LD III LLC v. Mapleton City

March 19, 2020

2020 UT App 41

The Utah Court of Appeals held that a development agreement was unambiguous as to transferable development rights and that the city’s rezoning of the property was a legislative act and was validly reversed by referendum. 

A developer (original developer) entered into a development agreement with Mapleton City regarding 245 acres of undeveloped real estate on Mapleton’s east bench wherein the original developer conveyed a large portion to the city in exchange for a zoning change to the remainder to allow for 136-residential-unit maximum density with transferable development rights. The agreement provided for assignment of rights under defined circumstances and only with the city’s approval. Another provision declared the agreement to be covenant to run with the land. 

Ultimately the original developer transferred the property to another entity (intervening developer), with city approval, who thereafter obtained a zone change to a much lower density. Intervening developer then lost the property through foreclosure to LDIII, who decided to proceed with developing the property. LDIII sought a zone change in line with the originally zoned density. When the City approved the zone change, Mapleton citizens successfully challenged the rezoning by referendum. LDIII sued claiming the referendum was invalid and argued the original agreement allowed the development plan and ran with the land. The district court dismissed the lawsuit and LDIII appealed. 

The Utah Court of Appeals found the development agreement to be unambiguous in that it provided that it would run with the land only upon certain conditions, one being the city’s approval. As LDIII obtained the property through foreclosure and without the city’s approval, the zoning rights in the development agreement did not pass on to LDIII. As to the validity of the referendum, the court found that the Utah Supreme Court’s decision in Krejci v. City of Saratoga Springs, 2013 UT 74, P.3d 662 conclusively held that site-specific rezoning is a legislative act and subject to referendum, and that LDIII’s assertion that the rezoning was administrative in relying on the holdings in Baker v. Carlson, 2018 UT 59, 437 P.3d 333, was misguided as neither decision in that case involved a zoning change.