Salt Lake City and Millcreek have resolved a dispute over their shared border, with leaders in Utah’s capital agreeing to give the newly formed city two chunks of property so it can redevelop a new downtown and beautify one of its main entrances.

With smiles and handshakes on Tuesday, officials from the two cities agreed in principle to give Millcreek control of about 4.85 acres of commercial land — between 1300 East and Highland Drive and Woodland and Miller avenues — as well as a highway roundabout at the 2300 East exit off Interstate 80.

In exchange, officials in Millcreek, whose residents voted to incorporate in 2017, will formally surrender any claims to Brickyard Plaza shopping center, which is currently something of an annexed island of Salt Lake City surrounded by Millcreek, its neighbor to the south.

Mayor Jeff Silvestrini said Millcreek has also agreed to pay Salt Lake City about $61,000 annually over the next decade to cover property and sales taxes generated by the hatchet-shaped piece of commercial property it is getting, which includes Highland Square Shopping Center and five other lots.

“The best news here for both residents of Millcreek and Salt Lake City is that we'll be able to work together as neighbors for the foreseeable future,” Silvestrini said.

The compromise appears to ease major tensions between the two cities, whose elected officials were at odds as recently as six months ago over Brickyard. A formal inter-local agreement enshrining the deal is expected to be adopted by year’s end, pending a set of public hearings.

(Photo courtesy of the city of Millcreek) A view of Millcreek's commercial center, an area the city hopes to designate for redevelopment.

Salt Lake City Mayor Jackie Biskupski said she welcomed the compromise worked out over recent months, though she added that her city would continue to provide key services to the ceded neighborhoods, including water delivery.

“Residents and businesses can be assured that Salt Lake City isn’t just walking away,” Biskupski said. “This truly is a partnership and one that will last a lifetime.”

Officials announced details of the deal outside The Riverbank Bar at 1306 E. Woodland Avenue, just a few feet from the newly shifted border line between the two cities.

“Is this perfect for Millcreek? No. But neither is it perfect for Salt Lake City,” said Millcreek City Council member Cheri Jackson, whose District 3 spans the area. “To me, it seems like a fair compromise for both cities trying to work as good neighbors.”

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Silvestrini said the deal, which will be subject to public hearings before both city councils, frees Millcreek to spend money already allocated for landscaping, beautifying and putting up welcome signs at the 2300 East exit to I-80, located at roughly 2700 South, which serves as a northeastern gateway to Millcreek.

The exit roundabout and surrounding acreage, located just west of Congregation Kol Ami, at 2425 E. Heritage Way, are tax exempt.

But more importantly, the border compromise also gives Millcreek full planning and administrative jurisdiction over a key area between 1300 East and Highland Drive. At the urging of residents, Millcreek officials have designated that central neighborhood for a major community-reinvestment area, with a view to using tax breaks and other tools to help create a new downtown and community gathering place for the young city.

(Photo courtesy of the city of Millcreek) A rendering of a proposed park and city center envisioned as part of efforts to redevelop the commercial center of Millcreek, Utah's newest city.

The prior boundary sliced eastward and created a peninsula of Salt Lake City property through the heart of that proposed downtown area for Millcreek. And as recently as February, a resulting dispute over those boundaries had pulled Brickyard into the discussion, threatening to pit the two cities against each other at the state level.

Negotiations broke down temporarily when Rep. Val Potter, R-North Logan, proposed a bill in the Utah Legislature to give Millcreek added leverage in potentially annexing the 23-acre Brickyard site, which currently generates between $3 million and $4 million in sales taxes per year.

One of Millcreek’s annexation proposals at the time had even raised the possibility of Salt Lake City Council member Amy Fowler’s home being cut out of the capital city. Fowler said Tuesday that the ensuing, complex negotiations between Millcreek and Salt Lake City had instead yielded “a real friendship and partnership between these two cities.”

“Cities throughout the state can look at us as an example,” Fowler said, “and as the capital city, we should be an example.”

Salt Lake City Council Chairman Charlie Luke on Tuesday thanked Potter for ultimately withdrawing his legislative proposal and letting the two cities instead work out their differences.

“Local government is the best place for these types of decisions,” Luke said. "“Both cities will be working together on this.”