BUSINESS + ECONOMY

Smith Entertainment Group seeks 99-year lease, 2 extra blocks as part of Salt Lake plan

May 3, 2024, 7:47 PM | Updated: 7:48 pm

Kids play street hockey ahead of the doors opening as thousands attend the NHL event at the Delta C...

Kids play street hockey ahead of the doors opening as thousands attend the NHL event at the Delta Center in Salt Lake City on April 24. KSL obtained the document Smith Entertainment Group filed to Salt Lake City for a proposed revitalization district, which outlines its intent to remain at the arena and focus on improvements around it. (Scott G Winterton, Deseret News)

(Scott G Winterton, Deseret News)

SALT LAKE CITY — Smith Entertainment Group is proposing a 99-year lease to keep the Utah Jazz and a new National Hockey League team at the Delta Center and is seeking “to lease the two additional blocks” directly east of the facility, according to an application filed to Salt Lake City last month.

The company’s seven-page application isn’t long or detailed; however, it describes proposed zoning changes, street adjustments and a renovation to the Salt Palace Convention Center, which is located directly across from 300 West. The application doesn’t list a cost, but requests “a significant amount of public financing” to make the project “financially viable.”

“To make the subject property financially viable, and in order to maximize the overall positive impact of the project to the surrounding community, and to justify the significant private investment, a significant amount of public financing is required in connection with (Smith Entertainment Group’s) development of the project area,” the company wrote.

Smith Entertainment Group is expected to present its proposal to members of the Salt Lake City Council on Tuesday, but KSL obtained the seven-page application on Friday through a public records request. Salt Lake City has until September to come up with an agreement, but it’s not the only major task in front of them.

Salt Lake City Mayor Erin Mendenhall is also scheduled to present her proposed 2025 fiscal year budget on Tuesday, meaning that the City Council will have to weigh both major financial proposals to sift through in the coming weeks and months.

What Smith wants

Smith Entertainment Company filed its application on April 4, igniting a city process outlined in a bill that legislators approved earlier this year to create a downtown revitalization zone. It was filed about two weeks before Utah Jazz owner Ryan Smith officially acquired the Arizona Coyotes in a deal that relocated the team to Salt Lake City.

The application focuses on retaining the Delta Center and securing leases to Salt Lake County land around it, which would require major overhauls to downtown Salt Lake City.

The group is asking the Redevelopment Agency of Salt Lake City, which owns the land the Delta Center sits on, for a 99-year extension to its current lease at the same rate as the existing lease. Smith explained last month that he originally sought to build a new arena “south” of Salt Lake City but ultimately decided on a plan to remodel the interior of the Delta Center so it could fit the configurations of a hockey rink while retaining a similar experience for Jazz fans.

The application explains that the Delta Center’s interior remodel is expected to take place “over several offseasons.” The process is expected to begin with a new locker room for the new hockey team. Smith Entertainment Group filed paperwork with Salt Lake City this week ahead of any construction, according to city records.

Smith said the arena is expected to seat about 17,500 fans for NHL games once complete.

His group is now focusing more on projects outside of the Delta Center. Smith pointed out that his initial vision had a new arena built within an entertainment district, mirroring a trend happening at other U.S. stadiums.

The company is now trying to replicate that experience next to the Delta Center. It states that the project area would be the full 100 acres outlined in SB272, but it’s officially requesting to lease two blocks east of the Delta Center from Salt Lake County on “substantially the same financial terms” as its RDA lease for “substantial redevelopment, urban renewal and reconstruction” in the area.

That would require renovation to the Salt Palace Convention Center, located across 300 West from Delta Center. Abravenal Hall, the remnants of Salt Lake City’s historic Japantown and the Radisson Hotel could fall within two blocks east of the arena, but there’s no mention of any of those properties in the application and there is no map outlining the proposed area.

The project would also include “re-routing, permanent closure and/or bridging of certain surrounding streets,” which is why the document states the Utah Department of Transportation and Utah Transit Authority would have to get involved.

It would also involve some rezoning on Salt Lake City’s end. The company is asking for the city to eliminate maximum height limitations in the project area, while also listing “arenas,” “stadiums,” “heliports,” “parking, commercial” and “parking, off-site” as “permitted uses in the applicable zone or zones.”

A request for public funds

Smith Entertainment Group also outlines how some of it would be covered.

It’s asking for the Salt Lake City Council to approve a 0.5% sales and use tax, which it is asking to take “the full amount of.” The tax is something set up in SB272. It’s up to the Salt Lake City Council to approve any tax increase, which would last a maximum of 30 years.

The proposal might also “require tax increment financing and the creation of a public infrastructure district.” The former is a collection of any gains created from a project that increases the property values of the area to pay for improvements.

“(Smith Entertainment Group) believes the project area and the surrounding areas will become a desired destination where both Utah residents and tourists will want to regularly visit, shop, recreate, gather, work and live,” the company wrote.

It doesn’t state how much private funding would go into the construction, but Mike Maughan, a representative of Smith Entertainment Group, said the company expected to spend “billions” on the project during an event discussing the bill held in March.

The company is scheduled to make its case to the Salt Lake City Council next week before a public hearing is held on May 21.

Salt Lake’s decision

The City Council must vote on whether to agree to a deal with Smith Entertainment Group by Sept. 1, according to the new law. City leaders said they could vote on the measure as early this July, giving them about two months to negotiate a final agreement. That means what is in the application could change in the coming months. A new state revitalization commission would also have to sign off on any agreement.

The city has until the end of the year to approve any sales tax increases, which would be citywide. It comes as the city is also figuring out its 2025 fiscal year budget, which has to be completed by the end of June.

“It’s going to be tough,” Salt Lake City Councilman Dan Dugan told KSL.com on Thursday.

The revitalization zone could overshadow the budget process. City officials held a meeting on Tuesday to help residents understand how the budget it pieced together and ended up receiving several questions and comments about SB272 instead.

One resident read his concerns from a sheet of paper he had written on during the event.

“Representatives from our city government should be appalled, not excited at a suggested city sales tax increase to pay to develop a revitalized zone hockey team,” he said. “The hockey team’s cost should be reflected in the cost of a ticket and borne by the attendees from the entire state. Salt Lake City residents should not be forced to pay for the cost of a hockey fan’s ticket.”

Sports economy experts have also been skeptical of the plan, and similar entertainment districts. J.C. Bradbury, a professor of economics at Kennesaw State in Georgia, took to social media to question Smith’s claims about a new arena as SB272 was being considered. He said there’s “little evidence” to show that sports venues “promote the type of commerce that downtowns need to prosper.”

Dugan said he couldn’t comment much on what he had seen when he spoke with KSL.com, but he pointed out that the project has the potential to go beyond hockey. He said it could “lift up the whole city” by making major downtown improvements to housing and transportation.

Yet, he fell short of saying if the City Council is leaning one way or another. That’s something that will be sorted at the same time as the City Council figures out its budget for the upcoming fiscal year.

“It’s going to take a lot of hours from (city leaders and employees), a lot of collaboration and a lot of discussions,” he said.

 

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Smith Entertainment Group seeks 99-year lease, 2 extra blocks as part of Salt Lake plan