Draper, potential SunCrest buyer were at odds over trailheads

The would-be buyer of the unfinished SunCrest development in Draper backed out of the deal in June mainly due to conflicts with the city over open space and public access to trailheads, according to people close to the negotiations and the minutes of the City Council.

On June 11, Zions Bank and the Arizona developer, MCO, announced they were calling off the deal, after 15 months of due diligence. "MCO's new direction proved too difficult to balance with the interests of Draper City," according to a statement released by Zions Bank.

MCO's new master plan called for more open space, with conservation easements around homes creating a contiguous natural area. The open space would be under private ownership, but trails passing through would be public.

The problem, according to Mayor Darrell Smith, was that MCO was straying too far from the original development agreement, changing where it would develop homes and where open space would remain.

"We had hoped they would stick to the original development agreement," he said in June. "They wanted to make significant changes."

Repeated calls to MCO's president, Jeremy Hall, were not returned. Zions Bank would not comment beyond its statement.

Of primary concern, Smith said, was that MCO wanted to build a gated community in the West Bluff area, which has trailheads to popular hiking routes, including Jacob's Ladder in Corner Canyon. The city didn't want such a substantial area closed off to a majority of Draper residents, he said.

MCO explained to concerned council members that high-end homebuyers are important to its market, and those buyers want gates — in a quality upscale community.

The developer added that higher property values would mean more tax revenue for the city, as well as reduced crime and no obligation to maintain streets. In the end, MCO said its new plan would produce 33 percent more tax revenue and 27 percent more open space, according to City Council minutes.

The developer proposed moving the trailheads. But doing so would have compromised access, said Smith. Toward the end of the negotiations, MCO proposed moving its development farther west, according to council minutes.

"MCO probably felt it wouldn't have made money" without the gated community, said Paul Tonks, a resident and member of the Owners Association Board, which represents residents of the 1,000 homes that have been built, a quarter of the total planned for the project.

Tonks said another problem with MCO's plan was that it had high-density housing, which wasn't on the original master development plan. The new plan included up to 25 small apartments per acre in a 60-acre area across the street from the already-developed Mercer Reserve.

"Residents did not want high-density" nearby, he said, citing concerns that low-cost housing near high-cost homes would affect property values.

Another sticking point, he said, may have been plans for a subdivision of 200-300 homes above Deer Ridge. Tonks said he does not believe the Unified Fire Department would have approved it because the plan had only one road in and out.

One more complication, according to council minutes: The city wanted MCO Properties to plan on having SunCrest pay all impact fees. The previous master development agreement exempted SunCrest from all impact fees except police and fire.

The sale of SunCrest to MCO in February 2011 was a step toward settling a $25 million lawsuit that Zions filed against Draper. The lawsuit alleged that the city forced the development into bankruptcy. The bank acquired the property shortly thereafter.

Zions continues to work with Draper City and market SunCrest.

Though the negotiations failed, the mayor said he continues to see MCO as a good developer.

"They did what they felt like they needed to do," he said in June. "No hard feelings."

nmathews@sltrib.com

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