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• Whether the retaining the area within the city limits would result in an adverse impact to the city, including adverse fiscal impacts; • Whether disannexation would present an opportunity for incorporation of the area into a new municipality or for an existing municipality to annex the area; • Whether the area is populated with residential development; and • Whether the area is proposed for long-term development. See Exhibit B, pp. 15-16 for the full text of the policy.' Each of these criteria also contains a requirement relating to the provision of city services. In this instance, the Council may consider the property for disannexation because (a) the area proposed to be disannexed comprises more that an individual parcel (although the fact that it is only four parcels makes this point arguable given the language of the policy); (2) the area is not populated with residential development (criteria #6); and (3) disannexation of the area will not create any keyholes or islands. On February 24, 2025, Council approved a resolution instituting disannexation proceedings as per the policy and and setting public hearings as required by state law. The institution of proceedings did not and does not obligate the Council to disannex the properties. My office sent out notices to other taxing entities of same on February 26t', and notice of the public hearings was published in the Paris News on April 3rd. Council conducted the first public hearing on April 14t' at its regularly scheduled meeting and conducted the second public hearing on April 21s' at a special meeting. Council may now consider ordinances either granting or denying the disannexation petitions. Analysis - The stated reasons for disannexation—lack of city water and sewer—are not strictly true. The Kraft property is currently connected to city water and sewer service, and the new structure can be connected when the time comes. The other properties look to have access either to city water or water from Lamar County Water Supply, but are currently used for agricultural purposes. All the parcels have the benefit of fire, police, garbage collection and other city services. Arguably, then, the parcels are not even eligible for disannexation. The primary issue with disannexation of the proposed area as far as the city is concerned is that of lost potential property and sales tax revenue. Dr. Kraft's parcel is now (and will be when he builds his new clinic) developed. The real question is the possibility of future development on the Cobb and Morrison properties. At present, the Cobb properties are subject to an Ag exemption that make their taxable value very low. Staff is concerned that with expansion of HWY 271 and other development in the area, these properties may become attractive for either residential or commercial development which would greatly increase their taxable values. In any event, it must be remembered that once disannexed, given current annexation law, it would be nearly impossible to reannex the property, and the city would be giving up all future property taxes forever. I The policy for disannexation is simply the inverse of the policy for annexation. Other than the prohibitions against keyholes and islands, the policy on disannexation is sparse. Likewise, state law regarding disannexation is simply that the procedures used in disannexing property must not conflict with the procedures for annexing property.