The DCA rejected the town's application after stating Groveland officials didn't say why they needed the additional land to grow the city of 3,500 permanent residents to nine square miles from four square miles.

The three parcels the county's smallest community wants to annex are near Cherry Lake and the Green Swamp, both environmentally sensitive areas. The 2,600-acre annexation eventually would house 3,000 single and multifamily residences, at least one golf course and an undetermined amount of office, retail and industrial.

Area brokers and planners tell GlobeSt.com the conceived growth would place the tiny community near the playing field of next-door Clermont, FL, the most vibrant commercial development hub in the county.

"Here you have everybody around them attracting national tenants to retail, office and multifamily projects but little old Groveland is sitting in the cold, unable to grow and attract the same revenue to its tax base," a south Lake County realtor tells GlobeSt.com on condition of anonymity.

City officials plan to vigorously challenge the state's rejection by year end, brokers following the controversy tell GlobeSt.com.

The DCA's rejection followed strong opposition from Lake County government officials, the St. Johns River Water Management District, the state's environmental protection and transportation departments, environmentalist groups and slow-growth advocates.

As Groveland prepares its response to the state, another small nearby community, Minneola, FL (Pop. 6,500), plans to study an annexation request from Lennar Homes Inc. of Miami, one of the largest homebuilders in Florida.

Lennar plans to develop Heritage Hills, a 4,000-home-office-apartments-retail development on a 1,850-acre tract northeast of Minneola at a potential new Florida Turnpike interchange location. Lennar has been talking with city officials since January.

Because of the project's size, it would need approvals from regional and state government agencies, area brokers familiar with the venture tell GlobeSt.com.