At a daylong strategic planning meeting on Thursday, the City Council directed staff to look at a phased annexation process.
Mayor Tommy Roberts said the direction to undertake a study "is not a decision to annex."
"This is purely in an analysis and study phase," he said.
If the City Council decides to forge ahead with annexation, it likely would increase the city's revenue and spread services such as water and sewer to outlying businesses and homes. But it also risks taking in business people and local residents who intentionally settled outside of city limits.
The idea is all about tax revenue.
"The attraction of annexation would be bringing in those businesses that are producers of goods and services, which generates gross receipts tax," Roberts said.
Among the areas under study for annexation could include U.S. 64 (Bloomfield Highway) and New Mexico 516 (Aztec Highway) east of Farmington.
Bloomfield Highway in particular has many industrial businesses that could generate significant tax revenue. City officials are quick to note, however, that nothing has been decided.
"This would just be an initial overview of the possibilities," Roberts said.
Farmington's northeastern boundary now stops at Farmington Lake.
Business owners in areas east of the city would face a number of changes in an annexation.
"As far as services to the businesses and the people that fall in that area, it's probably good," said Gilbert M. Cordova, owner of Cordova Investment, which does business as A.C. Fence Co., 2901 E. Bloomfield Highway.
Cordova complained that buildings in the city of Farmington fall under strict building codes.
"Since I'm in construction I have to deal with that," he said. "I don't think that's right. What happens is it increases construction costs."
The City Council has set aside for now a proposal from councilor Jason Sandel to consider a broad annexation that would take in much of Crouch Mesa. The proposal would have increased the city's land area by about 50 percent, Roberts said.
Sandel could not be reached for comment Friday.
"I am not in favor of a massive annexation," Roberts said. "I think we would find very likely that the costs outweigh the benefits. A smaller scale annexation is the way to go."
Crouch Mesa lies between Bloomfield Highway and Aztec Highway along County Road 350. The area includes industrial businesses and a few residential developments, but it is not densely populated. Businesses are interspersed in the desert.
Roberts said Crouch Mesa may be too large an area for the city to consider annexing anytime soon.
"That proposal has been on the table for over a year and the council has never warmed to that thought," Roberts said. "My personal view is there's not much attractive about it."
A smaller annexation could bring benefits to the city, Roberts said.
"It amounts to a cost-benefit analysis," he said.