Council voices reservations about water for Desert Rose mixed-use project; asks staff for policy clarity

Tooele City Council members on Wednesday raised concerns about authorizing city water for a proposed Desert Rose mixed-use development, asking staff for clearer policy guidance before making a commitment.

Community Development Director Andrew Agard briefed the council on the five-acre project east of Zaxby’s near Macy’s, which conceptually proposes 35 townhouse-style units with ground-floor commercial space and residential units above. Agard said the project falls into a gray area of the city’s water policy: the city permits payment-in-lieu for commercial water rights and for limited residential cases (single homes on vacant lots), but the policy is unclear for stacked mixed-use buildings.

Agard described the key policy questions: whether the project’s primary use is commercial with ancillary residential, and whether authorizing water for the commercial portion would leave the residential portion without sufficient water if the commercial tenant later vacates. “The first and foremost use of this project would be commercial with ancillary residential uses,” Agard said, but he added that the city cannot predict future commercial tenants or exact water demand until businesses are identified.

Council members expressed concern that approving water now could create an adverse precedent if units later converted to purely residential use, undermining the incentive for economic development. One council member noted that in some cases owners might stop operating the business and instead use the space as residential, producing little commercial benefit while consuming residential water demand. Another suggested a hybrid approach — allow fee-in-lieu for commercial demand and require developers to supply water rights for residential demand — but several council members said that would not help if the developer has no water to bring to the table.

Staff noted that commercial building-code requirements would apply to the ground-floor spaces and that any enforcement to maintain a business presence would be difficult without private covenants; one staff member said enforcement of unit-level commercial occupancy would likely fall to homeowners associations or private agreements, not the city.

No formal decision was made. Council members generally said they liked the mixed-use concept but had significant reservations about authorizing city water without guarantees that the commercial component would remain active. Agard said he would relay the council’s feedback to the applicant and seek policy clarification on how mixed-use projects should be treated under the city’s water policy.

Key project details discussed: the site is approximately five acres; the concept plan includes 35 townhouse-style units with ground-floor commercial and upper-floor residential; the applicant is working on a development agreement and has deferred final zoning until water availability is resolved. The council asked staff to return with options, including whether the city could limit any fee-in-lieu to the commercial portion or require dedicated water rights for residential components.