Just a year after Utah lawmakers created a process allowing landowners to establish and govern preliminary municipalities with limited oversight, legislation aimed at shutting it down is advancing in the final days of the legislative session.
House Bill 540, sponsored by Rep. Mike Kohler, R-Heber, passed the House Feb. 4 in a 59-19 vote without much discussion and now moves to the Senate, where it must pass before the session ends on March 7. If approved, the bill would prohibit any new applications for preliminary municipality status after Feb. 15, effectively repealing the process created under Senate Bill 258 last year.
However, four projects that applied before the cutoff — including the proposed Kane Creek development in Grand County, as well as other projects including one in Summit County — would be grandfathered in and allowed to proceed under new oversight requirements.
The Grand County Commission unanimously voted to support HB540 at its March 4 meeting.
Normally, bills must go through a committee before a final vote, but with the legislative session ending on March 7, the Senate would likely need to suspend its rules to bypass that process and vote on it directly if the bill is to move forward.
The proposed Kane Creek development is a planned 580-unit project that includes 478 residential units, 102 overnight accommodations and 67,000 square feet of commercial space.
The project has drawn strong opposition from residents and organizations like the Kane Creek Development Watch, a citizens group that argues it would strain Moab’s infrastructure, degrade the Colorado River corridor, increase flood risks and primarily provide unaffordable housing.
SB258: The process HB540 seeks to end
The Utah Legislature passed SB258 in last year’s session, allowing landowners to establish preliminary municipalities — privately governed entities with control over zoning, land use and infrastructure without local government oversight.
These municipalities do not have taxing authority or the power of eminent domain, but they can enter agreements with utility providers, oversee development, and implement land-use policies. Before a preliminary municipality can fully incorporate into a town, it must meet one of two conditions:
– Reach 100 permanent residents within four years of issuing its first Certificate of Occupancy, or
– Reach 100 permanent residents within six years of becoming a preliminary municipality.
Once that threshold is met, local registered voters must approve incorporation in an election. If the incorporation vote passes, the town gains full municipal authority, including taxing power. If neither threshold is met, the area reverts to county control.
Kohler, who voted for SB258 last year, acknowledged he did not fully scrutinize the bill at the time and now believes it grants landowners too much control over development while limiting county oversight.
“Somebody could buy a piece of property … develop that property under this new rule, and they can go in and basically do whatever they want on that property, both in density and development, [while] the county can say nothing about it,” Kohler said on the House floor.
He expressed concern that, under SB258, counties could inherit unfinished infrastructure if a preliminary municipality failed to reach full incorporation, arguing the option going forward needs to end.
(Utah House of Representatives) Rep. Mike Kohler, R-Heber, speaks in the Utah House about House Bill 540, which would end the preliminary municipality process, but still allow for the proposed Kane Creek development to go through.
The Utah Home Builders Association opposed HB540 in the House committee hearing, arguing that lawmakers were moving too fast to repeal SB258 without fully exploring its benefits.
“There really is only one logical reason that a developer would go through the time and the hassle and the expense of trying to form their own preliminary city, and that is because they want to get out from under the jurisdiction of the county for one reason or another,” said Taz Biesinger, a lobbyist for the association. “And I won’t elaborate on that, but there, oftentimes, it’s stifling and preventive to what they’re trying to accomplish.”
Grand County Attorney Stephen Stocks noted the unusual timeline of SB258, where the law was enacted, applications were submitted, and now, just a year later, lawmakers are considering shutting down the process.
“[SB258] was something that was created with very specific terms, and then one year and four applications later, now that door is being closed [if HB540 passes],” Stocks said. “It raises the question of why the door was ever opened in the first place.”
How HB540 could affect Kane Creek’s incorporation process
Since Kane Creek developers filed their feasibility request before the deadline, the project can still move forward if HB540 passes, but under stricter oversight.
One of the most significant changes requires landowners to fully compensate Grand County for any damage to roads, utilities or other county infrastructure before Kane Creek can become a town.
Kane Creek Boulevard, the main road leading to the development, is already in poor condition from 500 West to the site. If future construction causes further deterioration, the developers — not the county — would be responsible for repairs. HB540 allows the county to assess infrastructure damage before incorporation and require repairs as a condition of becoming a town.
Stocks said the bill strengthens compliance with county infrastructure standards and helps mitigate the impact of development.
“It does create the obligation that they need to put the county in a position that it would have been in, but for the development,” Stocks said.
Additionally, Kane Creek developers must comply with all pre-existing agreements with the county, ensuring that commitments made before incorporation remain binding — even if ownership changes before full incorporation. The bill also prevents the development from expanding beyond its original proposed boundaries once incorporated.
If HB540 does not pass before the session ends, the preliminary municipality process under SB258 will remain in place, allowing new applicants to apply.
Kane Creek’s next steps in incorporating
Kane Creek remains in the early stages of the incorporation process. A public hearing on March 5 allowed state officials and residents to discuss the findings of a state-backed feasibility study.
The study evaluated Kane Creek’s ability, if it is able to eventually incorporate into a town, to generate revenue from property taxes, sales tax and other municipal sources while also accounting for infrastructure costs, law enforcement services and road maintenance. It projected that the town would initially operate at a deficit but could become financially self-sustaining if planned residential and commercial growth materializes.
However, it also raised concerns about the feasibility of proposed developments and the costs associated with infrastructure maintenance.
Over 230 people attended the public hearing, where many stated concerns about the study and the proposed development overall, including potential flooding, needed road maintenance, the developer’s access to water and the impact on Grand County residents, among other things.
Now that the hearing has been held, the landowners have one year to formally petition to become a preliminary municipality. If approved, Kane Creek would continue along the multi-year process toward full incorporation.
The developers are also pursuing a separate approval process through Grand County, working through the traditional county zoning and plat approval process, but have run into several hurdles and delays in recent years.
A version of this story was first published by The Times-Independent.
