Letter from City Manager

Draper City asked me to post this letter from City Manager, Layne Long:

December 19, 2008
Dear Draper City Resident,

On behalf of Mayor Smith and the City Council I want to take a moment and update the community on the status of the SunCrest Development, particularly since there has been a recent change in ownership.

Terrabrook, LLC which was the owner of the SunCrest Development, filed for bankruptcy earlier this year. Zions Bank, a major lender and creditor of the project, purchased the Development through the bankruptcy proceedings. Zions Bank is actively trying to find a new owner or developer to take over the project and there continues to be strong interest from various developers, both local and out-of-state.
Most recently Zions Bank and the City have been in discussions with a company headed up by a local developer. Although, after months of working to get an agreement, they withdrew their offer this week, we believe some of the things all the involved parties learned over the past few months will be valuable in facilitating an agreement with a new owner or developer.

The purchase of the project by a new developer is complicated by various unresolved issues left over when Terrabrook, LLC declared bankruptcy. Some of these issues are the complex geology of the mountain; incomplete and inadequate road and water infrastructure; unfinished parks and trails; revegetation of the hillside and open trenches; recreation center, pool and other unfinished facilities; and repair of improvements and other infrastructure that are defective or not up to adopted City
standards. There are various Surety Bonds and Letters of Credit totaling $9.2 million which will cover many of the improvements, however, they will not cover everything. We know that Draper City must be flexible, creative and innovative in working with Zions Bank and any potential new developer to resolve these issues so that the project can move forward to completion. We know absolutely that they can be resolved. However, any resolution must be balanced with the appropriate entity taking fiscal responsibility for their appropriate areas of responsibility. The City is committed to not spending general tax- payer funds to fix those areas of the project that were the prior developer’s responsibility.

One of the largest obstacles to resolve is the roads. We now know that some of the roads in the development were not built to the standards required by the SunCrest Development Agreement and have already failed or are beginning to fail. The City has already accepted ownership of some of these roads and with that has accepted responsibility for repairing and maintaining these. Last year the City spent $1.3 million repairing Traverse Ridge Road and expects to spend at least $3.3 million over the next three years to repair other roads that are failing. There are other roads which have not yet been accepted by the City including SunCrest Drive, parts of Deer Ridge Drive, and the Eagle Crest road area. The City is requiring that the owner or developer of the property repair these roads, either to the standards required in the SunCrest Development Agreement or some other mutually acceptable standard before the City will take ownership, thereby saving taxpayers the expense.

SunCrest is a great development and provides a type of living in our community that is unique from any other City in Utah. That is why the Development was initially approved by the City and that is why it will be completed. We know we are living in very difficult economic times right now, and most residential development across the state has slowed dramatically. We remain confident, however, that the right developer, with the right development plan, at the right price will purchase the project and it will be completed.

The Mayor, City Council and staff are committed to working through these issues with Zions Bank and potential buyers of SunCrest Development.

Merry Christmas and a Happy Holiday Season,
Layne Long
Draper City Manager
1020 East Pioneer Road . Draper, Utah . 84020 . (801) 576-6500