The research is clear: Spending taxpayer dollars on building sports stadiums is a bad deal. It’s something I extensively wrote about a few months ago when the Legislature’s bills supporting new stadiums were first passed.
But in the months since, Ryan Smith’s downtown arena plans have changed so much that they no longer resemble that research. There’s no new arena being built at all, just one being renovated. The sports and entertainment district no longer surrounds the stadium, but simply extends two blocks east from it. The district also renovates the Salt Palace Convention Center, potentially unlocking new acreage downtown.
So what is there to like, and not like about the new Smith Entertainment Group plan — or at least, what we know of it? Here’s my take.
What to like
Renovating the Salt Palace
Earlier this year, I had the chance to visit the Seattle Convention Center for a math teacher conference. Yes, it was a total nerd move. But I was struck by how the new center, finished in 2023, was designed: up, rather than out. It lies on just 5 acres — one half of one Salt Lake City block — but goes up five stories to accommodate more exhibit halls and meeting space. Meanwhile, the Salt Palace takes up nearly 30 acres of land.
Shrinking the footprint of the Salt Palace and using that land for bigger and better things makes a lot of sense. So I really like the idea of containing the Salt Palace within one city block, and using the rest of the area for different things.
It also really could open up downtown. That 100 South is currently closed between West Temple and 200 West is annoying for both motorists and pedestrians alike, making it more difficult than it needs to be to get from the Delta Center to Salt Lake City’s true urban core on Main Street. Re-imagining that ugly back side of the Salt Palace to support people, not convention-center transport, would be ideal.
Renovating the Delta Center and Abravanel Hall, not rebuilding them
Yes, we just did this — the Delta Center was renovated by the Miller group less than a decade ago. But I’ve visited every NBA arena, and the Delta Center is currently a top 10 basketball-watching experience in the NBA. Heck, I’d put it in the top five. Losing that experience simply would be a shame for Utah’s sports fans.
(Trent Nelson | The Salt Lake Tribune) Abravanel Hall in Salt Lake City on Friday, May 17, 2024.
Interestingly, the Utah jazz audience feels the same as the Utah Jazz audience — each has a current building with a top-tier experience. Abravanel Hall, musicians and patrons alike agree, has excellent acoustics rarely matched in concert halls in America. Losing it, too, would be a shame.
But renovating the Delta Center also makes more sense from a financial point of view. While the Smith group hasn’t released how much of the taxpayer contribution they plan to spend on renovations, early indications are that it’ll be under half of the total outlay. It’s easier, frankly, to imagine them spending nearly a billion on a brand-new arena rather than on renovating an older building.
Meanwhile, renovating Abravanel Hall may be approximately the same cost as building a new hall, but it seems SEG is making the right choice, listening to public feedback, and allowing it to stay.
New space for the public
In the end, I welcome the idea of more downtown gathering space, especially immediately adjacent to the Delta Center.
Bars, restaurants, retail, and more will be targeted toward Utahns and Salt Lake City residents — not visitors, like the Salt Palace’s current acreage attends to. There’s a real, significant benefit to Utahns of having public throughways and a natural place for watch parties, concert pregaming, and more. And with some of Utah’s liquor laws being suspended in the area, as passed in this year’s HB548 liquor omnibus bill, visitors might get a better outlook on the place, too.
While the Olympic organizing committee has publicly indicated neutrality towards the project, a permanent Olympic Plaza so close to the Delta Center will have obvious benefits for not just the 2034 Olympics, but in the years before and after as well.
What not to like
Asking for taxpayer increment financing
The Smith group, unsatisfied with simply receiving an estimated $54 million per year in sales tax for the next 30 years, asked for taxpayer increment financing (TIF) funds from the project as well in their application to the city.
They haven’t said how much they hope to get from the TIF scheme, but I presume it’ll be sizable. (The Miller family asked for and received a promise of up to $22.7 million in TIF money for its $125 million renovation of the arena in 2016.)
SEG’s argument is that, since the group is working to improve the blocks in the sports and entertainment district, it should get a slice of the property tax in that area.
(Trent Nelson | The Salt Lake Tribune) Mayor Erin Mendenhall listens as 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, during their meeting on Tuesday, May 21, 2024.
That argument isn’t strong on a couple of levels. First, if this land was truly available in a public auction, numerous developers would be itching to purchase it without city funding. There’s no reason that SEG should get additional taxpayer dollars for doing what other developers would do. Second, there’s the concept of replacement: If restaurants choose to move nearer to the Delta Center, they’re probably leaving their current locations — putting tax income into SLC coffers at risk.
It’s easy to get into the weeds when increment financing and property tax are involved, but I’d encourage those interested to read the academic research on the subject. TIF is not a panacea, and perhaps the most-cited study on the subject found that cities that use TIF grow more slowly than those that do not.
No public vote
Full stop: On matters as expensive as this, the public should get to decide what happens to their money.
In 2022, voters were asked to approve a $85 million general bond for Salt Lake City’s parks, trails, and open spaces. If you do the math, each Salt Lake homeowner was asked to pay about $53.80 per year in additional property tax to pay for this. Salt Lake taxpayers approved it. Cool!
For this sports district, estimates from The Salt Lake Tribune’s Robert Gehrke put the cost in additional sales tax paid for Salt Lake City residents at about $196 dollars per year — nearly four times more. That doesn’t include the sales tax out-of-city residents will pay, nor does it include the proposed property tax funding.
Salt Lake City residents have proven pretty darn willing to accept tax increases for various city projects. They’re not money misers. So that the city involved is skipping that process for this particular, more expensive project — well, it’s not a good sign.
An opaque process
There is still so much more to be decided or announced on this project.
• What will the lease terms be on the blocks SEG is getting? They’re asking for 99-year leases — are there mechanisms locking them into development on those blocks? What happens if Smith decides later to move the Utah Jazz? Can he?
• What exactly is happening to Abravanel Hall? To the Utah Museum of Contemporary Arts? Are other governments, either Salt Lake County or the state of Utah, going to pay for any of the changes?
• Are additional blocks going to be part of the project? During the legislative session, early negotiations involved points as far south as Pioneer Park. One public commenter at Tuesday’s city council meeting wondered if the Rio Grande Plan, burying Salt Lake City’s train lines to open up acreage, could be part of the project. The City Council didn’t say no.
• What exactly does SEG hope to put in these blocks? They’ve called the block immediately east of the Delta Center an “entertainment” block. Does that mean restaurants or retail? Bars or hotels? They’ve nodded toward both housing (needed downtown) and office space (probably not). What exactly is the plan here?
What’s frustrating is that the public comment process is happening now, before any of these critically important details have been announced. The city council public comment meeting on the project happened Tuesday, though to the council’s credit, they extended it to a date to be named later. SEG, meanwhile, is asking for public comment on their new website released this week, but what exactly is the public supposed to comment on? Vibes?
The leadership team here is just used to the worlds of tech and basketball — highly secretive and proprietary, acting in a silo until you can shock the world with a grand success. But good urban planning is the exact opposite of that: slow, well-considered, and collaborative.
At the news conference announcing the NHL team’s arrival, Ryan Smith had a insightful comment on his group’s approach: “If you’re expecting perfection, you’re looking at the wrong people. Probably make 10 bets, six of them will work out. That’s pretty good, right? But if we didn’t make this bet, and we were perfect, we would not be here,” he said. “So don’t expect perfection out of us, we won’t get it right the first time. But we’ll get it right.”
It’s true: There’s value to experimentation. But in this case, Salt Lake City needs SEG to get this right the first time, not with a 6 out of 10 bet, but with a 10 out of 10 one.
There are good ideas here, but they need to be more fully fleshed out to earn the public’s confidence.
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