Wallingford v. Moab City

459 P.3d 1039

Lucy WALLINGFORD, Kiley Miller, John Rzeczycki, Carol Mayer, David Bodner, Meeche Bodner, Sarah Stock, Josephine Kovash, and Living Rivers, Appellants,

v.MOAB CITY and Moab City Council, Appellees,Utah School and Institutional Trust Lands Administration and LB Moab Land Company LLC, Intervenors and Appellees.

No. 20180524-CA

Court of Appeals of Utah.

Filed January 24, 2020

Daniel J. McDonald and Kyle C. Fielding, Salt Lake City, Attorneys for Appellants

Christopher G. McAnany, Attorney for Appellees Moab City and Moab City Council

Jody K. Burnett and Robert C. Keller, Salt Lake City, Attorneys for Appellees Utah School and Institutional Trust Lands Administration and LB Moab Land Company LLC

Judge Ryan M. Harris authored this Opinion, in which Judges Michele M. Christiansen Forster and Kate Appleby concurred.

Opinion

HARRIS, Judge:

¶1 For several years, LB Moab Land Company LLC (Developer), a real estate development firm, has been planning a large mixed-use development project known as Lionsback Resort (the Project) on land located just east of Moab, Utah and owned by the Utah School and Institutional Trust Lands Administration (SITLA). The original iteration of the Project, including a resort hotel and numerous condominiums, was approved by the relevant land use authorities more than a decade ago, and a challenge to the propriety of those approvals has already been rejected by this court. See generally Moab Local Green Party v. Moab City , 2012 UT App 113, 276 P.3d 1230.

¶2 More recently, however, Developer has proposed certain modifications to the Project’s site plan, but those modifications are publicly opposed by a group of local citizens¹ (Citizens). Aware of Citizens’ opposition, and also aware that Developer had threatened litigation if the newly-modified Project was not approved, the City of Moab (the City) entered into a contract with SITLA and Developer, pursuant to which the City agreed to deem the proposed modifications "minor" rather than "major," a classification which, under applicable municipal ordinances, allows the proposed modifications to be approved without a public hearing. Shortly thereafter, the Moab City Council (the Council) adopted a resolution—without holding a public hearing—authorizing the City’s mayor to execute the contract.

¶3 Citizens then sued the City, seeking (among other things) an order enjoining the Project from proceeding until a public hearing was held on the proposed modifications. The district court dismissed Citizens’ lawsuit on summary judgment, and Citizens appeal. We reverse, concluding that municipalities may not contract around public hearing requirements found in statute or ordinance.

BACKGROUND²

¶4 SITLA owns roughly 175 acres of land (the Property) just east of Moab, Utah, near the trailhead for the popular Slick Rock Trail. In 2006, SITLA agreed to lease the Property to Developer for the purpose of pursuing a "mixed use residential, commercial, and hotel development" to be known as Lionsback Resort, "named for a prominent nearby geological feature." Moab Local Green Party v. Moab City , 2012 UT App 113, ¶ 2, 276 P.3d 1230.

¶5 A couple of years later, in October 2008, the City and Developer, joined by SITLA, entered into a "Pre-Annexation Agreement" to facilitate annexation of the Property—which at that time was located in unincorporated Grand County—into the City. Under this agreement, Developer agreed to submit a petition seeking annexation of the Property, and the City agreed to consider that petition "in compliance with the [a]pplicable [l]aws." The parties also agreed that "[t]he Project will be subject to" the City’s municipal code. In December 2008, the City passed an ordinance annexing the Property into the City. However, the Pre-Annexation Agreement contained a provision stating that, "in the event the City does not approve" the Project, Developer "shall have the option to terminate this Agreement" and "the City shall have no further right to annex the Property," and that if annexation had already occurred, "then upon request of [Developer] the City shall immediately commence proceedings to disconnect the Property from the City."

¶6 Over the next year, the Project proceeded through the City’s land use approval process, and in 2009 the City finalized all necessary approvals for the Project, and authorized Developer to begin construction. As originally approved, the Project consisted of a nine-building, fifty-unit hotel—complete with a café, convention meeting rooms, a health club, and a 105-stall parking lot—as well as 188 single-family housing lots. During the City’s land use approval process, certain Moab area citizens³ voiced opposition to the Project, and had the opportunity to be heard at public hearings. See id. ¶¶ 3–4 (describing "public hearing[s]" held before both the City’s planning commission and the Council). But the City approved the Project notwithstanding their opposition. Id. Some of the citizens who were opposed to the Project filed a lawsuit to challenge the City’s approval of it; their suit was unsuccessful at the district court level, and this court affirmed the district court’s dismissal of the lawsuit. See generally id.

¶7 The litigation (as well as changing economic conditions) delayed the Project for several years, and in the interim, Developer determined, based on updated market analysis, that modifications to the Project’s master plan would be beneficial. Among other things, Developer wanted to consolidate the hotel portion of the Project into one three-story building (instead of nine separate two-story buildings), and wanted to design the hotel units as "three bedroom condominiums with ‘lockout’ doors allowing individual bedrooms that could be rented separately," creating a potential for 150 rentable rooms in the fifty units. Although the Project’s overall footprint would remain unchanged, the hotel’s footprint would nearly double, as would the size of its parking lot. In addition, the consolidated hotel would have certain new amenities, including retail space, a restaurant, and a conference center.

¶8 According to the City’s municipal code, project amendments "that change the character, basic design, building density and intensity, open space or any other requirements and conditions" will be considered "major changes" that "shall not be permitted without prior review and approval by the planning commission," a process that requires a "[p]ublic [h]earing." See Moab, Utah, Mun. Code §§ 17.65.080(A), 17.65.130(B) (2015). On the other hand, "[m]inor changes" necessitated by "unforeseen circumstances, such as engineering requirements," "may be authorized by Moab City planning department staff" without a public hearing. Id. § 17.65.130(A). "When in question, the Moab City planning staff may determine whether the changes shall be classified as minor or major, or may refer the question" to the City’s planning commission. Id.

¶9 In 2013, when Developer first proposed its desired modifications, then-current City staff indicated, at least preliminarily, that the modifications would be considered "minor" and would not require a public hearing. Later, however, after some City staff turnover, the City’s attorney—who is counsel of record for the City in this case—informed Developer in a letter that, in the City’s view, its proposed modifications, including the "larger hotel concept," were "major changes," stating as follows:

Given the scope of the changes ..., it is my conclusion that this project should be processed as a "major change" under [the municipal code]. Under [the] proposal, [Developer] would be substantially changing the configuration, building types, phasing, and total square footage of the structures. These are not minor changes due, for example, to site constrain[t]s.

As you know, under Utah law municipalities are bound to adhere to their own land use ordinances. Although a minor change might appear to be expedient, in my opinion that would run contrary to the Moab ordinance. Similarly, attempting to process this application as a minor change would likely invite a legal challenge by other interested persons. Given the past litigation history as to this project, the parties should use care to follow the review processes to the letter.

¶10 In response to the City’s new position, SITLA 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," a right it believed it had pursuant to both Utah statutory law⁴ as well as the terms of the Pre-Annexation Agreement. The City did not necessarily agree with SITLA’s position, but in an effort to avoid litigation over the meaning of the Pre-Annexation Agreement and Utah statutory law, the City entered into negotiations with SITLA and Developer about how to resolve their disagreement.

¶11 The result of those negotiations was a document captioned "Zoning Status Agreement" (ZSA), which was eventually executed in March 2017 by the City, Developer, and SITLA. Under the ZSA, Developer agreed to take responsibility for certain Project-related items that had previously been tasked to the City, including traffic studies and sewer infrastructure. SITLA expressly agreed, for the purposes of the Project, to "consent[ ] to the City’s exercise of its local planning and zoning jurisdiction." Most notably for present purposes, the City in return agreed to "deem[ ]" Developer’s proposed Project modifications "[m]inor" changes, "which will be reviewed and acted upon by the Moab City planning department staff" and "which would not require a public hearing."

¶12 The ZSA was first presented to the Council at a meeting in December 2016, and re-considered at two additional meetings in February 2017, before finally being approved, by a 3–2 vote, at a fourth meeting in late February 2017. Immediately after the vote, however, one of the Council members who had voted "yes" stated that she wanted "to change [her]...