What Utahns think about raising taxes to help pay for downtown Salt Lake City project

Utahns aren’t hip on raising the sales tax rate in Salt Lake City as part of an ambitious plan to reimagine the city center and renovate the Delta Center to accommodate both the Utah Jazz and the new Utah Hockey Club.

A new Deseret News/Hinckley Institute of Politics poll posed this question to 800 registered Utah voters: “Salt Lake City is considering raising its sales tax by 0.5% to generate revenue to establish a downtown sports entertainment, cultural, and convention zone, including renovations to the Delta Center. Do you support or oppose this proposal?”

The survey found 54% of residents oppose the proposed tax increase for the plan, while 38% favor it. Another 8% don’t know.

Harris X conducted the poll Aug. 2-9 for the Deseret News and Hinckley Institute. It has a margin of error of plus or minus 3.5 percentage points.

“I think it’s disappointing to see a poll like that but I also think this is the nature of a growth trajectory. There very rarely are easy answers. There are very rarely overwhelming positive answers. They’re called growing pains for a reason,” said Salt Lake City Council chair Victoria Petro.

“That’s kind of where we find ourselves, trying to make the best of opportunities without stressing out our average constituent too much as we move through what’s likely to be a tough period of growth.”

What’s in the downtown revitalization plan?

Smith Entertainment Group, which owns the NBA and NHL teams, intends to put $3 billion into redeveloping a three-block area east of the Delta Center, which includes reconfiguring the arena entrance to face east, pedestrian plazas, taking 300 West underground between 100 South and South Temple, and building a residential tower and a hotel. The plans, which aim to better connect the east and west sides of downtown, would impact the Salt Palace Convention Center, Abravanel Hall, Utah Museum of Contemporary Art and Japantown .

Earlier this year, the Legislature, with Salt Lake City and Salt Lake County support, passed legislation allowing the creation of a downtown district. Under the law, the city could raise its current 7.75% sales tax rate one-half of a percent — pushing it to 8.25% over no more than 30 years. The tax doesn’t apply to groceries and major purchases like vehicles.

In July, the seven-member Salt Lake City Council unanimously endorsed a participation agreement with SEG. 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 SEG. The company estimates it will spend $525 million to remodel the 33-year-old Delta Center and $375 million on the other district improvements. The agreement awaits approval from the Utah Legislature’s newly established Revitalization Zone Committee.

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.

In a statement this week, the City Council said it’s continuing to work with the legislative committee to finalize the timing of formally submitting the agreement, which is due by Sept. 1. The committee has 30 days after receiving the agreement to accept or reject it. If approved, it would go back to the City Council for a final vote, including the tax increase, before Dec. 31. The sales tax rate would go up sometime in 2025.

Salt Lake City Mayor Erin Mendenhall supports the project and accompanying tax hike.

“Increasing taxes is rarely something an elected official wants to do, and no one ever wants to pay more taxes,” Andrew Wittenberg, the mayor’s spokesperson, told the Deseret News in a statement Wednesday.

“However, Mayor Mendenhall’s priorities remain with Salt Lake City residents and small business owners, who want to see a safe, vibrant downtown that continues to serve as an economic driver for the entire region. Keeping the Utah Jazz and Utah Hockey Club in downtown Salt Lake City benefits the city and has positive economic ripple effects throughout the state.”

How much would the sales tax increase cost for consumers?

While the poll surveyed Utahns statewide, more than a third live in Salt Lake County and three-quarters live along the Wasatch. Various government data show as much as 70% of Salt Lake City’s workforce, people who might eat out and shop on any given day, live outside the city. During certain times of the year, out-of-state visitors account for 20% to 40% of all retail sales at City Creek Center, according to a Salt Lake County economic analysis.

Natalie Gochnour, an economist and director of the Kem C. Gardner Policy Institute, told the City Council in June that 75% to 80% of the sales tax is paid by businesses and nonresidents of Salt Lake City. Salt Lake City residents, she said, benefit for $3 out of every $4 that are invested from the sales tax proposal.

“And what do they get for it? They get a vibrant, growing, thriving, dynamic city that has upward mobility,” she said.

Gochnour also estimated that Salt Lake City households would on 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.

“I think it’s a hard time to try to make your dollars do work,” Petro said. “Any time you’re being asked to make a dollar do a little more work, that’s a source of stress.”

But she said there’s something in the works to make the tax increase “net neutral” but didn’t want to elaborate because “they’re outside of my control.”

The Utah Taxpayers Association is neutral on the proposed sales tax increase. “It’s not the perfect way to do it, but it’s a fair way to do it,” Rusty Cannon, association president, said earlier.

A better model, he said, would be a user fee attached to tickets for hockey and basketball games, noting that gate fees paid for the Salt Lake airport reconstruction. But he said the $3 billion SEG intends to put up is “no small amount” and raising the sales tax is a “fair trade off.”

Can the project go without raising taxes?

Mike Maughan, an SEG executive and project principal, said in an interview early this month that the sales tax increase is “very important” to the proposal.

“The reason we have an NHL team right now that came so quickly is because there were issues with an arena. We can’t put the NHL in that situation again, and we’ll have to have those conversations. We have to have multiple options,” he said.

Ryan Smith bought the Arizona Coyotes in April after the team’s ownership failed in several attempts to build a new arena. After its lease expired at a city-owned venue in Glendale, the team played the past two seasons at Arizona State University in Tempe before being moved to Salt Lake City .

Maughan also pointed out that SEG just bought the Shops at South Town in Sandy, where it intends to build a practice facility and team headquarters. Terms were not publicly disclosed.

“We need to make sure that we do right by the NHL. We’ve given them our word that we’re not going to have a terrible situation as it relates to any hockey arena and so we’ll make sure that things are taken care of,” he said. “We want to be in downtown Salt Lake City, and so as long as everyone stays at the table and does this, we’re committed to doing this in Salt Lake City.”

SEG initially planned to build a hockey arena as part of a sports and entertainment district at the south end of Salt Lake Valley and possibly move the Jazz from downtown as well.

Petro said there’s enough data to show that losing a sports team or reducing activity in the urban core poses more danger to residents than the tax increase for the project.

“This is the way the state chose to fund this avenue. I didn’t as a councilperson get to chime in on how they would have it funded,” she said. “My only option is to either make it work or not, so at this point I would say it’s very essential.”

More polling data

In the poll, slightly more Republicans than Democrats, 41% versus 39%, favored raising the sales tax to help pay for the arena remodel and other elements of the sports, entertainment, culture and convention district. Independents less so at 34%.

Older Utahns were more likely than younger residents to support the tax increase, with those over 65 the highest at 42%. Among those ages 18 to 34, one-third favored the tax hike, while two-thirds did not. Also, 45% of urban dwellers favored the increase compared to 35% of suburban and 41% of rural residents.

Broken down by income, 44% of those making more than $100,000 annually, 35% of people earning $50,000 to $99,000 and 30% those making less than $50,000 support raising the sales tax rate.