Sprenger, Grubb & Associates, Inc. v. City of Hailey

The City of Hailey, Idaho (defendant) and McCulloch Properties, Incorporated (McCulloch), the predecessor to Sprenger, Grubb & Associates, Incorporated (Sprenger) (plaintiff) entered into a development agreement in 1973 that provided for the development of a master planned residential-recreational neighborhood on 654 acres of land. The master plan called for a small commercial area for some convenience-shopping locations as part of the development. The development agreement also indicated that the city would take all other action as required to develop McCulloch’s property in accordance with the terms of the development agreement and in “substantial compliance” with the master plan. At the time the development agreement was executed, McCulloch’s property included a 12.6-acre parcel zoned as a business district. The rest of the property was zoned as general residential. In 1993, the 12.6-acre parcel’s zoning classification was changed to limited business because the city council found that the existence of a large retail commercial property outside of the city’s core business district was not in accordance with the city’s comprehensive plan. At any rate, the limited-business zoning classification allowed convenience stores and several other types of commercial establishments. Sprenger challenged the change in zoning classification of the 12.6-acre parcel as a breach of the development agreement because the change in zoning classification was not in substantial compliance with the master plan. The district court upheld the city’s change in zoning classification. Sprenger appealed.