The city of Deer Vista is a small residential community of 1800 located in the foothills of rural Utah, on the outskirts of a larger college/industrial city. The first homes were built in Deer Vista in the 1970's. At that time most of the property was owned by a handful of farmers and fruit growers. Developers began to take notice of this area and speculated about its growth, buying sections of land to develop into subdivisions. Although growth was slow for the first ten years, it rapidly increased in the mid to late 80's.
It seemed as though pride and problems came hand in hand with incorporation of the infant city. One of the early challenges was water supply. Since the city was in the foothills, it was necessary to drill wells for the city's water. Two wells provided water, which had to be pumped up to a storage tank before being delivered via gravity to the individual homes through the city's lines.
Water pressure was low, and at times, nonexistent for brief periods. With about 400 homes depending on the well pumps, the unthinkable happened. The pump for the biggest well broke down. The pipe had cracked far down in the well shaft, a chunk of pipe had broken out, and dirt and small rocks were being sucked up into the pump, shutting it off. It would take a lot of money and about two months to put the pump back in operation, but the city had no money fore the repairs. The city's water rates were already among the highest in the county, so raising them was not feasible at that time.
Developers who had bought the land had been granted building permits, but without water, were not allowed to continue. The city had no idea how long it would take to raise the needed funds, so a moratorium was placed on all new building effective immediately. Petitions by the city to the state and various federal agencies for money proved fruitless. Things looked dard.
Finally, one developer volunteered to loan the city $50,000 to make the repairs. The loan was to be paid back over a period of several years with no interest accruing. The developer had a great deal of money tied up on land investments in the city; if he could not get his homes built and sold within the next few months, he would lose much more than $50,000.
The city was grateful for the loan and went ahead with the repairs. The pump was back in operation about six weeks from the time of the loan. Although some developers did suffer setbacks, building soon got back on track.
Many of the new homes being built were built by the developer who had made the loan to the city. Within a few months, complaints began to come to the city planning commission about the developer for violations of city codes, failing to complete promised work, doing things he had specifically told buyers he would not do, etc. Within a year, he built his own home in the city on a small peak overlooking the valley.
Whenever complaints came to the mayor about the developer, they were dismissed as a misunderstanding, or an oversight. As complaints increased, so did the mayor's loyalty to the developer. One day, the city building inspector reported that his inspection of the developer's private home revealed that he had bypassed the water meter when he hooked his water lines to the city's. The city required that the lines be properly hooked up. The developer claimed he was not aware of the error. Over the next few years, many complaints about this particular developer came to the city, but little was done to require him to comply with city codes. Whenever the developer applied for a variance to city codes, it was granted.
- What responsibility does the city have to the developer who "saved the day" for it in such a generous way?
- What responsibility does the city have to the residents whose houses are not meeting code?
- What recourse, if any, do the homeowners have?
- What responsibility does the city have to other developers who are required to meet codes?
- What will happen if the developer demands the loan be repaid in full immediately (which he could do, according to the terms of the loan agreement)?
