January 24, 2020
2020 UT App 12 (January 24, 2020) (cert denied)
The Utah Court of Appeals held that city, by adopting a zoning status agreement without public hearing, committed an unlawful act of contract zoning.
A developer just outside of Moab proposed a mixed use residential, commercial, and hotel development. The landowner and City entered into a pre-annexation agreement to facilitate annexation of the property into the City, but contained a provision allowing the developer the option of terminating the annexation agreement if the City did not approve the project. The land use approval process included significant citizen opposition including a lawsuit which delayed the project for several years, and in the interim, the developer determined that modifications to the master plan would be beneficial based on updated market analyses.
Moab’s municipal code addresses project amendments and distinguishes between “major changes”, which require prior review and approval by the planning commission including public comment, and “minor changes” which may be authorized by planning department staff without a public hearing. Upon review, the City attorney determined that the proposed changes would constitute “major changes” requiring a public hearing. In response, the landowner informed the City that if the proposed changes were not processed as minor changes, it would exercise its right to pull the project from city jurisdiction. As a result, the City, developer, and landowner entered into a Zoning Status Agreement in which the City agreed to deem the changes as minor changes to be reviewed without public hearing. A group of citizens filed a lawsuit to challenge the zoning agreement.
The district court dismissed the lawsuit, concluding the City had flexibility to resolve issues through negotiated settlement agreements. The citizens appealed. The Utah Court of Appeals reversed, holding that the agreement constituted an illegal act of contract zoning. While a municipality’s power to enter into contracts is broad, the court explained, a municipality may not contract around public hearing requirements found in statute or municipal ordinance.