HB 510

03-06 16:41  3rd Sub. (Cherry) H.B. 510
                       Kirk A. Cullimore proposes the following substitute bill:
1Municipal Incorporation Modifications
                                       2026 GENERAL SESSION
                                             STATE OF UTAH
                                      Chief Sponsor: Tiara Auxier
                                   Senate Sponsor: Kirk A. Cullimore
2
3   LONG TITLE
4   General Description:
5This bill modifies the process to incorporate as a preliminary municipality.
6   Highlighted Provisions:
7This bill:
8▸ defines terms and modifies definitions;
9▸ authorizes the lieutenant governor's office to charge and collect a fee;
10▸ modifies uses of the Municipal Incorporation Expendable Special Revenue Fund;
11▸ requires an applicant to engage in good faith coordination with a county for 18 months
12   before the applicant may file a feasibility request as part of an application to incorporate
13   an area as a preliminary municipality, with an exception;
14▸ modifies the process for a person to apply to incorporate an area as a preliminary
15   municipality;
16▸ authorizes a sponsor and a county to submit data, information, and analysis to the
17   feasibility consultant evaluating a proposed preliminary municipality;
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18▸ requires the feasibility consultant to rely on data, information, and analysis that is
19   objective, reliable, and grounded in area-specific information from the preceding 10
20   years, including information from nearby areas;
21▸ extends the period of time in which a feasibility study shall be completed;
22▸ requires the lieutenant governor to hold public information sessions following a
23   feasibility study;
24▸ modifies the requirements to file a petition for incorporation of a preliminary
25   municipality, including:
26●   modifying the requirements for a bond, cash deposit, or letter of credit;
27●   requiring a property owner to include an executed improvement warranty; and
28●   requiring a certification that the preliminary municipality will be developed in
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29   accordance with the description in the certified feasibility request; and
30▸ makes technical and conforming changes.
31   Money Appropriated in this Bill:
32None
33   Other Special Clauses:
34None
35   Utah Code Sections Affected:
36   AMENDS:
3710-2a-220 (Effective 05/06/26), as last amended by Laws of Utah 2024, Chapter 518
3810-2a-501 (Effective 05/06/26) (Repealed 01/01/31), as last amended by Laws of Utah
392025, Chapter 399
4010-2a-502 (Effective 05/06/26) (Repealed 01/01/31), as enacted by Laws of Utah 2024,
41Chapter 534
4210-2a-503 (Effective 05/06/26) (Repealed 01/01/31), as enacted by Laws of Utah 2024,
43Chapter 534
4410-2a-504 (Effective 05/06/26) (Repealed 01/01/31), as enacted by Laws of Utah 2024,
45Chapter 534
4610-2a-505 (Effective 05/06/26) (Repealed 01/01/31), as enacted by Laws of Utah 2024,
47Chapter 534
4810-2a-506 (Effective 05/06/26) (Repealed 01/01/31), as last amended by Laws of Utah
492025, Chapter 399
5010-2a-507 (Effective 05/06/26) (Repealed 01/01/31), as enacted by Laws of Utah 2024,
51Chapter 534
5210-2a-508 (Effective 05/06/26) (Repealed 01/01/31), as enacted by Laws of Utah 2024,
53Chapter 534
5410-2a-509 (Effective 05/06/26) (Repealed 01/01/31), as enacted by Laws of Utah 2024,
55Chapter 534
56   ENACTS:
5710-2a-502.5 (Effective 05/06/26), Utah Code Annotated 1953
5810-2a-505.5 (Effective 05/06/26), Utah Code Annotated 1953
5910-2a-511 (Effective 05/06/26), Utah Code Annotated 1953
60
61   Be it enacted by the Legislature of the state of Utah:
62Section 1. Section 10-2a-220 is amended to read:
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6310-2a-220 (Effective 05/06/26). Costs of incorporation -- Fees established by
64   lieutenant governor.
65   (1)(a) There is created an expendable special revenue fund known as the "Municipal
66Incorporation Expendable Special Revenue Fund."
67(b) The fund shall consist of:
68(i) appropriations from the Legislature;
69(ii) payments that feasibility request sponsors make to the lieutenant governor under
70Subsections 10-2a-205(1)(b) and 10-2a-206(1)(f); and
71(iii) fees the lieutenant governor collects and remits to the fund under this section.
72(c) The lieutenant governor shall deposit all money collected under this section into the
73fund.
74   (2)(a) The lieutenant governor shall establish a fee in accordance with Section 63J-1-504
75for a cost incurred by the lieutenant governor or the county for an incorporation
76proceeding, including:
77(i) a request certification;
78(ii) a petition certification;
79(iii) publication of notices;
80(iv) public hearings;
81(v) all other incorporation activities occurring after the elections; and
82(vi) any other cost incurred by the lieutenant governor or county in relation to an
83incorporation proceeding.
84(b) A cost under Subsection (2)(a) does not include a cost incurred by a county for
85holding an election under Section 10-2a-210.
86   (3) Subject to Subsections 10-2a-205(1)(b) and 10-2a-206(1)(f), the lieutenant governor
87shall pay for a cost described in Subsection (2)(a) using funds from the Municipal
88Incorporation Expendable Special Revenue Fund.
89   (4)(a) A newly incorporated municipality shall:
90(i) pay to the lieutenant governor each fee established under Subsection (2) for each
91cost described in Subsection (2)(a) incurred by the lieutenant governor or the
92county;
93(ii) pay the county for a cost described in Subsection (2)(b); and
94(iii) reimburse feasibility request sponsors the cost the feasibility request sponsors
95paid for:
96(A) a feasibility study under Section 10-2a-205; and
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97(B) any supplemental feasibility study under Section 10-2a-206.
98(b) The lieutenant governor shall execute a payback agreement with each new
99municipality for the new municipality to pay the fees described in Subsection (4)(a)
100over a period that, except as provided in Subsection (4)(c), may not exceed five years.
101(c) If necessary, the lieutenant governor may extend a fee payment deadline beyond the
102deadline described in Subsection (4)(b) by amending the payback agreement
103described in Subsection (4)(b).
104(d) The lieutenant governor shall deposit each fee the lieutenant governor collects under
105Subsection (4)(a)(i) into the Municipal Incorporation Expendable Special Revenue
106Fund.
107   (5) If the lieutenant governor expends funds from the Municipal Incorporation Expendable
108Special Revenue Fund that are not repaid to the lieutenant governor under Subsection
109(4)(a)(i) because an area did not incorporate as a municipality, the Legislature shall
110appropriate money to the fund in an amount equal to the funds that are not repaid.
111   (6)(a) In addition to fees established under Subsection (2), the lieutenant governor shall
112charge a $50,000 fee from a person who files a feasibility request under Section
11310-2a-502 and deposit the fee into the fund to cover the lieutenant governor's costs
114incurred in fulfilling the duties described in Part 5, Incorporation of a Preliminary
115Municipality.
116(b) The lieutenant governor shall return any unexpended amounts of the fee described in
117Subsection (6)(a) to the person who paid the fee if:
118(i) a person's feasibility request is rejected under Section 10-2a-503;
119(ii) the person withdraws a feasibility request before the lieutenant governor issues a
120certificate of incorporation for the preliminary municipality under Section
12110-2a-508; or
122(iii) the lieutenant governor rejects the person's application for a certificate of
123incorporation for the preliminary municipality under Section 10-2a-508.
124Section 2. Section 10-2a-501 is amended to read:
12510-2a-501 (Effective 05/06/26) (Repealed 01/01/31). Definitions.
126      As used in this part:
127   (1) "Affordable housing" means housing occupied or reserved for occupancy by households
128with a gross household income equal to or less than:
129(a) 80% of the median gross income of the applicable municipal or county statistical
130area for households of the same size for rental housing; or
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131(b) 100% of the median gross income of the applicable municipal or county statistical
132area for households of the same size for owner-occupied housing.
133   (2) "Applicant" means an individual or person who applies to incorporate an area as a
134preliminary municipality by filing a feasibility request.
135   [(2)] (3) "Board," in relation to a preliminary municipality, means the same as a council
136described in Section [10-3b-402] 10-3b-403.
137   [(3)] (4) "Board chair," in relation to a preliminary municipality, means the same as a mayor
138described in Section 10-3b-402.
139   (5) "Certified feasibility request" means the document that is certified by the lieutenant
140governor under Section 10-2a-503.
141   [(4)] (6) "Contiguous" means the same as that term is defined in Section 10-2a-102.
142   (7) "Declaration" means a document that an individual signs, affirming a statement to be
143true or accurate.
144   [(5)] (8) "Feasibility consultant" means a person or firm:
145(a) with expertise in the processes and economics of local government; and
146(b) who is independent of, and not affiliated with, a county or a sponsor of a petition to
147incorporate a preliminary municipality under this part.
148   [(6)] (9) "Feasibility request" means a request, described in Section 10-2a-502, for a
149feasibility study for the proposed incorporation of a preliminary municipality.
150   (10) "Feasibility study" means an analysis of a certified feasibility request, as described in
151Section 10-2a-504, conducted by a feasibility consultant.
152   (11) "Full-time" means 183 days a year or more.
153   [(7)] (12) "Initial landowners" means the persons who owned the land within the proposed
154preliminary municipality area when the [person] applicant filed the feasibility request [
155under Section 20A-1-501] as described in this part.
156   [(8)] (13) "Municipal service" means the same as that term is defined in Section 10-2a-102.
157   [(9)] (14) "Pending annexation area" means an area proposed for annexation in an
158annexation petition described in Section 10-2-806 that is filed before, and is still pending
159when, a person files the applicable request for a feasibility study under Section
16010-2a-502.
161   (15) "Population" means the number of individuals who are full-time residents of a defined
162area.
163   [(10)] (16) "Primary sponsor contact" means:
164(a) in relation to a feasibility request:
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165(i) the individual designated as the primary sponsor contact for a feasibility request
166under Subsection [10-2a-502(5)(c)] 10-2a-502(5)(a)(iii); or
167(ii) an individual designated, in writing, by the initial landowners if a replacement
168primary sponsor contact is needed; or
169(b) in relation to a petition for incorporation of a preliminary municipality:
170(i) the individual designated as the primary sponsor contact for a petition for
171incorporation of a preliminary municipality under Subsection [10-2a-507(1)(d)]
17210-2a-507(1)(e); or
173(ii) an individual designated, in writing, by the initial landowners if a replacement
174primary sponsor contact is needed.
175   [(11)] (17) "Private," in relation to real property, means taxable real property.
176   [(12)] (18) "Proposed preliminary municipality area" means the area proposed for
177incorporation as a preliminary municipality in a feasibility request.
178   (19) "Public financing tool" means any mechanism that allows a private entity to utilize tax
179revenue.
180   [(13)] (20) "System infrastructure" means, as shown on the map or plat described in
181Subsection [10-2a-502(5)(e)] 10-2a-502(5)(a)(v) for the proposed preliminary municipal
182area:
183(a) the main thoroughfares within the proposed preliminary [municipal] municipality
184area, including the roads that connect the proposed preliminary municipality area to
185an existing road outside the proposed preliminary municipality area; and
186(b) the main lines that will connect a utility, including culinary water and wastewater
187treatment services, to the proposed preliminary municipality area, including the stubs
188that will connect the main lines to the development in the proposed preliminary
189municipality area[.] ; and
190(c) construction of culinary water facilities, wastewater treatment facilities, or both, if no
191services exist that would meet the requirements of the proposed preliminary
192municipality area.
193   (21) "Utah Population Committee" means the committee created in Section 63C-20-103.
194Section 3. Section 10-2a-502 is amended to read:
19510-2a-502 (Effective 05/06/26) (Repealed 01/01/31). Incorporation of a
196   preliminary municipality -- Feasibility request -- Requirements.
197   (1)(a) A person may apply to incorporate an area as a preliminary municipality by filing
198a feasibility request:
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199(i) after fulfilling the requirements in Section 10-2a-502.5; and
200(ii) [ ]in accordance with this section.
201(b) A person filing a feasibility request shall:
202(i) pay the fee described in Subsection 10-2a-220(6) at the same time the person files
203the feasibility request; and
204(ii) designate an individual in the application who:
205(A) has the authority to represent the person; and
206(B) will serve as the point of contact for the application.
207   (2) Subject to Subsection (6), [a person] an applicant may file a feasibility request in relation
208to an area that the [person] applicant seeks to incorporate as a preliminary municipality if:
209(a) the area is contiguous;
210(b) no part of the area is within a county of the first class or second class;
211(c) no part of the area is within, or within .25 miles of, a municipality;
212(d) on the day on which the [person] applicant files the feasibility request:
213(i) the area is owned by no more than three persons, all of whom consent to
214incorporation as a preliminary municipality; and
215(ii) at least 50% of the area is undeveloped;
216(e) the persons who sign the feasibility request intend to and, if the preliminary
217municipality is incorporated, shall develop the area to the point that:
218(i) at least 100 individuals reside full-time in the area;
219(ii) the area will have an average population density of no less than seven individuals
220per square mile, unless:
221(A) a population density of less than seven individuals per square mile is
222necessary in order to connect separate areas that share a demonstrable
223community interest; and
224(B) the average population of the area has a population density of no less than
225seven individuals per square mile if the land necessary to connect the separate
226areas described in Subsection (2)(e)(ii)(A) is not included in the calculation;
227and
228(iii) at least 10% of the housing in the preliminary municipality is affordable housing;
229(f) the area does not include land owned by the United States government unless:
230(i) the area, including the land owned by the United States government, is
231contiguous; and
232(ii)(A) incorporating the land is necessary to connect separate areas that share a
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233demonstrable community interest; or
234(B) excluding the land from the area would create an unincorporated island within
235the proposed preliminary municipality;
236(g) the area is entirely within one county;
237(h) the applicant has complied with Section 10-2a-502.5; and
238[(h)] (i) the feasibility request complies with Subsection (3).
239   (3)(a) A proposed preliminary municipality area may not include all or part of a pending
240annexation area, unless:
241(i) the portion of the pending annexation area included in the proposed preliminary
242municipality area does not exceed 20% of the proposed preliminary municipality
243area; and
244(ii) the feasibility request would comply with the requirements of this section
245regardless of whether the portion of the pending annexation area included in the
246proposed preliminary municipality area is excluded from, or remains included in,
247the proposed preliminary municipality area.
248(b) A proposed preliminary municipality area may not include all or part of an area that
249is the subject of a completed feasibility study or supplemental feasibility study that
250qualifies to proceed under Subsection 10-2a-205(5)(a), unless:
251(i) the proposed incorporation that is the subject of the completed feasibility study or
252supplemental feasibility study has been defeated by the voters at an election under
253Section 10-2a-210; or
254(ii) the time described in Subsection 10-2a-208(1) for filing an incorporation petition
255based on the completed feasibility study or supplemental feasibility study has
256elapsed without the sponsors filing an incorporation petition under Section
25710-2a-208.
258(c) A proposed preliminary municipality area may not include all or part of an area that
259is the subject of a completed feasibility study or supplemental feasibility study whose
260results comply with Subsection 10-2a-504(4), unless the time described in Subsection
26110-2a-507(1) for filing a petition for incorporation based on the completed feasibility
262study or supplemental feasibility study has elapsed without the sponsors filing a
263petition for incorporation under Section 10-2a-507.
264   (4) Except as provided in Section 10-2a-505, the lieutenant governor shall consider each
265feasibility request that includes an area described in Subsection (3)(a) as if the request
266does not include the area described in Subsection (3)(a).
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267   (5)(a) [A person] An applicant who files a feasibility request under this section shall file
268the feasibility request with the lieutenant governor, including in the feasibility request:
269[(a)] (i) the signatures of all owners of real property included in the proposed
270preliminary municipality area, showing that the owners consent to including the
271real property in the proposed preliminary municipality area;
272[(b)] (ii) the name, address, and phone number of each owner signing the feasibility
273request;
274[(c)] (iii) a designation of one individual who signs the feasibility request as the
275primary sponsor contact for the feasibility request;
276[(d)] (iv) a description of the proposed preliminary municipality area;
277[(e)] (v) an accurate map or plat, prepared by a licensed surveyor, showing:
278[(i)] (A) a legal description of the boundaries of the proposed preliminary
279municipality area and each phase of the proposed preliminary municipality
280area;
281[(ii)] (B) all development planned for the proposed preliminary municipality area;[
282and]
283[(iii)] (C) that the first phase of the proposed preliminary municipality area is
284projected to have at least 100 full-time residents when completed;
285(D) that at least 10% of all housing included in the planned development shall
286qualify as affordable housing, with no more than half of the affordable housing
287utilized as long-term rentals;
288(E) that at least 10% of the development qualifies as open space; and
289(F) that no more than 30% of all housing included in the planned development
290shall be utilized for short-term rentals;
291(vi) an explanation of how the applicant intends to ensure that the requirements of
292Subsections (5)(a)(v)(D) and (E) will be met;
293(vii) an explanation of the public financing tools, if any, the applicant intends to
294utilize in developing the preliminary municipality;
295(viii) confirmation that the applicant has complied with the requirements of Section
29610-2a-502.5 before filing; and
297[(f)] (ix) a request that the lieutenant governor commission a study to determine the
298feasibility of incorporating the area as a preliminary municipality.
299(b) An applicant may provide development plans in the alternative in the feasibility
300request by indicating which plan is the primary plan and which plans may be used if
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301there are market shifts or other market developments, if each plan meets the
302requirements of Subsection (5)(a).
303(c) A feasibility request described in Subsection (5)(a) may not include a material
304change from the proposed development about which the applicant and county
305engaged in good faith coordination, as described in Section 10-2a-502.5.
306(d) The applicant shall sign a declaration at the time of filing, affirming that the
307applicant intends to proceed with the preliminary municipality and subsequent
308development process as described in the feasibility request, and provide the
309declaration to the lieutenant governor with the feasibility request.
310   (6)(a) The provisions of this part, providing for the incorporation of a preliminary
311municipality, is a pilot project that ends on January 1, 2031.
312(b) Except as provided in Subsection (7), [a person] an applicant may not file a feasibility
313request under this part in a calendar year during which two or more requests have
314already been filed in the state.
315   (7) A feasibility request does not count towards the limit described in Subsection (6)(b) if:
316(a) the sponsors who file the request withdraw the request;
317(b) the lieutenant governor rejects the feasibility request under Subsection 10-2a-503(4)
318or (5)(b), and the sponsors:
319(i) do not timely amend the feasibility request under Subsection 10-2a-503(7)(b); or
320(ii) are prohibited from amending the feasibility request under Subsection
32110-2a-503(7)(c); or
322(c) the process to incorporate is prohibited from proceeding under Subsection [
32310-2a-504(5)(a)] 10-2a-504(7)(a) and the sponsors:
324(i) do not timely file a modified feasibility request under Subsection
32510-2a-505(1)(b)(i); or
326(ii) are prohibited from filing a modified feasibility request under Subsection
32710-2a-505(3).
328Section 4. Section 10-2a-502.5 is enacted to read:
32910-2a-502.5 (Effective 05/06/26). Good faith coordination with county required.
330   (1) An applicant may not apply to incorporate an area as a preliminary municipality by
331filing a feasibility request in accordance with Section 10-2a-502 unless the applicant has
332already engaged in good faith coordination with the county about the planned
333development.
334   (2) Good faith coordination under this section requires:
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335(a) the applicant to submit, make, or propose:
336(i) a land use application, as defined in Section 17-79-102;
337(ii) a formal petition that a county rezone a particular area; or
338(iii) a development agreement between the applicant and the county;
339(b) the county to provide the applicant with a meaningful opportunity for the applicant to
340consult with county staff and officials about the planned development; and
341(c) both the applicant and the county:
342(i) to make reasonable efforts to find areas in which compromise is possible or
343alternative solutions may be found; and
344(ii) to identify the specific issues upon which the applicant and county are unable to
345reach a mutually agreeable solution, including the factors that make a mutually
346agreeable solution impossible or impractical.
347   (3) The application, petition, or proposed development agreement described in Subsection
348(2)(a) shall make clear to the county:
349(a) what the applicant is proposing to do with land in the county;
350(b) what the applicant is requesting from the county in order to proceed; and
351(c) that the applicant intends to apply to incorporate an area as a preliminary
352municipality if the applicant and county are unable to reach a mutually agreeable
353resolution.
354   (4) A county shall:
355(a) accept an application described in Subsection (2)(a) if the application is complete, as
356described in Section 17-79-803; and
357(b)(i) accept a petition or proposed development agreement described in Subsection
358(2)(a) for consideration if the petition or proposed development agreement is
359sufficiently clear to begin good faith coordination with the applicant; or
360(ii) provide a written explanation of why a petition or proposed development
361agreement is not sufficiently clear, including what information the county requires
362to render the petition or proposed development agreement sufficiently clear,
363within 10 business days of the day on which the county receives the petition or
364proposed development agreement.
365   (5)(a)(i) No earlier than 18 months after the day on which an applicant takes the
366action described in Subsection (2)(a), an applicant that intends to file a feasibility
367request under Section 10-2a-502 may submit a request to the county that the
368county acknowledge the good faith coordination between the applicant and the
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369county.
370(ii) Notwithstanding the 18 month requirement in Subsection (5)(a)(i), an applicant
371may submit a request to the county that the county acknowledge the good faith
372coordination between the applicant and the county earlier than 18 months from the
373day on which an applicant takes the action described in Subsection (2)(a) if the
374county has denied the applicant's land use application, formal petition, or
375proposed development agreement as a final action.
376(b) The applicant shall include in the request described in Subsection (5)(a):
377(i) a description explaining that:
378(A) the requirements of this section have been met; or
379(B) the requirements of this section have been met but for the county's failure to
380provide the applicant with a meaningful opportunity to consult or make
381reasonable efforts to find compromise or alternative solutions, or both, as
382required in Subsections (2)(b) and (c); and
383(ii) that the applicant intends to file a feasibility request under Section 10-2a-502.
384(c) A county that receives a request described in Subsection (5)(a) shall respond to the
385request in writing within five business days:
386(i) concurring with the applicant's assertion that the applicant and county have
387engaged in good faith coordination, as described in this section, but have been
388unable to reach a mutually agreeable solution;
389(ii) disputing the applicant's assertion that the applicant and county have engaged in
390good faith coordination; or
391(iii) asserting that the county has engaged in good faith coordination but that the
392applicant has failed to make reasonable efforts to find compromise or alternative
393solutions.
394(d) If Subsection (5)(c)(ii) or (iii) apply, the county shall provide a rationale for the
395county's dispute or assertion in the response described in Subsection (5)(c).
396   (6) An applicant may file a feasibility request under Section 10-2a-502:
397(a) after the applicant receives the county's response, as described in Subsection (5)(c); or
398(b) if a county fails to timely respond, after the sixth business day following the day on
399which the applicant makes a request under Subsection (5)(a).
400Section 5. Section 10-2a-503 is amended to read:
40110-2a-503 (Effective 05/06/26) (Repealed 01/01/31). Processing a feasibility
402   request -- Certification or rejection -- Processing priority -- Determination by the Utah
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403   Population Committee.
404   (1) Within 45 days after the day on which an individual files a feasibility request under
405Section 10-2a-502, the lieutenant governor shall:
406(a) determine whether the feasibility request complies with Section 10-2a-502; and
407(b) notify the clerk of the county where the proposed preliminary municipality area is
408located, in writing, of the determination made under Subsection (1)(a) and the
409grounds for the determination.
410   (2) A county clerk shall:
411(a) inform the lieutenant governor if the applicant does not meet the requirements of
412Subsection 10-2a-502.5(6); and
413(b) comply with a request by the lieutenant governor to provide information or a record
414to the lieutenant governor or to a sponsor of the feasibility request, to assist in
415complying with this part, within five calendar days after the day on which the
416lieutenant governor makes the request.
417   (3) If the lieutenant governor determines that the feasibility request complies with Section
41810-2a-502, the lieutenant governor shall:
419(a) certify the feasibility request; and
420(b) transmit written notification of the certification to:
421(i) the primary sponsor contact[,] ;
422(ii) the county clerk[,] ; and
423(iii) the Utah Population Committee.
424   (4) If the lieutenant governor determines that the feasibility request fails to comply with
425Section 10-2a-502, the lieutenant governor shall reject the feasibility request and notify
426the primary sponsor contact and the county clerk, in writing, of the rejection and the
427grounds for the rejection.
428   (5)(a) Within 20 days after the day on which the lieutenant governor transmits written
429notification under Subsection (3)(b), the Utah Population Committee shall:
430(i) determine whether, based on the map or plat described in Subsection
43110-2a-502(5)(e), the proposed preliminary municipality will, when all phases of
432the map or plat are completed, likely comply with the population, population
433density, and contiguity requirements described in Section 10-2a-502; and
434(ii) provide notice of the determination to the lieutenant governor and the county
435clerk.
436(b) If the Utah Population Committee determines, under Subsection (5)(a)(i), that, when
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437all phases of the plan or plat are completed, the proposed preliminary municipality
438will not likely comply with the population, population density, and contiguity
439requirements described in Section 10-2a-502, the lieutenant governor shall rescind
440the certification described in Subsection (3) and reject the feasibility request.
441   (6) The lieutenant governor shall certify or reject feasibility requests in the order in which
442the requests are filed.
443   (7)(a) If the lieutenant governor determines, under Subsection (4), that the feasibility
444request fails to comply with Section 10-2a-502, or rejects the feasibility request under
445Subsection (5)(b), the sponsors may, subject to Section 10-2a-505, amend the
446feasibility request to correct the deficiencies and refile the feasibility request with the
447lieutenant governor.
448(b) Except as provided in Subsection (7)(c), the sponsors may submit an amended
449feasibility request within 90 days after the day on which the lieutenant governor
450makes the determination or rejection described in Subsection (7)(a).
451(c) The sponsors may not submit an amended feasibility request more than once.
452(d) The lieutenant governor shall consider a feasibility request that is amended and
453refiled under Subsection (7)(a) as a newly filed feasibility request and process the
454feasibility request in accordance with this section.
455   (8) If the primary sponsor desires that the feasibility study described in this section be based
456off a development plan that is materially different than what is described in the certified
457feasibility request:
458(a) the primary sponsor shall notify the lieutenant governor and the lieutenant governor
459shall rescind the certification of the feasibility request;
460(b) the primary sponsor is required to comply with Section 10-2a-502.5 regarding the
461new development plan;
462(c) the primary sponsor may submit an amended feasibility request as described in
463Section 10-2a-502, subject to the limit described in Subsection (7)(c); and
464(d) the lieutenant governor shall consider an amended feasibility request made under
465Subsection (8)(c) as a newly filed feasibility request and process the feasibility
466request in accordance with this section.
467   (9) Any individual in the Office of the Lieutenant Governor or on the Utah Population
468Committee who plays a role in the preliminary municipality approval process described
469in this part shall be independent of and not affiliated with an applicant or a sponsor of a
470petition to incorporate a preliminary municipality.
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471Section 6. Section 10-2a-504 is amended to read:
47210-2a-504 (Effective 05/06/26) (Repealed 01/01/31). Feasibility study --
473   Feasibility study consultant -- Qualifications for proceeding with incorporation.
474   (1) Unless the lieutenant governor rescinds the certification under Subsection
47510-2a-503(5)(b), the lieutenant governor shall, within 90 days after the day on which the
476lieutenant governor certifies a feasibility request under Subsection 10-2a-503(3)(a), in
477accordance with Subsection (2), engage a feasibility consultant to conduct a feasibility
478study on the proposed preliminary municipality, as the proposed preliminary
479municipality is described in the certified feasibility request.
480   (2) The lieutenant governor shall:
481(a) select a feasibility consultant in accordance with Title 63G, Chapter 6a, Utah
482Procurement Code;
483(b) ensure that the feasibility consultant:
484(i) has expertise in the processes and economics of local government;[ and]
485(ii) is not affiliated with a sponsor of the feasibility request or the county in which the
486proposed municipality is located; and
487(iii) comply with the relevant provisions of this part; and
488(c) require the feasibility consultant to:
489(i) submit a draft of the feasibility study to each applicable person with whom the
490feasibility consultant is required to consult under Subsection (3)(c) within [90] 120
491days after the day on which the lieutenant governor engages the feasibility
492consultant to conduct the study;
493(ii) allow each person to whom the consultant provides a draft under Subsection
494(2)(c)(i) to review and provide comment on the draft;
495(iii) submit on the same day a completed feasibility study, including a one-page
496summary of the results, to the following within [120] 180 days after the day on
497which the lieutenant governor engages the feasibility consultant to conduct the
498feasibility study:
499(A) the lieutenant governor;
500(B) the county legislative body of the county in which the proposed preliminary
501municipality area is located;
502(C) the primary sponsor contact; and
503(D) each person to whom the consultant provided a draft under Subsection (2)(c)(i);
504and
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505(iv) attend the public [hearings] information sessions described in Section 10-2a-506
506to present the feasibility study results and respond to questions from the public.
507   (3)(a) The feasibility study shall include:
508(i) an analysis of:
509(A) the likely population and population density within the proposed preliminary
510municipality area when all phases of the map or plat for the proposed
511preliminary municipality area are completed;[ and]
512(B) the population and population density of the area surrounding the proposed
513preliminary municipality area on the day on which the feasibility request was
514submitted; and
515(C) any land use entitlements already established within the proposed preliminary
516municipality area;
517(ii) an analysis of the following, determined as if, at the time of the analysis, the
518proposed [ ]preliminary municipality area is incorporated as a town with a
519population of 100 [people] individuals:
520(A) the initial[ and projected] , five-year, and 10-year projected demographics and
521tax base within the boundaries of the proposed preliminary municipality area
522and the surrounding area, including household size and income, commercial
523and industrial development, and public facilities;
524(B) subject to Subsection (3)(b), the initial[ and] , five-year, and 10-year projected
525cost of providing required municipal services to the proposed preliminary
526municipality area, including administrative costs and the costs of public
527infrastructure required to provide each municipal service to the proposed
528preliminary municipality area;
529(C) assuming the same tax categories and tax rates as imposed by the county and
530all other current service providers at the time during which the feasibility
531consultant prepares the feasibility study, the initial[ and] , five-year, and
53210-year projected revenue for the proposed preliminary municipality area;
533(D) the risks and opportunities that might affect the actual costs described in
534Subsection (3)(a)(ii)(B) or the revenues described in Subsection (3)(a)(ii)(C) of
535the proposed preliminary municipality area;
536(E) new revenue sources that may be available to the proposed preliminary
537municipality area that are not available before the area incorporates, including
538an analysis of the amount of revenues the proposed preliminary municipality
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539area might obtain from those revenue sources;
540(F) the projected tax burden per household of any new taxes that may be levied
541within the proposed preliminary municipality area within five and 10 years
542after incorporation as a town; and
543(G) the fiscal impact of the proposed preliminary municipality area's incorporation
544as a town on unincorporated areas, other municipalities, special districts,
545special service districts, and other governmental entities in the county; and
546(iii) an analysis regarding whether sufficient water will be available to support the
547proposed preliminary municipality area when the development of the area is
548complete.
549      (b)(i) In calculating the projected costs under Subsection (3)(a)(ii)(B), the feasibility
550consultant shall assume the proposed preliminary municipality area will provide a
551level and quality of municipal services that fairly and reasonably approximate the
552level and quality of municipal services that are provided to the area surrounding
553the proposed preliminary municipality area at the time the feasibility consultant
554conducts the feasibility study.
555(ii) In calculating the current cost of a required municipal service under Subsection
556(3)(a)(ii)(B), the feasibility consultant shall consider:
557(A) the amount it would cost the proposed preliminary municipality area to
558provide the required municipal service for the first five years and 10 years after
559the area incorporates as a town; and
560(B) the proposed or current municipal service provider's initial[ and] , five-year,
561and 10-year projected cost of providing the required municipal service after the
562proposed preliminary municipality area incorporates as a town.
563(iii) In calculating costs under Subsection (3)(a)(ii)(B), the feasibility consultant shall
564account for inflation and anticipated growth.
565      (c) In conducting the feasibility study, the feasibility consultant shall consult with the
566following before submitting a draft of the feasibility study under Subsection (2)(c)(iii):
567(i) if the proposed preliminary municipality will include lands owned by the United
568States federal government, the entity within the United States federal government
569that has jurisdiction over the land;
570(ii) if the proposed preliminary municipality will include lands owned by the state,
571the entity within state government that has jurisdiction over the land;
572(iii) each entity that provides, or is proposed to provide, a municipal service to a
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573portion of the proposed preliminary municipality area;[ and]
574(iv) each other special service district that provides, or is proposed to provide,
575services to a portion of the proposed preliminary municipality area[.] ; and
576(v) the legislative body of the county in which the preliminary municipality area is
577located.
578   (4)(a) The legislative body of the county in which the preliminary municipality area is
579located and the sponsor may both provide the feasibility consultant with data,
580information, and analysis the legislative body or sponsor considers relevant to the
581feasibility study.
582(b) Data, information, and analysis described in Subsection (4)(a) may include:
583(i) areas in which the county and applicant were able to reach a mutually agreeable
584solution during the good faith coordination required by Section 10-2a-502.5;
585(ii) information supporting or explaining the county's position in regard to issues
586upon which the applicant and county were unable to reach a mutually agreeable
587solution, including the factors that make a mutually agreeable solution impossible
588or impractical, during the good faith coordination required by Section 10-2a-502.5;
589(iii) the county's assessment of the necessary system infrastructure to support the
590proposed development, including any fill and grading required before paved roads
591can be placed;
592(iv) projected needs for future property tax increases;
593(v) projected county costs in regard to development of the proposed preliminary
594municipality area, including development costs outside but adjacent to the
595proposed preliminary municipality area;
596(vi) state growth projections, including data from the Utah Population Committee;
597(vii) information about the desires of the property owners with property inside the
598proposed preliminary municipality area;
599(viii) deferred maintenance costs in or near the proposed preliminary municipality
600area;
601(ix) the sponsor's plan, if any, to utilize a public financing tool in developing the
602proposed preliminary municipality area; and
603(x) unique factors about the county or the proposed preliminary municipality or both
604that may create a strain on county resources in the future.
605(c) The feasibility consultant shall consider data, information, and analysis provided by
606the county under Subsection (4)(a), and use the data, information, and analysis in the
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607feasibility study in accordance with Subsection (5).
608   (5)(a) The analysis required by Subsection (3) shall be based on:
609(i) data, information, and analysis that is objective, reliable, and grounded in
610area-specific information from the preceding 10 years, including nearby areas; and
611(ii) professional or market-based studies, including market absorption, pricing, and
612existing available lots in the area and nearby areas.
613(b) The feasibility consultant shall:
614(i) only use data, information, or analysis provided by a sponsor or a county if the
615feasibility consultant determines the data, information, or analysis can be
616independently verified to meet the requirements of Subsection (5)(a);
617(ii) provide an explanation of the determination described in Subsection (5)(b)(i) in
618the feasibility study; and
619(iii) provide a signed declaration to the lieutenant governor that the feasibility
620consultant complied with the requirements of Subsections (4) and (5) at the time
621the feasibility consultant submits a draft or a complete feasibility study.
622   [(4)] (6) If the five-year and 10-year projected revenues calculated under Subsection
623(3)(a)(ii)(C) exceed the five-year and 10-year projected costs calculated under
624Subsection (3)(a)(ii)(B) by more than 5%, the feasibility consultant shall project and
625report the expected annual revenue surplus to:
626(a) the primary sponsor contact;
627(b) the legislative body of the county in which the preliminary municipality area is
628located; and
629(c) the lieutenant governor.
630   [(5)] (7)(a) Except as provided in Subsection [(5)(b)] (7)(b), if the results of the feasibility
631study, or a supplemental feasibility study described in Section 10-2a-505, show that
632the average annual amount of revenue calculated under Subsection (3)(a)(ii)(C) does
633not exceed the average annual cost calculated under Subsection (3)(a)(ii)(B) by more
634than 5%, the process to incorporate the area that is the subject of the feasibility study
635or supplemental feasibility study may not proceed.
636(b) Except as provided in Subsection 10-2a-505(3), the process to incorporate an area
637described in Subsection [(5)(a)] (7)(a) may proceed if a subsequent supplemental
638feasibility study conducted under Section 10-2a-505 for the proposed incorporation
639demonstrates [compliance with Subsection (5)(a)] that the average annual amount of
640revenue calculated under Subsection (3)(a)(ii)(C) does exceed the average annual
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641cost calculated under Subsection (3)(a)(ii)(B) by more than 5%.
642   [(6)] (8) If the results of the feasibility study or revised feasibility study do not comply with
643Subsection [(5)] (6), and if requested by the sponsors of the request, the feasibility
644consultant shall, as part of the feasibility study or revised feasibility study, make
645recommendations regarding how the proposed preliminary municipality area may be
646altered to comply with Subsection [(5)] (7), unless the sponsors are precluded from
647modifying the feasibility request under Subsection 10-2a-505(3).
648   [(7)] (9) The lieutenant governor shall post a copy of the feasibility study, and any
649supplemental feasibility study described in Section 10-2a-505, on the lieutenant
650governor's website and make a copy available for public review at the lieutenant
651governor's office.
652Section 7. Section 10-2a-505 is amended to read:
65310-2a-505 (Effective 05/06/26) (Repealed 01/01/31). Modified feasibility request
654   -- Supplemental feasibility study.
655   (1)(a) The sponsors of a feasibility request may modify [the request to alter the
656boundaries of the proposed preliminary municipality area ] a certified feasibility
657request and refile the modified feasibility request with the lieutenant governor only if:
658(i) the results of the feasibility study do not comply with Subsection [10-2a-504(5)(a)]
65910-2a-504(7)(a); or
660(ii)(A) the feasibility request complies with Subsection 10-2a-502(3)(a);
661(B) the annexation petition described in Subsection 10-2a-502(3)(a) that proposed
662the annexation of an area that is part of the proposed preliminary municipality
663area has been denied; and
664(C) a petition for incorporation described in Section 10-2a-507, based on the
665feasibility request, has not been filed.
666(b)(i) The sponsors of a feasibility request may not file a modified request under
667Subsection (1)(a)(i) more than 90 days after the day on which the feasibility
668consultant submits the final results of the feasibility study under Subsection
66910-2a-504(2)(c)(iii).
670(ii) The sponsors of a feasibility request may not file a modified request under
671Subsection (1)(a)(ii) more than 18 months after filing the original feasibility
672request under Section 10-2a-502.
673(c) A modified feasibility request under Subsection (1)(a) shall comply with Subsections
67410-2a-502(1) through [(4)] (5).
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675(d) Within 20 days after the day on which the lieutenant governor receives the modified
676request, the lieutenant governor shall follow the same procedure described in
677Subsections 10-2a-503(1) through (4) for the modified feasibility request as for an
678original feasibility request.
679   (2) The timely filing of a modified feasibility request under Subsection (1) gives the
680modified feasibility request the same processing priority under Subsection 10-2a-503(6)
681as the original feasibility request.
682   (3) The sponsors of a feasibility request may not file a modified feasibility request under
683Subsection (1)(a)(i) more than once.
684   (4) Within 10 days after the day on which the county clerk receives a modified feasibility
685request under Subsection (1)(a) that relates to a request for which a feasibility study has
686already been completed, the lieutenant governor shall commission the feasibility
687consultant who conducted the feasibility study to conduct a supplemental feasibility
688study that accounts for the modified feasibility request.
689   (5) The lieutenant governor shall require the feasibility consultant to:
690(a) comply with the requirement to:
691(i) consider data, information, and analysis provided by the county as described in
692Subsection 10-2a-504(4); and
693(ii) only use data, information, and analysis that meets the requirements of
694Subsection 10-2a-504(5);
695(b) submit a draft of the supplemental feasibility study to each applicable person with
696whom the feasibility consultant is required to consult under Subsection
69710-2a-504(3)(c) within [30] 45 days after the day on which the feasibility consultant
698is engaged to conduct the supplemental study;
699[(b)] (c) allow each person to whom the consultant provided a draft under Subsection [
700(5)(a)] (5)(b) to review and provide comment on the draft;[ and]
701[(c)] (d) submit on the same day a completed supplemental feasibility study, to the
702following within [45] 60 days after the day on which the feasibility consultant is
703engaged to conduct the feasibility study:
704(i) the lieutenant governor;
705(ii) the county legislative body of the county in which the incorporation is proposed;
706(iii) the primary sponsor contact; and
707(iv) each person to whom the consultant provided a draft under Subsection [(5)(a).]
708(5)(b); and
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 3rd Sub. (Cherry) H.B. 510  03-06 16:41
709(e) provide a signed declaration to the lieutenant governor that the feasibility consultant
710will comply with the requirements of this Subsection (5).
711   (6)(a) Subject to Subsections (3) and (6)(b), if the results of the supplemental feasibility
712study do not comply with Subsection [10-2a-504(4)] 10-2a-504(5), the sponsors may
713further modify the request in accordance with Subsection (1).
714(b) Subsections (1)(d), (4), and (5) apply to a modified feasibility request described in
715Subsection (6)(a).
716(c) The lieutenant governor shall consider a modified feasibility request described in
717Subsection (6)(a) as an original feasibility request for purposes of determining the
718modified feasibility request's processing priority under Subsection 10-2a-503(6).
719Section 8. Section 10-2a-505.5 is enacted to read:
72010-2a-505.5 (Effective 05/06/26). County audit of a feasibility study or
721   supplemental feasibility study.
722   (1) Upon receipt of a complete feasibility study under Section 10-2a-504 or a complete
723supplemental feasibility study under Section 10-2a-505, the county shall post the study
724or a summary of the study on the county website within one business day of receipt.
725   (2) The county may, at the county's own cost, hire a consultant to:
726(a) audit the feasibility study or supplemental feasibility study; and
727(b) provide a written report on the feasibility study or supplemental feasibility study that
728confirms or disputes the results of the study.
729Section 9. Section 10-2a-506 is amended to read:
73010-2a-506 (Effective 05/06/26) (Repealed 01/01/31). Public information session
731   on feasibility study results -- Notice of information session.
732   (1) If the results of the feasibility study or supplemental feasibility study comply with
733Subsection [10-2a-504(4), ] 10-2a-504(5), the lieutenant governor shall, after receipt of
734the results of the feasibility study or supplemental feasibility study, conduct [public
735hearings] at least one public information session in accordance with this section.
736   (2)(a) If a portion of the proposed preliminary municipality area is approved for
737annexation after the feasibility study or supplemental feasibility study is conducted
738but before the lieutenant governor conducts a public [hearing] information session
739under Subsection (4), the lieutenant governor may not conduct the public [hearing]
740information session under Subsection (4) unless:
741(i) the sponsors of the feasibility study file a modified feasibility request in
742accordance with Section 10-2a-505; and
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 03-06 16:41  3rd Sub. (Cherry) H.B. 510
743(ii) the results of the supplemental feasibility study comply with Subsection
74410-2a-504(4).
745(b) For purposes of Subsection (2)(a), an area is approved for annexation if a municipal
746legislative body:
747(i) approves an annexation petition proposing the annexation of an area that is part of
748the proposed preliminary municipality area under Section 10-2-810 or 10-2-811; or
749(ii) adopts an ordinance approving the annexation of an area that is part of the
750proposed preliminary municipality area under Section 10-2-812.
751   (3) The lieutenant governor shall conduct a public [hearing] information session:
752(a) within 60 days after the day on which the lieutenant governor receives the results
753under Subsection (1) or (2)(a)(ii);
754(b) at a location within or near the proposed preliminary municipality area or through a
755virtual, online format; and
756(c) to allow the feasibility consultant to present the results of the feasibility study and
757inform the public about the results.
758   (4) The lieutenant governor shall:
759(a) conduct an additional public [hearing] information sessions following each occasion
760when, after the day of the initial public [hearing] information session, the lieutenant
761governor receives the results of a supplemental feasibility study that comply with
762Subsection 10-2a-504(4); and
763(b) hold the public [hearing] information session described in Subsection (4)(a):
764(i) within 30 days after the day on which the lieutenant governor receives the results
765of the supplemental feasibility study;
766(ii) at a location within or near the proposed preliminary municipality or through a
767virtual, online format;
768(iii) to inform the public that the feasibility presented to the public at the preceding
769public [hearing] information session does not apply; and
770(iv) to allow the feasibility consultant to present the results of the supplemental
771feasibility study and inform the public about the results.
772   (5)(a) At each public [hearing] information session required under this section, the
773lieutenant governor shall:
774[(a)] (i) provide a map or plat of the boundary of the proposed preliminary
775municipality;
776[(b)] (ii) provide a copy of the applicable feasibility study for public review;
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777[(c)] (iii) allow members of the public to express views about the proposed
778preliminary municipality, including views about the proposed boundaries; and
779[(d)] (iv) allow the public to ask the feasibility consultant questions about the
780applicable feasibility study.
781(b) A public information session may be conducted entirely virtually if the lieutenant
782governor is able to comply with this Subsection (5).
783   (6) The lieutenant governor shall publish notice of each public [hearing] information session
784required under this section for the proposed preliminary municipality area, as a class B
785notice under Section 63G-30-102, for at least three weeks before the day of the public [
786hearing] information session.
787   (7)(a) Except as provided in Subsection (7)(b), for [a hearing] a public information
788session described in this section, the notice described in Subsection (6) shall:
789(i) include the feasibility study summary described in Subsection 10-2a-504(2)(c)(iii);
790and
791(ii) indicate that a full copy of the feasibility study is available on the lieutenant
792governor's website and for inspection at the lieutenant governor's office.
793(b) Instead of publishing the feasibility summary under Subsection (7)(a)(i), the
794lieutenant governor may publish a statement that specifies the following sources
795where a person may view or obtain a copy of the feasibility study:
796(i) the lieutenant governor's website;
797(ii) the lieutenant governor's office; and
798(iii) a mailing address and telephone number.
799Section 10. Section 10-2a-507 is amended to read:
80010-2a-507 (Effective 05/06/26) (Repealed 01/01/31). Petition for incorporation --
801   Requirements and form.
802   (1) At any time within one year after the day on which the lieutenant governor completes
803the public [hearings] information session required under Section 10-2a-506, the owners
804of the property who filed the feasibility request under Section 10-2a-502 for the
805proposed preliminary municipality area may proceed with the incorporation process by
806filing a petition for incorporation of the proposed preliminary municipality that:
807(a) includes the typed or printed name, signature, address, and phone number of the
808initial landowners;
809(b) describes the proposed preliminary municipality area, as described in the feasibility
810request or the modified feasibility request;
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811      (c) demonstrates compliance with Subsection [10-2a-504(4)] 10-2a-504(5);
812      (d) states the proposed name for the proposed preliminary municipality;
813      (e) designates the primary sponsor contact for the proposed preliminary municipality;
814      (f) designates the board chair and three of the four board members who will serve as a
815five member council form of government for the preliminary municipality, described
816in [Section] Sections 10-3b-402 and 10-3b-403, for the preliminary municipality;
817      (g) is accompanied by an accurate map or plat, prepared by a licensed surveyor, that
818conforms to the information, including planning and phasing, that was included in the
819certified feasibility request showing:
820(i) the boundaries of the proposed preliminary municipality;
821(ii) a single development plan for the proposed municipality, depicting each phase of
822the development; and
823(iii) the structure that will serve as a municipal building or community center where
824preliminary municipality or future incorporated town business or operations may
825be conducted, which shall be completed in the first phase of the development;
826      (h) is accompanied by a bond, cash deposit, or letter of credit that:
827(i) is posted by the initial landowners;
828(ii) is in favor of the county in which the preliminary municipality area is located, up
829and until the time the preliminary municipality is incorporated as a town, to
830guarantee that the initial landowners will complete any infrastructure for which
831construction has begun or which is necessary, under state law or county ordinance,
832for any developed parcels;
833[(ii)] (iii) is in favor of the town that is incorporated from the proposed preliminary
834municipality, to guarantee that the initial landowners will complete the system
835infrastructure no later than six years after the day on which the initial landowners
836file the petition for incorporation described in this section;[ and]
837[(iii)] (iv) meets the requirements of Subsection (4);
838(v) is held by an institution independent from the sponsor; and
839(vi) will be refunded to the initial landowners in percentages that reflect the progress
840toward completing the system infrastructure;[ and]
841      (i) is accompanied by an executed improvement warranty for the improvement warranty
842period, which may be a cash deposit, surety bond, letter of credit, or other similar
843security, as required by the county, in the amount of up to 10% of the lesser of the:
844(i) county engineer's estimated cost of completion; or
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845(ii) the initial landowner's reasonable proven cost of completion;
846(j) is accompanied by payment in full, from the initial landowners, of the costs incurred
847by the lieutenant governor for the feasibility study, the public notices, the [hearings]
848public information sessions, and the other expenses incurred by the lieutenant
849governor to comply with the requirements of this part in relation to the proposed
850preliminary municipality[.] ; and
851(k) includes a declaration indicating that the sponsor will develop the preliminary
852municipality in accordance with the description in the certified feasibility request, or
853an alternate description included in the certified feasibility request, subject to
854conditions identified in the final feasibility study, including the overall master plan
855layout, number of housing units, build schedule phasing, affordable housing
856requirements, and structure described in Subsection (1)(g)(iii).
857   (2)(a) If, within six years after the day on which the initial landowners file a petition for
858incorporation under Subsection (1), the system infrastructure for the preliminary
859municipality is not completed, the portion of the bond, cash deposit, or letter of credit
860described in Subsection (1)(h) that has not been refunded to the initial landowners
861shall forfeit to[ the preliminary municipality] :
862(i) the county, if the preliminary municipality has not incorporated as a town; or
863(ii) the town.
864(b) The provisions of Title 10, Chapter 20, Municipal Land Use, Development, and
865Management Act, Title 17, Chapter 79, County Land Use, Development, and
866Management Act, and relevant local land use regulations adopted in accordance with
867those provisions govern:
868(i) the determination of whether, within the improvement warranty period, an
869improvement is not completed, fails, or is demonstrated to be faulty or
870substandard; and
871(ii) whether the executed improvement warranty described in Subsection (1)(i) shall
872forfeit to the county, if the preliminary municipality has not incorporated as a
873town, or the town.
874   (3) If, within four years after the day on which the first residential certificate of occupancy
875is issued for [the development described in Subsection 10-2a-503(5)(e)] a residential unit
876within the preliminary municipality, or six years after the day on which the initial
877landowners file a petition for incorporation under Subsection (1), the preliminary
878municipality has not transitioned to a town:
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879(a) the lieutenant governor shall issue a certificate dissolving the preliminary
880municipality;
881(b) all roads and infrastructure within the preliminary municipality revert to the county
882in which the preliminary municipality is located;
883(c) the area within the proposed municipality falls under the jurisdiction of the county
884and is no longer incorporated; and
885(d) the initial landowners are liable to the county for damages caused to the county due
886to the dissolution of the preliminary municipality.
887   (4) The amount of the bond, cash deposit, or letter of credit required by Subsection (1)(h)
888shall be determined:
889(a) based on engineering estimates or construction bids; and
890(b) by an independent financial or risk management consultant retained by the county,
891subject to consultation with the sponsor.
892   (5) The improvement warranty period and improvement warranty described in Subsection
893(1)(i) shall be determined by the county for each type of improvement, according to the
894same standards and requirements the county utilizes under Sections 17-79-707 and
89517-79-805.
896Section 11. Section 10-2a-508 is amended to read:
89710-2a-508 (Effective 05/06/26) (Repealed 01/01/31). Processing of petition by
898   lieutenant governor -- Certification or rejection -- Petition modification.
899   (1) Within 45 days after the day on which a petition for incorporation is filed under Section
90010-2a-507, the lieutenant governor shall:
901(a) determine whether the petition for incorporation complies with Section 10-2a-507;
902and
903(b)(i) if the lieutenant governor determines that the petition for incorporation
904complies with Section 10-2a-507, incorporate the preliminary municipality, issue
905a certificate of incorporation, and appoint the board chair and three board
906members designated under Subsection [10-2a-507(1)(e)] 10-2a-507(1)(f); or
907(ii) if the lieutenant governor determines that the petition for incorporation fails to
908comply with Section 10-2a-507, reject the petition for incorporation and notify the
909primary sponsor contact in writing of the rejection and the reasons for the
910rejection.
911   (2)(a) If the lieutenant governor rejects a petition for incorporation under Subsection
912(1)(b)(ii), the sponsors of the petition for incorporation may correct the deficiencies
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913for which the petition for incorporation was rejected and refile the petition for
914incorporation with the lieutenant governor.
915(b) Notwithstanding the deadline described in Subsection 10-2a-507(1), the sponsors of
916the petition for incorporation may file a modified petition for incorporation under
917Subsection (2)(a) no later than 30 days after the day on which the lieutenant governor
918notifies the primary sponsor contact of the rejection under Subsection (1)(b)(ii).
919   (3)(a) Within 20 days after the day on which the lieutenant governor receives a modified
920petition for incorporation under Subsection (2)(a), the lieutenant governor shall
921review the modified petition for incorporation in accordance with Subsection (1).
922(b) The sponsors of a petition for incorporation may not modify the petition for
923incorporation more than once.
924Section 12. Section 10-2a-509 is amended to read:
92510-2a-509 (Effective 05/06/26) (Repealed 01/01/31). Governance of preliminary
926   municipality -- Utilities -- Road maintenance.
927   (1)(a) Within 30 days after the day on which the lieutenant governor issues a certificate
928of incorporation described in Subsection 10-2a-508(1)(b)(i), the county in which the
929preliminary municipality is located shall appoint one board member for the
930preliminary municipality.
931(b) If the county fails to timely comply with Subsection (1)(a), the board chair and the
932three board members appointed under Subsection 10-2a-508(1)(b)(i) shall, by
933majority vote, appoint the final board member.
934   (2) The board chair and board members, described in Subsection (1), of a preliminary
935municipality:
936(a) are not required to be residents of the preliminary municipality; and
937(b) shall serve as the board for the preliminary municipality until replaced by election
938under Section 10-2a-510.
939   (3)(a) Within 14 days after the day on which the first residential certificate of occupancy
940is issued for the development described in Subsection 10-2a-503(5)(e), the engineer
941described in Subsection 10-2a-509(6), shall notify the county and the lieutenant
942governor, in writing:
943(i) that the first residential certificate of occupancy has been issued for the
944preliminary municipality;
945(ii) of the date on which the first residential certificate of occupancy was issued; and
946(iii) of the physical address for which the first residential certificate of occupancy
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947was issued.
948(b) No later than the next municipal general election, or regular general election, that is
949at least 30 days after the date described in Subsection (3)(a)(ii), the initial landowners
950shall:
951(i) replace the board chair or a board member with an individual who is a resident of
952the preliminary municipality; and
953(ii) notify the county and the lieutenant governor of the appointment, in writing.
954   (4)(a) Subject to Subsection (4)(b), a preliminary municipality has all the powers and
955duties of a municipality.
956(b) A preliminary municipality:
957(i) may not impose a tax;
958(ii) may enter into an interlocal agreement with a special district to provide utility
959services to the preliminary municipality;
960(iii) has the same authority as another municipality to make decisions regarding
961zoning and land use;
962(iv) may not receive an allocation of sales tax or gas tax; and
963(v) may not exercise eminent domain authority.
964   (5) As needed, the county shall provide all services and utility connections to the
965preliminary municipality that the county provides other areas in the county if the
966preliminary municipality:
967(a) pays the uniformly assessed rates for the services and utilities and reasonable
968connection fees; and
969(b) complies with the county's established regulations and specifications for the
970construction and connection of the local improvements.
971   (6)(a) The preliminary municipality and subsequently incorporated town shall maintain
972and repair, or cause to be maintained and repaired, any roadway that, on the day on
973which the individual filed the feasibility request under Section 10-2a-502:
974[(a)] (i) existed within the preliminary municipality;
975[(b)] (ii) was within a public right of way that abuts the preliminary municipality; or
976[(c)] (iii) was within 1/2 mile of the preliminary municipality and connected to, or
977was proposed in the feasibility request to be connected to, the preliminary
978municipality.
979(b) Roads on unincorporated land outside of the preliminary municipality area continue
980to be governed by the provisions of Title 17, Chapter 79, County Land Use,
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981Development, and Management Act.
982   (7) Before any development occurs within the preliminary municipality area or the
983preliminary municipality submits a petition to transition to a town, the preliminary
984municipality shall select an independent third-party engineer to review and approve all
985building permit applications within the preliminary municipality to ensure compliance
986with the law.
987   (8) Chapter 2, Classification, Boundaries, Consolidation, and Dissolution of Municipalities,
988does not apply to a preliminary municipality.
989Section 13. Section 10-2a-511 is enacted to read:
99010-2a-511 (Effective 05/06/26). Applicability of provisions.
991   (1) Except as provided in Subsection (2), for a feasibility request filed in accordance with
992Section 10-2a-502 before May 6, 2026, the process to proceed to the incorporation of a
993preliminary municipality as described in this part shall be governed by the law that was
994in effect as of May 5, 2026.
995   (2) Subsection (1) does not apply to an applicant who filed a feasibility request before May
9966, 2026, if the feasibility request was rejected or otherwise not accepted by the lieutenant
997governor and required to be refiled on or after May 6, 2026.
998Section 14. Effective Date.
999   This bill takes effect on May 6, 2026.
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