Salt Lake City passes sales tax increase for Delta Center renovation

Anyone shopping in Salt Lake City will help pay for a proposed multi-billion dollar makeover of downtown and renovation of the Delta Center to accommodate both the Utah Jazz and new Utah Hockey Club.
As expected, the City Council approved a sales tax increase after a public hearing Tuesday to generate hundreds of millions of dollars for the creation of sports, entertainment, culture and convention district in the city center. The council also gave final to a participation agreement with Smith Entertainment Group, which owns the basketball and hockey teams. Both passed unanimously.
“Nothing has been taken for granted in this deal,” Council member Victoria Petro said during a council work session, adding all aspects of the agreement underwent “thorough” discussion. “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.”
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.
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, Abravanel Hall, Utah Museum of Contemporary Art and Japantown.
The council vote authorizes Salt Lake City Mayor Erin Mendenhall to sign the agreement with SEG. Council members said residents will have more opportunities to weigh in as development plans unfold, budgets are considered and negotiations with the company continue. Any proposed structure over 200 feet tall must have council approval.
“With today’s 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, county, Smith Entertainment Group, and leaders from the Utah Symphony, UMOCA, Salt Palace Convention Center, community and religious organizations, educational institutions, local businesses, residents, and other stakeholders,” Mike Maughan, SEG executive and project principal, said in a statement.
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% 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. The increase will take effect starting Jan. 1, 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 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.
Natale Gochnour, an economist and director of the Kem C. Gardner Policy Institute, told the council earlier this year that 75% to 80% of the sales tax is paid by businesses and nonresidents of Salt Lake City. She 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.
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.
A Deseret News/Hinckley Institute of Politics poll in August found 54% of Utahns oppose the proposed tax increase, while 38% favor it and 8% 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 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. Former Salt Lake City Mayor Rocky Anderson vowed to initiate a referendum to overturn what he called a “heinous” tax increase.
Representatives from the Downtown Alliance, University of Utah, Utah Symphony and Utah Restaurant Association spoke in favor the revitalization plan and accompanying tax increase, calling it 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 with a left-leaning City Council and arts community. “We all the folks who represent all the folks that weighed in on this and said they want it,” he told the council
Cities, he said, evolve or change or die. “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,” Beck said of SEG owner Ryan Smith.
City Attorney Katie Lewis told the council the deal is unique compared to sports incentive and participation agreements around the country in that 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 other cities and counties in the country.
The deal keeps the Jazz and Utah Hockey Club downtown — owner Ryan Smith had plans to move the teams to south end of Salt Lake Valley — and requires them to play home games in the Delta Center. If 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.
“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,” Lewis said.
The Utah Legislature’s five-member Revitalization Zone Committee unanimously approved the participation agreement between Salt Lake City and SEG in September without any changes before returning to the City Council for final approval.
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. Abravanel Hall is not included in the agreement because it is owned by Salt Lake County, not Salt Lake City. In approving the agreement, though, the City Council, recommended the preservation of the building.
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,” she said. Wilson did not elaborate, but said architects hired by both the county and SEG are working together on the plan.
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 not only receive community benefits, including resolving longstanding issues with the convention center and Japantown, but keep downtown Salt Lake City alive.
“Death to downtown means less sales taxes gathered in Salt Lake City, less activation, less jobs. Many cities across the nation are seeing this. The struggle of making that up is huge. May cities call it a death spiral that kills everything around it,” he said.
The agreement between SEG and the city 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.