The Utah Jazz and the state’s new professional hockey team would be required to play all of their home games in the Delta Center for the next 30 years or face significant penalties under a deal being finalized between Ryan Smith and Salt Lake City.
In exchange for $900 million in public financing to renovate the arena and develop a three-block sports and entertainment district, Smith Entertainment Group would agree to pay up to $125 million if either team leaves the arena in the first 15 years or $250 million if both leave, with the penalties decreasing by about $16 million a year after that.
In addition, if both teams leave, SEG could be required to repay whatever part of the $900 million it had received up to that point.
“We need to see — we have to see — assurances that both of the teams stay in Salt Lake City,” Mayor Erin Mendenhall said in an interview ahead of the release of the proposed agreement between the city and SEG.
The participation agreement is a critical step in moving the downtown sports and entertainment district forward. It provides, in broad terms, the vision for the district and conditions for the city agreeing to a half-percentage-point sales tax increase citywide.
The council discussed the proposed pact at its work session Tuesday, but a potential vote on the accord was delayed to July 9.
Mendenhall acknowledged the project planning has been rushed and doesn’t provide as much opportunity for public scrutiny and input, but the city has to meet the deadline in the state law passed during the legislative session.
“I don’t think any of us, neither Smith Entertainment Group nor Salt Lake City, feels like this has sufficient or as much time as we could give it,” Mendenhall said, “but what is important is that the public benefits are assured and also that we not lose the opportunity by defaulting on the legislative timelines that are very clear.”
Skyscrapers near the Delta Center
The council heard proposal Tuesday for a zoning change requested by SEG that would lift height restrictions on buildings near the Delta Center, allowing the construction of skyscrapers of up to 600 feet in a seven-block area.
If approved, high-rises near the arena could top the Wells Fargo Center and the Church Office Building by more than 150 feet.
(Trent Nelson | The Salt Lake Tribune) Smith Entertainment Group's Mike Maughan speaks to the Salt Lake City Council on a plan to transform downtown with a multibillion-dollar sports and entertainment district, Tuesday, May 21, 2024.
The council’s consideration of the changes comes after members of the city’s planning commission unanimously rebuffed the request, saying the district is being pushed through too fast and should not receive special treatment due to the Legislature’s priorities. The council is under no obligation to follow the commission’s recommendation.
During the council’s work session Tuesday, council members signaled their support for a proposal to allow skyscrapers but with a required review of buildings slated to be taller than 75 feet.
“The truth of the matter is we’re just like Manhattan, except instead of rivers boxing us in, it’s mountains,” council Chair Victoria Petro said. “So we have got to go taller if we are going to house people. However, I want to make sure that as we go taller, we are doing so in a way that is respectful of things like Japantown and the Japanese Church of Christ.”
A second meeting on the zoning request is scheduled for Aug. 13, when the council plans to take unlimited public comment on the proposal.
What else is in the agreement
It is the participation agreement, though, that is the linchpin of the district.
Other features of the proposed pact include a fee on ticket sales at all Delta Center events — $1 for tickets that cost less than $25, $2 for tickets up to $200, and $3 for tickets more than $200.
“What is fantastic about this agreement is the ticket fee that was a point of our serious negotiation, that leads to about $100 million over the course of 30 years for Salt Lake City to determine how to invest in other public benefits, like family-size affordable housing,” the mayor told reporters after the council discussed the accord. “Those are decisions that will take place here in City Hall with public hearings, the way that we always do when we make investments in the community.”
A spokesperson for the mayor’s office later said the $100 million figure had not been verified.
About $5 million of the fund will be earmarked for restoration of Japantown — which was once one of the largest Japanese enclaves in the country. Representatives of the Japanese Church of Christ and Buddhist Temple will work with SEG on designing the renovations.
“We need to see investment in public art and support and honor of Japantown and the history there,” Mendenhall said, “and of course affordable housing has been a major theme in everything Salt Lake City has done in the last several years, and it is here, as well.”
A new police station will be built in the district to house SEG’s private security and Salt Lake City police officers. It will include a temporary lockup where offenders can be held and processed.
Draft Participation Agreement 070224 by Jeff Parrott on Scribd
The proposed agreement calls for pedestrian plazas that can be used for festivals, free of charge, for six days a year. A series of public art installations, budgeted for $5 million of ticket fee proceeds, will be commissioned and built.
During the Tuesday work session, City Attorney Katherine Lewis said all development paid for by the city’s sales tax revenue, including renovations to the Delta Center and further projects within the district, must be completed within 10 years of the date of the finalization of the agreement.
Of the city’s contribution to the project, an estimated $525 million would help pay for renovations to the arena, while the remaining $375 million would go toward developing the rest of the district. Those figures are estimates, Lewis noted, because it “wasn’t reasonable” for SEG to have firm cost projections under an expedited timeline.
What comes next
If council members endorse the deal at the July 9 meeting, the agreement would still need to be reviewed and approved by the Capital City Revitalization Commission — an oversight board created by the Legislature — and then returned to the council, either for further negotiations or for the council’s passage.
Along with that final vote, the city would boost its sales tax citywide by half a percentage point. Once approved by the Utah Tax Commission, the increase would take effect by year’s end and would generate an estimated $54 million annually to pay off debt for the project.
According to projections from the University of Utah’s Kem C. Gardner Policy Institute, up to 80% of the sales tax increase would be paid by commuters, tourists and businesses outside of the city limits. The average household in Utah’s capital would end up paying about about $150 more in sales tax annually.
In addition to the taxpayer support, SEG has committed to investing at least $3 billion of its money into the area.
During the work session, Petro urged Salt Lake City residents to contact their council representatives with their concerns ahead of next week’s meeting.
“This is a really, really good document,” Petro said. “The likely outcomes, with these sorts of guideposts and parameters ... are really remarkable. So I’m giving myself another week to stay in my Eeyore stage of depression, of every possible thing that could go wrong and try to assert a defensive position. But I’m really excited about possibilities for our city.”
Council member Darin Mano, meanwhile, pleaded with SEG executive Mike Maughan to not “let us down.”
“I do not want to look back and [have] regret for having voted for it or being part of this process,” Mano said. “I just wanted to share that I’m still nervous. ... I hope that my fears are unwarranted.”
