THE decision by Argyle defender Paul Connolly to decline talks with the club to extend his Argyle contract came as no surprise to manager Paul Sturrock.
Connolly, 24, will be able to exit Home Park as a Bosman free-transfer when his current deal runs out during the close season.
Argyle were prepared to offer Shelly a new and improved deal but the right-back turned down all overtures, citing personal reasons for wanting a move from the Westcountry.
"I have known for some time that Paul Connolly has decided to leave the club when his contract expires in the summer," said Luggy.
"I would have liked Shelly to stay, but I have to respect his feelings.
"He has been at Plymouth since he was a teenager and has given this club good service.
"To be fair to him, has continued to wear the green shirt with pride even though he has known that his future lies away from Home Park."
Connolly - nicknamed 'Shelly' after a youthful love of colourful shell-suits - came through the youth ranks at Argyle and made his debut in the final game of the 2000-01 season alongside fellow first-timer Luke McCormick.

He was loaned to non-league outfit Bideford during the following season, before returning to Home Park but was a regular when the Pilgrims won the Second Division title in 2003-04.
After seeing off challenges for the right-back spot from David Worrell and Anthony Barness, he made the position his own and has racked up 178 appearances for the club, scoring a solitary goal - a header in this season's 3-0 home win over Norwich City.
Luggy said: "I would hope that our fans join me in wishing him all the best in his new career, and will welcome him if and when he returns to Plymouth in different colours."