Saying it could interfere with economic development, a Senate subcommittee Thursday put on indefinite hold a bill that forbids cities from requiring annexation by nonresidents who buy city utilities.

The bill was closely watched by Myrtle Beach, Conway and Georgetown officials, who feared it could stop their plans to bring in territory they serve with water and sewer or electric utilities.

Sen. Danny Verdin, R-Laurens, said the bill could have "very detrimental effects" on economic development and industrial recruitment.

Cities that have utilities for sale could decline to offer them if they can't get a promise of possible future annexation in exchange.

Verdin said the bill was the result of "two local hot spots" that drew attention from Sen. Jake Knotts, R-West Columbia, and Sen. Mike Fair, R-Greenville.

It's too risky to change state law to solve those problems, Verdin said.

Further, Lexington and Greenville have softened their stances with residents they were seeking to annex in response to the bills, Verdin said.

Subcommittee chairman Greg Gregory, R-Lancaster, said city utilities are "the only unregulated monopoly in this state" but the bill "would do a lot more harm than good."

Verdin said he didn't want to kill the bill because it could be used to address some legitimate issues.

But the bill is not likely to be brought up again, Verdin said.

A similar bill is under study in the House.

Lexington Mayor Dan Breazeale said his town requires people to sign a contract that they will agree to be annexed in return for utility service if they become close enough to the city.

It was the town's action to annex a subdivision that drew the ire of its residents and Knotts, who filed the bill. Breazeale said the residents made the choice to sign that agreement, but Knotts said they had no choice.

"You can't go nowhere else for water in Lexington," he said.

Breazeale said his town revised its policy because of Knotts' and the subdivision's concern, as well as the House bill.

"We annexed our House member," which contributed to the barrage of loud complaints, Breazeale said.

Gary Cannon, lobbyist for the Municipal Association of South Carolina, said city residents make investments in utilities and it's a fair exchange to demand annexation in return if an area comes close enough to be taken in.

Cities would not want to extend service outside their boundaries without that opportunity because state law severely restricts their ability to annex, Cannon said.