The Utah Court of Appeals issued a decision Thursday, saying discussions between Holladay officials and a developer who wanted to build a Walgreens don't count as a formal appeal of a 2006 zoning decision — effectively preventing a Walgreens from being built.

But since the lawsuit was filed, Walgreens has purchased two Holladay pharmacies in the very neighborhood where the developer wanted to build. The area is slated for a massive renewal project.

The dispute began in 2006 when the developer applied for a building permit near 4700 South and Holladay Boulevard. The zoning was proper at the time, but the project was denied approval.

Thereafter, Holladay Towne Center company officials worked with city staff toward approval, but the City Council enacted a six-month moratorium on building in the neighborhood.

Attorneys for Holladay Towne Center told the courts that they considered the negotiations an appeal though they should have filed a letter within 10 days of the denial, according to the appeals court decision.

When the moratorium expired, the council changed the neighborhood's zoning. Under the new code, the Walgreens can't be built.

Holladay Towne Center filed suit against the city following the vote to rezone, but the 3rd District court found in favor of Holladay. Thursday, the appeals court agreed with the lower ruling.

"Utah law clearly requires an aggrieved party to exhaust its administrative remedies before challenging a municipality's land use decision in court," the appeals court judges wrote.

About three months ago, Walgreens purchased Holladay Pharmacy, at 4690 S. Holladay Blvd., and Olympus Pharmacy, across the street. The corporation is now running the Holladay Pharmacy but hasn't changed its name.

Neither Walgreens officials nor Holladay officials returned telephone calls Thursday about future plans for the Walgreens holdings.

The neighborhood, which includes the old Cottonwood Mall, will soon be transformed into a mixed-use development featuring shops, a plaza, a movie theater and housing. The renewal will focus on walkability and environmental sustainability.

About 80 percent of the steel, wiring and asphalt from the old mall is being recycled, General Growth Properties spokesperson David Allred said in a statement Thursday.

The concrete, asphalt and steel have been crushed into small pieces and used for fill throughout the development, Allred said. The project is expected to achieve Leadership in Energy Design certification, which ensures environmentally friendly construction, and could open in late 2010.

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