Salt Lake City endorses Ryan Smith’s downtown revitalization project

Salt Lake City took a big step Tuesday toward giving downtown an extreme makeover.

The seven-member City Council unanimously endorsed a participation agreement with Smith Entertainment Group to create a sports, entertainment, culture and convention district that would keep the Utah Jazz and Utah Hockey Club in the Delta Center.

“We do big things here in Salt Lake City. This is the next one,” said Council Chair Victoria Petro, noting she first became aware of the city during the 2002 Olympics when she lived on the East Coast.

The agreement comes with a .5% increase in sales tax in Salt Lake City — from 7.75% to 8.25% — generating an anticipated $1.2 billion over 30 years, $900 million which would go to SEG to renovate the arena, the surrounding plazas and the district. The company estimates it will spend $525 million to remodel the Delta Center to accommodate hockey and basketball and $375 million on the other district improvements. SEG intends to invest $3 billion of its own in the project.

The city will now pass the agreement to the Capital City Revitalization Committee, a five-member panel formed by the Utah Legislature that’s tasked with considering the lengthy document in a public meeting within 30 days of receiving it. The committee will either accept the agreement as is or send it back to the council for revisions, which would trigger more negotiations with SEG. If the committee approves, the agreement would be returned to the City Council for a final vote. The council would then have until Dec. 31, 2024, to adopt the sales tax increase for the project and authorize the mayor to sign the agreement.

The participation agreement is the result of numerous hours of negotiation between the city and SEG. Council members noted Tuesday vote was the first of many to come.

“This is a good agreement that brings good things to the city,” Petro said. “Our partners have made good faith responses every time we’ve brought them something, including literally last night at 9 p.m. asking them for just a few more assurances.”

Petro also recognized the immensity of the project, saying she’ll probably never again deal with something “that not only has this many commas and zeros associated with it but also has the chance to transform a piece of property that is sitting economically fallow.”

“I don’t want to confuse big and scary with impossible and wrong,” she said.

Reimagining downtown

The SEG proposal, which covers a three-block area, includes reconfiguring the Delta Center entrance to face east and taking 300 West underground to build a plaza extending east to connect to the Salt Palace Convention Center, Abravanel Hall and the rest of downtown. The project also includes construction of a high-rise apartment building, hotel and commercial, retail, and office space.

The City Council will hold a public hearing next month on proposed zoning changes, including raising the height limit for buildings from 125 feet to 600 feet.

SEG is pursuing an agreement with Salt Lake County for the two blocks east of the arena, including the convention center and symphony hall, which are both managed by the county. According to the participation agreement, SEG has until July 1, 2025, to secure a lease on that land.

The company estimates the Delta Center remodel to be done in 2027 and the first phase of the entertainment district to be complete in 2028. The second phase would extend to 2033, which SEG has said would include the Salt Palace and Abravanel Hall.

The agreement includes the creation of a community benefit fund from fees SEG would attach to ticket sales for basketball, hockey and other events, ranging from $1 to $3 per ticket depending on the ticket price, starting in July 2025. The city would use the money for affordable and family-sized housing, a Japantown streetscape project and public art, the latter two getting $5 million each. The housing would not have to be in the district. Other public benefits that SEG would provide include workforce training and development, a college internship program, a high school mentor program, youth athletics programming in Salt Lake City and free or subsidized tickets to both NHL and NBA games for residents and organizations in the city.

In addition, the district will include a public safety/police substation. The agreement says Salt Lake police will provide “consistent” coverage, including the downtown bike squad for large scheduled events and patrol officers to respond to calls and provide “hotspot” checks.

“It is an impressive list of public benefits,” said council member Alejandro Puy. “I hope that this is the beginning of a new relationship for the benefit of our city. I understand there are a lot of our neighbors who are not going to really understand the value of these things, but it will be on me and maybe all of us to explain what the value of these things are.”

Petro said she’s proud the city will create a “restorative, there’s no way to create completely reparative” paradigm for what happened to the Japanese American community, which the city erased through the use of eminent domain to build the Salt Palace in the 1960s. The city and SEG, she said, will bring “dignity, culture, history” back to Japantown, now consisting only of the Salt Lake Buddhist Temple, Japanese Church of Christ and a small garden on 100 South.

Tax boon or burden?

Americans for Prosperity-Utah, a libertarian conservative political advocacy group, organized a small protest outside City Hall on Tuesday to oppose the use of taxpayer dollars to fund the project, saying it would obligate the public and stymie economic growth. Demonstrators held signs reading, “Say no to sale tax increase” and “Stop Corporate Welfare.”

“This vote is a vote for more crony capitalism in our state capital, plain and simple. It’s been proven time and time again, in cities across the country, that subsidy schemes for sports stadiums do more harm than good for the economy,” said Kevin Greene, AFP-Utah state director. “We’re happy to see major league sports interested in coming to Salt Lake City, but hardworking Utahns shouldn’t be paying for it from their own pockets.”

Natalie Gochnour, an economist and director of the University of Utah’s Kem C. Gardner Policy Institute, told the council that 75% to 80% of the sales tax is paid by businesses and nonresidents of Salt Lake City. The tax doesn’t apply to groceries and major purchases like vehicles. She estimated that Salt Lake City households would on average pay about $120 to $150 a year in additional sales tax.

An economic analysis of the revitalization zone done by D.A. Davidson and reviewed by the Gardner Policy Institute found renovating the Delta Center would create 1,800 temporary construction jobs and future spending at the arena would bring another 3,500 direct and indirect jobs to materials and services suppliers, and at grocery stores, restaurants and other business where those workers spend their money.

The report showed the construction and future spending on basketball, hockey and other arena events through 2029 would generate an estimated $22 million tax revenue for Salt Lake City, $17.5 million for Salt Lake County, $120 million for the state and $26.2 million for other local taxing entities like school districts.

Once the project is complete and operations stabilized, $735 million in annual spending across the Jazz, Utah Hockey Club and arena events is anticipated to generate a $976 million yearly economic contribution to the city, $1.3 billion to the county and $1.4 billion to the state, according to the analysis.

In addition to the economic contribution, the report says the district would elevate Salt Lake City’s status as a “major league” city, anchor it as the state’s center for arts, culture, sports and entertainment, attract more media exposure and enhance the sense of neighborhood and community connectivity.

Project challenges

The participation agreement notes the project area encompasses “numerous infrastructure challenges” that will need to be resolved in the future, from public roadway reconstructions to fiber replacement and integration of new electrical vehicle chargers. “Additional infrastructure challenges and needs will be revealed as plans for redevelopment move ahead and traffic impacts are better known,” according to the document.

The agreement also says the new zone will bring more residents and visitors downtown, which it calls an “enormous benefit.”

“However, challenges could also stem from this increased activation, including dilution of opportunities for current small, local businesses,” the document says. “It is critical that the project area promotes connectivity downtown as a whole rather than competing with the current business environment.”

Any infrastructure or improvements proposed through redevelopment such as benches, bike racks, pavers and planters within city rights of way could also pose maintenance and operational challenges for the city. “The city is not funded for the increased maintenance that occurs in the downtown area and therefore any increases to maintenance support need to be included in future city budgets,” according to the agreement.