John Rogers
With an enthusiastic “yea” vote from the Salt Lake City Council last week, the Salt Lake City Corp. and Smith Entertainment Group (SEG) have moved one step closer to creating a community-centered sports, entertainment, culture and convention district and keeping professional sports in downtown Salt Lake City. The council voted unanimously to endorse a proposed “Participation Agreement” between the two parties that will put in motion the Utah Legislature-mandated process to bring the plan to fruition.
Earlier this year, the Utah State Legislature passed SB272, which lays out the process by which the city and SEG, under its principal owners Ryan and Ashley Smith, can agree to cooperate on the financial structure for the project that includes tax hikes for city residents combined with private funding from SEG.
“At the center of this Participation Agreement is a commitment to delivering valuable community benefits and opportunities that uplift our quality of life by activating the full potential of our downtown,” said Salt Lake City Mayor Erin Mendenhall. “This is an exciting step toward executing a vision to transform our urban core by centering walkability; affordability; and the needs of families, residents and visitors.”
Virtually every member of the council spoke glowingly of the possibilities presented by the agreement. Councilman Alejandro Puy seemingly summed up the sentiments of the council, saying, “Success of our downtown is success for the whole city.”
“This agreement is a good deal for Salt Lake City,” added Councilman Chris Warton. “I would not have considered it if it wasn’t.”
The Participation Agreement includes the creation of a Community Benefit Fund, which the city will use toward public benefits like affordable and family-sized housing investment, Japantown infrastructure upgrades, public art and more. Other public benefits that SEG would provide as part of the project 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 hockey and basketball games for residents and organizations within the Salt Lake City community.
In addition, the district will include a police and public safety substation, as well as gathering spaces and connectivity throughout the three blocks.
In exchange for public funding to remodel the Delta Center and build the downtown district, SEG intends to place a fee on tickets to Utah Jazz and Utah Hockey Club games along with other arena events to create the 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 council a week ahead of the July 9 vote to endorse the plan. The 0.5 percent sales tax increase — from which food is specifically excluded — 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 Delta Center to accommodate hockey and basketball and $375 million on other district improvements. SEG said it intends to invest a total of $3 billion of its own money over the life of the project.
With the endorsement by the council, the agreement now goes to the Capital City Revitalization Committee, which is a legislative committee tasked with considering the agreement in a public meeting within 30 days of receiving it from the city. If the committee approves the proposal, it will then be returned to the city council for final approval. Upon approval of the final agreement, the council has until Dec. 31 to adopt the sales tax adjustment for the project and authorize the mayor to sign the agreement.
The agreement as currently written — and barring any further adjustments — designates Delta Center as the home arena for both the Utah Jazz of the National Basketball Association and Utah Hockey Club of the National Hockey League. It further mandates that SEG would execute a binding lease with Salt Lake County for the city blocks that are currently occupied by the Salt Palace Convention Center by July 1, 2025, which SEG considers critical to the development of the district.
After the council’s final vote, the city will also negotiate a development agreement with SEG, which will outline the design guidelines for the district, and will negotiate a new lease for Delta Center for the hockey and basketball teams.
“SEG is committed to the creation of a vibrant sports, entertainment, culture and convention district that would be an active and welcoming space for individuals and families to gather in Salt Lake City’s downtown core,” said Mike Maughan, an executive with Smith Entertainment Group and the project principal. “Reimagining downtown Salt Lake is a mission-driven initiative that will involve everybody and have a lasting, positive impact for generations to come. This Participation Agreement is an important step in the journey toward a reimagined downtown core.”
“This proposed agreement is the product of tireless negotiations aiming to ensure the best opportunities for current and future Salt Lakers,” said Salt Lake City Council Chair Victoria Petro.
Salt Lake City officials have been working with some urgency to approve the proposed revitalization of downtown. Smith has suggested possible alternative locations for his two major league franchises, with several locales in south Salt Lake County receiving consideration.
“We are the home of sports, entertainment, convention and culture, and this deal secures our position as such in the state of Utah,” said Mendenhall. “With this deal, we ensure the future of Salt Lake City for everyone, not just for sports fans.”
The Smith/Salt Lake City deal is not without its detractors.
The Utah chapter of libertarian conservative political advocacy group Americans for Prosperity (AFP-UT) organized a protest outside the Salt Lake City Council chamber as the group considered the Participation Agreement last week.
“This vote is a vote for more crony capitalism in our state capital — plain and simple,” said Kevin Greene, AFP-UT state director. “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. 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.”
Greene had previously penned an opinion piece in The Salt Lake Tribune arguing against the subsidies and condemning sports teams’ hardball tactics when negotiating with cities over sports venues.