Scottsdale asks for court judgment to resolve conflicting contracts

A view of Scottsdale City Council during a recent study session discussion. (Independent Newsmedia/Melissa Fittro)

Scottsdale City Council has given its blessing to file a declaratory judgment action in an effort to remedy a faulty payback agreement for road improvements in north Scottsdale.

The resolution was adopted on consent by the local governing board on Thursday, July 6 at City Hall, 3839 N. Drinkwater Blvd.

With the council’s approval, hired hands can now file the declaratory judgment action in Maricopa County Superior Court involving McDowell Mountain Back Bowl, LLC and HHL Land, LLC.

According to the city, the municipality entered into a payback agreement with McDowell Mountain Back Bowl, LLC, for certain street and right-of-way infrastructure improvements to Ranch Gate Road on July 18, 2016. This agreement detailed a plan for the city to recover a portion of the cost of the infrastructure improvements from a parcel of land with frontage on Ranch Gate Road, if that parcel is developed in the future.

The subject parcel is owned by HHL Land, LLC, a city staff report states.

City staff says at the time of entering into the payback agreement, they were unaware of an earlier agreement between McDowell Mountain and HHL, regarding Ranch Gate Road improvements that reportedly existed.

In January of this year, the city received a claim from HHL asserting the provisions of the agreement between HHL and McDowell Mountain prohibited McDowell Mountain from having payback rights as set forth in the agreement with Scottsdale, the report states.

As a result of the claims set forth by HHL, the city is left in an “uncertain position as to the legality and enforceability of the respective agreements,” the report states.

The city of Scottsdale believes legal action may be appropriate in order to request the court to resolve the respective rights and obligations within the HHL and McDowell Mountain contract, as well as the payback agreement between the city and HHL.

Recent staff action includes the city attorney’s office and the risk management department working toward a resolution of this matter, the report states. The city believes it is appropriate to have the court declare the respective obligations of the contracts to avoid potential legal liabilities.

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