City leaders around Indiana are painting a dark picture when considering state legislation that could put a halt to annexation without 100 percent participation from property owners.

While the Senate failed to either pass or defeat the annexation bill Monday, New Albany Deputy Mayor and Director of Development Carl Malysz warned the Sewer Board on Thursday that if passed, the changes could have a big affect on the city’s future.

“If it passes, we might want to pull the plug on anything that we can’t get into the city up front,” Malysz said. “We need to see what the wreckage is and what we’re left with.”

The bill would require city governments to have 100 percent participation from property owners before they could annex. Annexations launched by property owners would only require 51 percent approval.

The bill should be passed or defeated by mid-March, so cities will know more then on how to proceed with long-term plans that include annexation, Malysz said.

“We’ve had significant plans to do all sorts of annexations and now that’s being potentially clipped out of the city,” Malysz said.

Anxiously awaiting word of how the annexation situation will shake out is local developer Don Thieneman.

Thieneman’s proposed 240-unit apartment development would sit along Grant Line Road just outside the city limits. The sewer board agreed Thursday to proceed with cost estimates for additional phases of sewer upgrades in part, so Thieneman could start scheduling construction.

While Thieneman has some assurance that sewer capacity will be available when the Stone Crest development is completed, he now faces the issue of where to pay tap-in and sewer fees.

“We’re looking at a cost of the sewer tap fee being $720,000 if we stay in the county,” Thieneman said. “We’re willing to pay that fee, but we can’t pay that fee and be annexed.”

Annexation of the property would require payment of both city and county fees. Thieneman said he would like for the property to be annexed, but if new legislation passes, annexation would be stopped retroactive to Jan. 1, 2008.

Thieneman’s tap-in fee would be roughly half the amount if the land was annexed, though property tax fees for the development would rise.

Thieneman said he could not afford to build the apartments if he had to pay the $720,000 fee and later be annexed, resulting in higher property taxes.

He added the willingness of the board to proceed with plans for sewer upgrades along Grant Line Road would jump-start the apartment construction, but the annexation issue still looms large.

“We really need to get this project going in 2008,” Thieneman said. “As far as economics, apartments are what we need right now.”

Malysz said fringe areas between the city limits and county are important for future annexation, which is why sewer upgrades have been suggested. He said the Stone Crest development is just one example of how new annexation requirements could slow progress for New Albany.

“Really, the driving force behind lots of those sewer-line improvements was poising the west side of Grant Line Road for industrial park development,” Malysz said. “The annexation question doesn’t just apply to this property.”

Annexation is one of the issues Mayor Doug England has been discussing with state lawmakers during his trip to Indianapolis this week.

In addition to the proposed property tax caps, new annexation requirements could be detrimental to the city’s economic future, England said. But the mayor feels confident that even if the property-tax caps and annexation requirements are passed, New Albany will find a way to continue to grow.

“If you had all the money in the world, you could be a great mayor,” England said. “Being a good mayor is taking what you got and making it work.”