Draper City settles SunCrest dispute

After almost five years of debate, the Draper City Council and Zions First National Bank have agreed on a settlement for the unfinished SunCrest Development on Traverse Ridge in Draper.

Zions Bank has agreed to end the $25 million lawsuit against Draper City, filed in 2009, accusing the city of “ill-advised” and “illegal” demands on SunCrest, which made it difficult for the bank to sell it.

“We are happy to have the issue resolved with Zions Bank,” Draper City Attorney Douglas Ahlstrom said. “The settlement came after a long process and it’s in the best interest of all parties and the residents currently located in the SunCrest area.”

The basic conditions of the settlement clearly state the responsibilities of both parties. The city will accept responsibility for correcting problems with the construction on SunCrest Drive and the paved portion of Deer Ridge Drive. They also agree to stipulations influencing undeveloped areas with historic landslide data and other improvements to roadways.

Zions Bank, or the developer that purchases the project, will be responsible for water issues. They will resolve issues with Detention Pond 7A and examine the need for a new water system for further development in the area.

The city agreed to design and build a regional storm water facility in the area as a city project, if the property owners agreed and there were no other alternative methods. Zions will cover a share of the cost of the project.

“We are glad to have the SunCrest issue settled,” Councilmember Troy Walker said, adding that it’s good the settlement clearly lays out what the responsibilities between the city and the developers are.

The original SunCrest developers declared bankruptcy in 2007, leaving Zions Bank about $40 million in unpaid loan debt. The bank bought the property in 2008 for $24.3 million with the intent of selling the property as soon as possible to help cover its losses.

Problems between the city and Zions Bank arose over who was responsible for the deterioration and development issues with the roads, water, and landslide potentials in the SunCrest area.

Zions Bank sold the property to MCO Properties, in Fountain Hills, Ariz., about a year ago. According to the bank, because of the settlement, MCO Properties will now be able to move forward with plans to build more than 3,000 homes in the undeveloped portions of the 4,500-acre development.