Kristin Murphy, Deseret News
Developer Terry Diehl, who is developing Tavaci at the base of Little Cottonwood Canyon, hasn't paid taxes on the property. Photographed on Monday, August 1, 2011.

COTTONWOOD HEIGHTS — City officials may allow more homes in the mouth of Big Cottonwood Canyon in hopes of appeasing a developer bent on disconnecting his property from the city.

A proposed new zoning ordinance would allow the controversial Tavaci development to include a mix of housing with greater density than the planned 43 luxury homes approved seven years ago.

"We'd like to see something viable developed on that property," Mayor Kelvyn Cullimore said.

On Aug. 2, the Cottonwood Heights City Council shot down a proposed zone that would have allowed developer Terry Diehl to build a resort-style community with a mix of high-density residential and commercial uses on the north side of the mouth of the canyon.

That led Diehl to file a petition to disconnect his 43 acres from the city and again be part of unincorporated Salt Lake County. The Tavaci development was first approved by the Salt Lake County Council in 2004, a year before Cottonwood Heights became a city.

The City Council is scheduled to vote on the petition Nov. 1. If the council denies the petition as expected, Diehl has said he will challenge that outcome in 3rd District Court.

City officials have been working since the council's Aug. 2 decision to come up with a zone that would allow more homes or condominiums but keep commercial development out of the mouth of the canyon.

The goal, Cullimore said, was to come up with a zoning compromise — one that offered greater entitlements to the developer than the existing zone while addressing council members' concerns about commercial development.

If approved, the new zone would allow for roughly 190 residences at the Tavaci development. As currently approved, the project calls for 43 luxury homes, though existing zoning allows nearly 100 residences.

City leaders say the proposed Canyon Residential Development zone would address many of the concerns they had with the Community Resort Residential zone, such as building heights, residential density, impacts on views and commercial uses.

The Canyon Residential Development zone calls for increased setbacks from hillsides and ridge lines. It would allow for 40 units on the perimeter of the property, with a mix of higher density housing in the center of the development.

"It basically takes (density) to the limit of what can be done without it being a problem with the general plan," Cullimore said.

The City Council and Planning Commission met in a closed session last week to discuss the proposed zone. On Wednesday, the Planning Commission took up the issue again during a work session. A public hearing is expected to be held during the Planning Commission's Dec. 7 meeting.

According to Cullimore, the developer's response to the proposal thus far is that it's "inadequate." Attempts to reach Bruce Baird, Diehl's development and land-use counsel, for comment were unsuccessful.

"It may not be the gangbuster financial reward (Diehl) might of been looking for," Cullimore said, "but we certainly believe this will be viable."