Kyle City Council is planning to finalize the annexation of 357 acres into the city limits Dec. 18. The original annexation process, which began in early summer and contained more than 2,500 acres, was delayed after it was discovered that city staff did not formally notify all the entities in the annexation area of the proceedings.

A race to annex land on the city's east side was set off when Hays County Emergency Services District No. 5 announced a November ballot measure that, if approved, would allow it to collect a half cent of sales tax on all sales within its service area that are not in the Kyle city limits. ESD No. 5 provides fire protection to areas in and around Kyle. The measure was approved by 52.05 percent of voters Nov. 5.

According to the Hays Central Appraisal District, the half cent of sales tax within the annexation areas would currently generate about $22,000 of sales tax annually.

City officials believe if the annexation of the properties along FM 150 is completed before April 1, the city, not the ESD, will be able to collect the sales tax.

City Manager Lanny Lambert said the majority of the city's residential growth is happening on the east side, and the annexations are part of an effort to capture sales tax from commercial development that might spring up to service residents of the area.

"We're not just talking about existing [sales tax]," Lambert said. "We're talking about future as well, and we do believe there is great potential out there at FM 150 and Hwy. 21."

City officials have also said the annexations will help it capture a tract of land it received from San Marcos in a land swap earlier this year. That property, located at the eastern edge of FM 150 and Hwy. 21, would be eligible for annexation once the city's limits are extended that far.

A 2,100-acre tract on the city's west side accounted for most of the land originally considered for annexation. The tract is owned by the General Land Office, a state entity responsible for funding the Permanent School Fund and other state programs through real estate investments.

In November, Kyle City Council approved an agreement with the GLO whereby the tract will not be annexed, but development within the area will be held to high standards.

"The development standards weren't necessarily put in [the agreement], although it does have to be developed in a way that exceeds our baseline standards," Planning Director Sofia Nelson said.

GLO spokesman Jim Suydam said the GLO is working with a developer that is planning to build a master-planned community containing high-end residential and commercial developments on the tract.