,” Kyle said. “If you want to pursue annexation, you need to start in earnest that consideration in order to be ahead of the effective date of the anticipated legislation should it pass.”

Reinhart said he doesn’t care that the state is proposing to make changes to annexation laws.

“If they change it, they change it, and if we have to deal with it, we’ll deal with it,” he said.

Council President Jim Rebber said he would not support the annexations now because of the cost. He said the city needs to address other priorities right now, including road maintenance and lowering health insurance costs, and shouldn’t be spending its reserves on anything new.

The city currently has a rainy day fund balance of around $700,000, but Rebber said he wants to see that amount increased to more than $1 million.

“My concern is how are we going to get there in terms of spending money and what else we have on our plate,” Rebber said. “I take a real hard look at the condition of our roads, and I know we’re going to have to find money for the roads.”

He said the city has other projects planned, including widening Second Street from Vehslage Road to the Crossing subdivision on the city’s far west side.

“There are some other projects we want to do, and I have expressed my concern with doing this project at this time and potentially taking our eye off the ball from the things the mayor had outlined in the state of the city and improving our roads,” he said.

If it’s a good enough plan, Rebber said, residents would support and vote for it in a few years, regardless of what the state does.

Council member Brian D’Arco said that of all three areas only Ashwood made sense.

“I definitely had reservations right off the bat with The Highlands because you’re looking at less than 10 homes out there, and that’s been in development now for eight years. So we’re averaging one per year,” he said.

He doesn’t expect growth to happen there quickly, and by adding the area, the city would be taking on a lot of upkeep for no revenue.

With the Hoover addition, he said, there is more farm ground than platted property for homes, which also wouldn’t generate much money for the city.

“The only viable one I saw was Ashwood, up until the point in time the water line was brought up,” he said. “But if that area is ever annexed, I know that is something that is going to have to happen. But at this point in time, I don’t know if we need to have it happen now.”