A looming boundary dispute between Millcreek and Salt Lake City over Brickyard Plaza shopping center is on hold after leaders agreed to negotiate instead of taking the fight to Capitol Hill.

Rep. Val Potter, R-North Logan, confirmed Wednesday that he has agreed to abandon HB262, which would have altered state laws on annexation to give Millcreek a chance to absorb the 23-acre retail center without Salt Lake City’s consent.

Potter said he met with leaders from both cities last week and they emerged “positive and upbeat” about prospects for resolving the issue, eliminating the need for his legislation.

“Between them, they’ve got a plan to talk and move forward,” he said. “I want them to work it out.”

Officials in Millcreek, which incorporated in 2017, requested in May that Salt Lake City consider letting them annex the shopping center, which is an island on the capital city’s southern border surrounded on all but one small side by Millcreek.

Though it happened 40 years ago, Millcreek Mayor Jeff Silvestrini has called Salt Lake City’s annexation of Brickyard into its boundaries “a crime” and has sought to address the issue as the fledgling city drafts its first general land-use plan and tries to develop a new community center.

But Salt Lake City had opposed the move, not least over the prospect of losing more than $3 million yearly in sales tax revenues generated by Brickyard Plaza. City officials had initially insisted any annexation would have to hold them harmless on tax revenues, but then broke off talks when HB262 surfaced.

Introduced last week, the bill would have created a new process for property owners living in the area to petition for “transferring a substantially isolated peninsula” from one city to another — even if the city giving up the land does not agree. HB262 was written to apply to the Brickyard situation by defining a “substantially isolated peninsula” as being surrounded on 95 percent of its border by another municipality.

Silvestrini and Salt Lake City Council Chairman Charlie Luke both said the cities had since diffused tensions over the issue and agreed to talks, with the possibility of involving a third-party mediator.

Lynn Pace, senior advisor on intergovernmental affairs to Salt Lake City Mayor Jackie Biskupski, told the City Council late Tuesday that Millcreek appreciated the offer of a dialogue on Brickyard, “so that bill appears to have gone away.”

And though welcoming the news, Luke countered by warning the city’s lobbyists on Capitol Hill to “continue to watch this issue closely” until the 45-day legislative session ends March 14, in case HB262 was resurrected.

“I take Mayor Silvestrini and his council at their word that they are interesting and willing to work with the city,” he said. “The Legislature as a whole, different animal. I take them at their word as well, but I… I… trust but verify.”

Silvestrini said the two east bench cities share so much in common that the Millcreek City Council was hesitant to risk alienating Salt Lake City as an ally by involving the Utah Legislature in the dispute.

The Millcreek mayor said the City Council had adopted its general plan Monday, but deleted a controversial map that called for pushing parts of Millcreek’s border northward to 2700 South and annexing Brickyard, Tanner Park, Parleys Historic Nature Park, a roundabout at 2300 East near 2700 South and other residential properties — all legally within Salt Lake City’s boundaries.

Silvestrini described removing the map before the plan was adopted as a good faith gesture toward Salt Lake City.

“We don’t want to burn bridges and we want to collaborate,” Silvestrini said. But, he added, Salt Lake City had not signaled a willingness to consider Millcreek’s request until HB262 entered the picture.

“The threat of legislation,” Silvestrini said, “is the only thing that brought them to the table.”