How SLC, SEG plan to use tax revenue for downtown project

In exchange for $900 million in public funding to remodel the Delta Center and build a sports, culture, convention and entertainment district in downtown Salt Lake City, the Smith Entertainment Group intends to place a fee on tickets to Utah Jazz and Utah Hockey Club games along with other arena events to create a city-controlled public benefits fund.

City Attorney Katie Lewis outlined the key elements of a proposed participation agreement between the city and SEG for the City Council on Tuesday, a week ahead of a scheduled July 9 vote on the contract and an accompanying .5% sales tax increase.

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 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.

Avoiding past mistakes

Mayor Erin Mendenhall said the partnership with SEG keeps both NBA and NHL teams in downtown Salt Lake City and “so much more.”

“We are the home of sports, entertainment, convention and culture, and this deal secures our position as such in the state of Utah,” she said, adding urban centers across the country suffer without intentional investment. “With this deal, we ensure the future of Salt Lake City for everyone, not just for sports fans.”

The city and SEG started negotiating the agreement in April, and Mendenhall noted there is “much more to go.” Under a law passed by the Utah Legislature earlier this year, the city has until Sept. 1 to reach an agreement with SEG on a development plan.

“I think the participation agreement given the compressed timeline has quite a few public benefits in it. There’s still so much leeway for this to be incredible, for there to be mistakes made and for it to be something we wish we had done differently,” council member Darin Mano said. “I just want to share that I’m still nervous about the outcome of this, making sure that we’re not making mistakes or repeating mistakes. I hope that my fears are unwarranted but I’m nervous still.”

The SEG proposal, which covers a three-block area, 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.

As part of the agreement, SEG would impose $1 per ticket on tickets costing $25 or less; $2 per ticket for tickets costing at least $25 but less than $200; and $3 per ticket if the price is more than $200. The money would be spent on family-sized and affordable housing and other initiatives determined by the city. The housing would not have to be in the district.

What’s in store for Japantown?

The agreement earmarks at least $5 million from the fund for the revitalization and redevelopment of Japantown.

Construction of the Salt Palace in 1969 and expansion in the 1990s all but wiped out the Japanese community, leaving only a small section of the street west of what is now the Salt Palace Convention Center that claims the honorary name Japantown Street. The Salt Lake Buddhist Temple, Japanese Church of Christ and a small garden are the last remaining landmarks on 100 South.

In addition, SEG would create a pedestrian connection between the district and Japantown, including a buffer between the Japanese Church of Christ, erect historical markers and incorporate Japanese architecture and landscaping.

“This in no way repairs what happened to the Japanese community,” said Council Chair Victoria Petro, thanking the Japanese community for its patience and tenacity in pushing for inclusion in the project. She also thanked SEG principal Mike Maughan for what was a “surprise calculation when we started talking about this. It wasn’t on your radar.”

A gathering place

As part of the development of the district, SEG would design outdoor event space, walkways connecting public streets to the district, and landscape features for individuals and families to gather. SEG and the city will identify two three-day periods each year between May 1 and Sept. 15 that will be free of cost for festivals or other events.

Another $5 million in the public benefits fund would be set aside for various pieces of public art, including “iconic” art, in the district. The works would be procured through a mutually agreed upon process between the city’s arts council and SEG, including for engaging with local artists to compete for the opportunity to create public art.

The agreement also includes a provision that requires the Jazz and Utah Hockey Club to play all home games at the Delta Center for the life of the agreement. If either team stops playing home games in the arena, the city could seek payment for damages.

SEG also would support community and workforce development initiatives including apprenticeship, college internship and high school job shadowing programs, with a share of those opportunities going to students with financial need. The company also would put $2 million toward youth hockey and basketball programs in Salt Lake City.

“We had a lot of expectations of what those benefits could be to the city. It is incredible to see them in writing because I think that’s what I hear from residents they want to see. They don’t want it to be a handshake and a ‘we got you,’” said council member Sarah Young.

What’s next?

Should the council approve the participation agreement, it would go to a Revitalization Zone Committee made up of two members each appointed by the Utah House and Utah Senate and one member appointed by the governor.

Meantime, the City Council also has to consider some proposed zoning changes.

In documents filed with the city, SEG said the project could include substantial redevelopment, urban renewal and reconstruction, including the rerouting, permanent closure and/or bridging of some surrounding streets. The company also wants to revise zoning ordinances to raise the maximum height limitation from 125 feet to 600 feet in the project zone.

Petro said going higher isn’t a “super concern for me,” even though she’s aware of people who don’t like it. “The truth of it is, we’re just like Manhattan. Instead of rivers boxing us in, it’s mountains. So we’ve got to go taller if we’re going to house people,” she said.

The Salt Lake City Planning Commission last month forwarded the City Council a negative recommendation on proposed zoning changes for the project, saying the changes don’t align with the city’s downtown plan or existing zone purposes. The commission recommended Abravanel Hall remain at its current site with “modest” renovation using sales tax and creating a buffer around the Japanese Church of Christ, adjacent garden and Salt Lake Buddhist Temple to minimize the impact on those historic structures.

City Council members Tuesday took issue with the commission mentioning Abravanel Hall because it’s owned and operated by Salt Lake County. Petro asked whether planning commission members need better training to know what’s in the city’s purview.

“I don’t want the county telling me what to do with my assets and it is not OK for me to tell them what to do with their assets,” Petro said. “In this, the city must protect city issues because no one else will and the county should advocate for theirs.”

The council will hold a public hearing and vote on the proposed zoning changes in August.