The “Developer Town” Loophole Reshaping Growth in Wasatch County
For generations, the creation of a town has usually followed the creation of a community. People settle in an area, neighborhoods grow, residents begin sharing public services, and eventually voters decide whether they want their own municipal government.
A controversial Utah law turns that sequence around.
Under the state’s “preliminary municipality” program, a small number of landowners can begin forming a new municipality on largely undeveloped property before a traditional community exists. The new entity can ultimately receive many of the powers normally associated with an established town, including authority over zoning, land use and development.
Critics often call it the “developer town loophole.”
The process has become especially important in Wasatch County, where proposals for Wasatch Highlands east of Heber City and Bear Canyon near the Utah County line have raised questions about growth, local control, infrastructure and the future character of the Heber Valley.
Although people sometimes refer to this controversy as a “township loophole,” the legal term is preliminary municipality. It is not the same as Utah’s older metro-township system. It is a separate incorporation process created by the Utah Legislature in 2024.
What Is a Preliminary Municipality?
Utah lawmakers created the preliminary-municipality process through Senate Bill 258 during the 2024 legislative session. The law established a pilot program allowing landowners to incorporate undeveloped or partially developed land for eventual transition into a town. The program took effect May 1, 2024, and is currently scheduled for repeal on January 1, 2031, unless lawmakers extend or replace it.
The program is unusual because it does not begin with a large group of residents requesting self-government. Instead, an application may be initiated by no more than three landowners.
The proposed area must meet a series of statutory requirements involving ownership, boundaries, development levels, water, infrastructure and projected population. No more than two preliminary-municipality applications may receive processing priority in a calendar year.
After an application is accepted, the state orders a feasibility study. That study is supposed to examine whether the future community could generate enough revenue to provide municipal services, along with its projected population, tax base, infrastructure needs and financial effects on surrounding areas.
If the project clears the required stages, the preliminary municipality can exercise governmental powers while development proceeds. It may later transition into a regular town after reaching statutory milestones and holding elections for municipal officers.
Supporters describe the program as a way to create housing, coordinate infrastructure and plan a community from the ground up. Opponents argue that it transfers land-use authority from an elected county government to a municipality initially shaped by the same landowners who expect to develop the property.
That tension is at the center of the controversy in Wasatch County.
Why Critics Call It a Loophole
Every parcel in unincorporated Wasatch County is ordinarily subject to county zoning. The zoning district determines the applicable density, permitted uses, development standards and portions of county code that govern the property.
A developer seeking a major change would normally work through the county’s planning process. Depending on the proposal, that could include public hearings, planning commission review, county council action, infrastructure negotiations, amendments to governing plans and compliance with existing zoning.
Preliminary incorporation creates a path around much of that long-term county control.
Once land becomes part of a separate municipality, it is no longer governed as unincorporated Wasatch County. The municipality gains its own land-use authority and can adopt ordinances and zoning rules for property inside its boundaries.
This does not mean developers are literally exempt from all laws. A new municipality remains subject to state and federal requirements, and the incorporation statute contains technical conditions and financial reviews. Existing agreements may also continue to matter in certain circumstances.
But the central concern remains: the county can lose zoning jurisdiction over land that was previously expected to develop under the county’s general plan.
Wasatch County officials have argued that the process gives the county little meaningful control even though surrounding taxpayers, roads, emergency services, water systems and neighboring communities may feel the consequences. County leaders have also questioned whether the law gives private landowners a way to bypass locally adopted growth policies.
Wasatch Highlands: A Proposed Town East of Heber City
The most consequential active proposal in the Heber Valley is Wasatch Highlands, a planned preliminary municipality east of Heber City.
The application submitted to the Lieutenant Governor’s Office describes an area of approximately 2,696 acres. Proposed uses include parks and open space, hotels, nightly rentals, glamping facilities, civic buildings, commercial areas, affordable housing and a range of residential lots and housing types.
The proposal has attracted attention in part because the land had already been associated with a large development concept previously discussed by Wasatch County. By seeking preliminary-municipality status, the applicants are pursuing a state-controlled incorporation process rather than relying entirely on the county’s development review system.
Representatives of the project have said the goal is not to evade county oversight but to keep development moving, increase Utah’s housing supply and preserve open space through coordinated planning. County officials and residents remain concerned about whether those promises will translate into binding, enforceable outcomes after the municipality controls its own zoning.
As of July 28, 2026, Wasatch Highlands remains the major preliminary-municipality proposal moving through the state process in Wasatch County. A feasibility consultant is expected to analyze its projected revenues, service costs, water resources, population, infrastructure and financial effects before the application can advance further.
Bear Canyon: The Proposal the State Rejected
The second prominent Wasatch County proposal was Bear Canyon, located near the Utah County boundary in the Provo Canyon area.
Its plans included multiple development phases with single-family homes, multifamily units, lodge rooms, rental cabins and glamping accommodations. Bear Canyon was initially treated as one of the two preliminary-municipality applications eligible to move forward during 2026.
The application encountered several problems.
An earlier determination found that Wasatch County records identified more property owners within the proposed boundaries than the three-owner maximum allowed by the statute. Applicants later submitted modified materials.
On July 16, 2026, the Lieutenant Governor’s Office issued a determination rejecting the revised Bear Canyon request. State officials concluded that the proposed boundaries did not satisfy Utah’s statutory contiguity requirements. The rejection became public the following week.
That decision ended Bear Canyon’s current attempt, although it did not resolve the broader dispute over the preliminary-municipality law. It also left questions about whether another application could eventually fill the state’s second available position.
Why the Issue Matters Beyond the Project Boundaries
A new town may appear independent on a map, but its effects do not stop at its borders.
Thousands of additional homes or visitor accommodations can place pressure on regional roads, schools, emergency services, water supplies and transportation corridors. Residents may commute into Heber City or travel through existing communities for shopping, work, health care and recreation.
Fire protection is one example raised by county officials. A feasibility study may conclude that a new municipality can balance its own municipal budget, but that does not automatically answer whether regional service districts will collect enough revenue to meet the additional demand. County leaders have warned that missing or inadequate impact fees could leave other taxpayers carrying a disproportionate share of service costs.
Roads present a similar issue. A project can build streets within its own boundaries while still increasing traffic on county roads and state highways outside the new town.
Water is another major concern. A feasibility study can analyze proposed water sources and legal availability, but residents will also want to understand the long-term reliability of those sources, the cost of delivery and the effect of new demand during drought conditions.
Then there is the question of planning.
Wasatch County has been updating its general plan as a roadmap for responsible growth, rural preservation, infrastructure and quality of life. A developer-created municipality could adopt different priorities for land that had previously been included in the county’s planning vision.
What Happened at the Utah Legislature?
The controversy is not limited to Wasatch County.
Utah’s first preliminary municipalities triggered lawsuits, legislative scrutiny and criticism from county governments elsewhere in the state. In response, lawmakers considered House Bill 510 during the 2026 legislative session.
The bill went through several revisions and would have added new procedural requirements, fees, county coordination and feasibility-study safeguards. Supporters said reform was needed to give local governments and the public a more meaningful role.
The legislation ultimately died in the Utah Senate, leaving the core preliminary-municipality system in place.
Another proposal, House Bill 592, sought to require compensation for damage to county infrastructure and compliance with certain preexisting county development agreements. Its language illustrates one of the central policy questions: whether a new municipality should be able to escape conditions negotiated while the land was still under county jurisdiction.
For now, Wasatch County leaders say they intend to continue opposing the pilot program and urging lawmakers to restore local influence over the process.
Is “Loophole” a Fair Description?
The word “loophole” can imply that applicants are exploiting an accidental gap in the law.
That is not quite what happened here.
The Utah Legislature intentionally created the preliminary-municipality program. Developers using it are following a process expressly authorized by state statute. Calling it illegal or suggesting that applicants are secretly evading the law would be inaccurate.
The better argument is that the law itself creates a loophole in traditional local planning.
It allows a small ownership group to replace county jurisdiction with a new municipal government before a normal resident-led community has developed. It may be perfectly legal while still producing a result many residents consider inconsistent with representative local government.
Supporters see flexibility, housing production and coordinated infrastructure. Critics see private development interests receiving governmental powers without the usual level of voter participation or county approval.
Both sides are really debating the same question: Who should decide how undeveloped land becomes a community?
What Wasatch County Residents Should Watch Next
The immediate focus will be the Wasatch Highlands feasibility process.
Residents should pay close attention to the project’s proposed density, water sources, transportation plans, affordable-housing commitments, municipal revenues, public-safety arrangements and projected impact on surrounding taxpayers.
It will also be important to distinguish promotional concepts from enforceable obligations. Renderings of open space, workforce housing and public amenities can be appealing, but the lasting protections will come from recorded agreements, ordinances, financing documents and legally binding development standards.
The Utah Legislature is also likely to revisit the issue. The pilot program is scheduled to expire in 2031, but lawmakers could modify, extend or end it before then. Future bills may address county consent, resident voting, fiscal impacts, infrastructure compensation and the authority of landowner-controlled municipal governments.
A Defining Growth Debate for the Heber Valley
Wasatch County is no stranger to growth.
Heber City, Midway and surrounding communities continue to face difficult decisions about housing, open space, transportation and the infrastructure required by a growing population. The preliminary-municipality law adds another layer to that challenge by moving some of the most important decisions away from county government.
Bear Canyon’s rejection shows that the state’s technical requirements can stop an application. Wasatch Highlands shows that proposals meeting those initial requirements may still advance even when county leaders strongly object.
The final outcome will affect more than a few parcels east of Heber City. It could shape traffic, taxes, water planning, public services and the rural landscape residents associate with the Heber Valley.
The law may be temporary, but the towns and development patterns created under it could last for generations.
This article is provided for general educational and community-information purposes. It is not legal, tax, financial or investment advice.