The policy, which also is being challenged in court by the Washington County government, requires property along the city's borders to be annexed before city water and sewer service are extended.
Unless they can get a city exemption, owners of property that does not border the city would have to agree to future annexation before receiving city water and sewer service. That annexation would be required once their properties became adjacent to city land.
In an April 16 letter to the city of Hagerstown, Louis A. Fantin, senior vice president and legal counsel of Lenox China, wrote: "It is my understanding that the pre-annexation ordinance became effective Sept. 1, 2002. As you know, Lenox made its decision to remain in the Hagerstown area and build its new warehouse in May of 2001, approximately one and a half years prior to the effective date of the pre-annexation ordinance."
In the letter, which was distributed to the council, Fantin said city, county and state officials did not mention the policy when urging the company to build the distribution center in the Hagerstown area.
The company invested approximately $28 million to purchase 40 aces of land, Fantin said.
The distribution center is expected to create about 60 jobs and to be open and operational by January 2004, a spokesman has said.
After the vote, Fantin said he was not there to question the policy but rather whether it was meant to apply to projects under way at the time of its adoption.
Construction of the warehouse was more than 50 percent complete before the company was notified it would have to sign an agreement in order to get water service, he said.
The Washington County Commissioners says the city's annexation policy violates a 1997 sewer agreement between the county and city governments because it places conditions on the provision of service.
The city disagrees with the county's interpretation.
A trial on the lawsuit between the city and the county is scheduled to start in September.