Anyone shopping in Salt Lake City (Utah, US) will help pay for a proposed multibillion dollar makeover of downtown and renovation of the Delta Center to accommodate both the National Basketball Association (NBA) team Utah Jazz and the new Utah Hockey Club which plays in the National Hockey League (NHL).
‘DeseretNews’ stated that as expected, the City Council approved a sales tax increase after a public hearing on October 1st to generate hundreds of millions of dollars for the creation of a sports, entertainment, culture and convention district in the City Center. The Council also gave final approval to a participation agreement with the Smith Entertainment Group which owns the above basketball and hockey teams. Both passed unanimously.
The 20,000-capacity Delta Center is an indoor venue in Salt Lake City, Utah, US. Opened in 1991, the arena is the home of the Utah Jazz of the National Basketball Association (NBA) and the Utah Hockey Club of the National Hockey League (NHL).
The Utah Jazz is an American professional basketball team based in Salt Lake City, Utah, US. The Jazz compete in the National Basketball Association (NBA) as a member of the Northwest Division of the Western Conference.
The Utah Hockey Club is a professional ice hockey expansion team based in Salt Lake City, Utah, US. The team competes in the National Hockey League (NHL) as a member of the Central Division in the Western Conference and began play during the league’s 2024-2025 seasons.
Salt Lake City (US)-based the Smith Entertainment Group (SEG) is a sports, technology and entertainment investment group that focuses on Utah. The SEG is led by Ryan and Ashley Smith.
“Nothing has been taken for granted in this deal,” Council Member Victoria Petro said during a Council work session, adding that all aspects of the agreement underwent “thorough” discussion.
Put in Petro, “This is difficult and large. But difficulty and size should not be conflated with the rightness or wrongness of this. Our City is capable of hard things, of big things.”
‘DeseretNews’ further stated that Petro said there has been “no seduction of the glitz and glamor” of Salt Lake City getting an NHL hockey team or other amenities the project would bring.
The SEG intends to put $3 billion into redeveloping a three-block area in the City Center which includes reconfiguring the arena entrance to face East, pedestrian plazas, building a residential tower and a hotel, and providing retail and restaurant space. The project, which aims to improve the flow and walkability between the East and West sides of downtown, would impact the Salt Palace Convention Center in Salt Lake City, the 2,768-capacity Abravanel Hall (concert hall), the 300-capacity Utah Museum of Contemporary Art (UMOCA), and Japantown (a neighborhood in downtown Salt Lake City, Utah).
The Council vote authorizes the Salt Lake City Mayor Erin Mendenhall to sign the agreement with the SEG. The Council members said the residents will have more opportunities to weigh in as the development plans unfold, budgets are considered and negotiations with the company continue. Any proposed structure over 200 feet tall must have the Council approval.
Mike Maughan, SEG Executive and Project Principal, sent out a statement which read, “With today’s (October 1st) vote, our capital City’s urban core is poised for a more activated, connected and family-friendly future due to the collaboration between the City, the county, the Smith Entertainment Group, and leaders from the Utah Symphony (orchestra), the UMOCA, the Salt Palace Convention Center, the community and religious organizations, the educational institutions, the local businesses, the residents, and other stakeholders.”
Tax Increase
Earlier this year, the Utah Legislature, with Salt Lake City and Salt Lake County backing, passed SB272 allowing the creation of the downtown district. Under the law, the City could raise its current 7.75 percent sales tax rate one-half of a percent – pushing it to 8.25 percent over no more than 30 years. The tax doesn’t apply to groceries and major purchases like vehicles. The increase will take effect starting January 1st, 2025.
The tax hike is anticipated to generate $1.2 billion over the 30-year life of the agreement, $900 million of which would go to the SEG to repay bonds for the project. The company estimates it will spend $525 million to remodel the 33-year-old Delta Center and $375 million on the other district improvements.
Natalie Gochnour, an Economist and Director of the Kem C. Gardner Policy Institute (Utah’s premier economic and public policy research institute), told the Council earlier this year that 75 percent to 80 percent of the sales tax is paid by the businesses and the nonresidents of Salt Lake City. She estimated that the Salt Lake City households would on an average pay about $120 to $150 a year in additional sales tax. But, she said, the amount really depends on how much people consume. Some might pay $1,000 more, while others only $20, she said.
The Salt Lake City residents, she said, benefit for $3 out of every $4 that is invested from the sales tax proposal.
She averred, “And what do they get for it? They get a vibrant, growing, thriving, dynamic City that has upward mobility.”
Speaking to the Council at during the October 1st hearing, Gochnour said, “Don’t drop the baton. Let’s stay focused and unified and invest in this incredible City.”
Residents’ Viewpoints
A poll conducted in August found that 54 percent of Utahns oppose the proposed tax increase while 38 percent favor it and eight percent don’t know.
During the public hearing, more than three dozen residents, business owners and civic leaders expressed mixed opinions over the tax hike.
Those who opposed the increase told the Council taxes are already too high, it would hurt those who can least afford it and drive consumers to the neighboring Cities. They also argued that the process was rushed and studies show that subsidizing a sports venue does not yield the promised economic benefit. The former Salt Lake City Mayor Rocky Anderson vowed to initiate a referendum to overturn what he called a “heinous” tax increase.
Pointed out Patrick Zunk, “It is not reasonable to demand that the working- and middle-class residents of this City pay for this project, especially those who either don’t have the interest or the means to attend a pro hockey game.”
The local officials, he said, have put out numerous statements extolling its benefits but the figures are “dubious” at best and “there’s a lot of well just-trust-me kind of logic to it.”
Representatives from the Downtown Alliance, the University of Utah, the Utah Symphony, the Utah Restaurant Association, and others spoke in favor of the revitalization plan and accompanying tax increase calling it a generational opportunity to leave a lasting legacy.
Small business owner and Capitol Hill resident Ryan Beck noted the proposal has brought together a Right-leaning legislature and business community and a Left-leaning City Council and arts community – “We have all the folks who represent all the folks that weighed in on this and said they want it.”
Cities, he said, evolve or change or die.
Beck said of SEG Owner Ryan Smith, “To those who oppose it, who else would you rather have do this than a billionaire who’s from here and grew up playing Junior Jazz, who’s in it for the long haul, not just for the money.”
Complex Deal
City Attorney Katie Lewis told the Council the deal is unique compared to sports incentive and participation agreements around the United States in that the SEG is committing to keep two teams downtown and revitalizing three City blocks in exchange for the public investment. Many of the public investments nationwide are only for a sports arena and sometimes only for one team, she said. Also, Lewis said the public benefits the City negotiated are in line with those in the other Cities and counties in the United States.
The deal keeps the Jazz and the Utah Hockey Club downtown – Smith had plans to move the teams to the South end of the Salt Lake Valley – and requires them to play home games in the Delta Center. If the SEG decides to move in the first 15 years of the agreement, it would have to pay the City $125 million per team. The figure decreases each year after that.
Added Lewis, “It is a highly complex and sophisticated and unique translation that has taken hours upon hours of work to negotiate and a lot of expertise and commitment from the entire City to get where we are today.”
The Utah Legislature’s five-member Revitalization Zone Committee unanimously approved the participation agreement between the Salt Lake City and the SEG in September without any changes before returning to the City Council for final approval. The Council endorsed the deal in July.
One of the most controversial aspects of the proposal is whether iconic Abravanel Hall, home of the Utah Symphony, would be torn down and rebuilt. The Abravanel Hall is not included in the agreement because it is owned by the Salt Lake County, not Salt Lake City. In approving the agreement, however, the City Council committed to work with the county, the SEG and others for the preservation of the building.
The Salt Lake County Mayor Jenny Wilson told the Legislative Committee last month that the county has a plan to preserve the 45-year-old hall – “We want the symphony to thrive for the next 50 years and beyond, and I’m committed, as I have been from Day One, to keeping the hall as is where it is. We have a plan to do so.”
Wilson did not elaborate, but said architects hired by both the county and the SEG are working together on the plan.
Community Benefits
The City Council Member Alejandro Puy said some of his constituents have questioned why the City would “give money to a billionaire for nothing in exchange.” He said the City not only will receive community benefits, including resolving longstanding issues with the convention center and Japantown, but keep downtown Salt Lake City alive.
He added, “Death to downtown means less sales taxes gathered in Salt Lake City, less activation, fewer jobs. Many Cities across the United States are seeing this. The struggle of making that up is huge. Many Cities call it a death spiral that kills everything around it.”
The agreement between the SEG and the City includes the creation of a community benefit fund from fees the 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. The other public benefits that the SEG would provide include workforce training and development, a college internship program, a high school mentor program, youth athletics programing in Salt Lake City, and free or subsidized tickets to both the NHL and the NBA games for the residents and the organizations in the City.
In addition, the district will include a public safety/police substation. The agreement says the 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.
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