PAYSON — Elk Ridge and Payson officials are working to adjust a boundary between the two cities that will allow Payson to annex about 500 acres of Payson Canyon the city recently acquired.

The Payson City Council approved an ordinance Wednesday that changes the boundary, while the Elk Ridge City Council has approved only a resolution to do so and must still pass an ordinance. Both cities must record the changes at the same time, Elk Ridge City Recorder Jan Davis said.

Elk Ridge can't adequately service the sliver of land that separates Payson from its Payson Canyon land, Davis said. Payson acquired the canyon acreage for $6 million from Elk Ridge City Councilman Don Mecham and his brother, car dealer John Mecham, who were planning an upscale mountain resort there.

With the boundary adjustment, Payson will be able to annex the canyon. Four property owners and Department of Natural Resources land will also be included when the annexation takes place, Payson city administrator Andy Hall said.

Also on Wednesday, the Payson City Council declared the 500-acre surplus. That allows Payson to sell the land to Las Vegas hotel and casino owner Dan Shaw, who has offered to donate it back to the city as a tax write-off, Payson city recorder Jeanette Curtis said. Shaw lives in Payson.

However, the city won't record the transfer until it receives Shaw's $6 million, Curtis said. The city used an anticipation note, a short-term loan, to buy the land from the Mechams until Shaw reimburses them.

Shaw is also interested in preserving the land around his property, which includes Payson Canyon, Hall said.

"It's more than a tax break for Shaw. I'm positive about that from talking to him," Hall said.

Earlier, Payson officials denied Don Mecham's request to annex the land into Payson. So Mecham, before his appointment as a city councilman, applied to annex to Elk Ridge. While the town was considering the annexation, Payson officials decided they needed it, Hall said. The canyon holds Payson's water shed and could be developed for recreational use.

The deal must conclude before the end of the month to make the tax write-off possible for this year, officials say.