Salt Lake County sells portion of Salt Palace to Smith Entertainment Group for $55M

SALT LAKE CITY — Smith Entertainment Group has acquired a large portion of the Salt Palace Convention Center as its vision for downtown’s future continues to take shape.

The Salt Lake County Council voted unanimously on Tuesday to approve a resolution to sell about a dozen parcels of county-owned land, totaling 6.5 acres, at a base price of a little over $55.4 million. The final price of the land near 55 S. 300 West fell within “fair market value,” according to Salt Lake County Mayor Jenny Wilson, and will help kickstart funding for a massive project to remodel and “modernize” the convention center.

The deal, outlined in a 76-page purchase agreement, includes several other provisions, such as an extra $87 million in a 25-year lease agreement. It lists Feb. 16, 2027, as the transaction closing date.

Meanwhile, with the deal in place, Salt Lake County plans to begin a process this week to find a project architect. A firm is expected to be picked by the end of summer to help plan out the project’s next steps. If everything goes as planned, partial demolition of the Salt Palace could begin as early as 2027, Wilson told reporters.

The vote, she added, should also help finalize the goal of Salt Lake City and the state of Utah of keeping the Utah Jazz and Utah Hockey Club downtown for decades to come.

“This is just one step in a very complex process, but … I think this was a major building block,” Wilson said.

A ‘significant’ agreement

Smith Entertainment Group previously reached a partnership agreement with Salt Lake City over its desire to create a “sports, entertainment, culture and convention district” in and around the Delta Center. However, their deal required that Smith reach some additional agreements with Salt Lake County over land it oversees east of the arena by July 1.

The two sides spent months negotiating over the Salt Palace and other county properties, leading to Tuesday’s vote. Maps included in the purchase agreement show that Smith will acquire about every Salt Palace parcel west of 200 West, excluding a garden between the convention center and the Japanese Church of Christ on the block.

It doesn’t say how the site would be transformed, but Gov. Spencer Cox said earlier this month that he met with Wilson, Smith Entertainment Group representatives, and state legislators about a “mid block” component of the downtown revitalization plan.

The mid block is described as a “mixed-use development” that will “be a pivotal piece in facilitating greater east-west connectivity of the downtown core,” according to a Governor’s Office of Economic Opportunity document. It’s listed as part of the “entertainment” portion of the district and is expected to have ties to 2034 Winter Olympic venues, as well.

Maps showed that it would be located by the parcels the county put up for sale. Smith Entertainment Group renderings have also included a pedestrian plaza east of the arena in the spot where the Salt Palace’s western end currently exists.

While the base sale is listed at $55.4 million, the deal is expected to create “cash flows” of about $140 million over the next three decades, said Darrin Casper, the county’s deputy mayor of finance and administration. The document outlines an additional parking lease agreement with SEG Sports Holdings totaling $87.3 million over 25 years.

The Salt Palace already rakes in $426 million in annual economic impact, but county officials estimate that upgrades could generate $105 million in additional value. Its resolution also noted that it would provide funding for the remodeling and reconstruction of the Salt Palace, while opening up nearly $5 million in annual county property tax revenue as the land switches over to nonexempt tax status.

In a statement after the vote, Smith Entertainment Group executive Mike Maughan said the company is “grateful” for Salt Lake County Council’s vote, as the company begins its massive downtown overhaul. The vote took place a week after Delta Center renovations officially began.

“Today’s vote was one more important step forward in the long and inspiring process to create a more activated, connected, economically thriving and family-friendly future for our capital city’s urban core,” he said. “We look forward to continuing the work underway in partnership with all stakeholders as we develop a world-class sports, entertainment, culture and convention district that will create an incredible year-round downtown experience for all.”

It’s unclear yet if the vote satisfies the county conditions included in the Salt Lake City’s agreement with Smith, but the city is currently reviewing the sale. If not, it’s at least a “significant” step toward it, a spokesperson for the Salt Lake City Mayor’s Office told KSL.com.

The update comes after Salt Lake City leaders and the Housing and Transit Reinvestment Zone Committee each passed measures created in this year’s SB26, creating a “funding mechanism” for the projected $1.8 billion project by setting up tax increment collection and financing tools.

Meeting an economic need

Tuesday’s vote took place after a public hearing on the matter. Many of the comments touched on issues raised during the initial agreement process last year, including concerns over speed of the process and project clarity.

But backlogged maintenance has already reached $120 million, and it’s expected to grow, Casper said. Wilson added that the COVID-19 pandemic drastically changed the need for the current convention center configuration, as more conventions are asking for ballroom spaces over large event spaces like the Salt Palace’s massive exhibit hall.

The need to outcompete other cities for business would have likely required other major updates. County Council members said they wanted to make sure the Salt Palace continues to be the economic driver that it is, and agreements between the city, county, state and Smith over the past year opened the door to making that happen — it’s what tipped the scale in their decision to sell.

“This is critical,” said Salt Lake County Councilwoman Aimee Winder Newton. “At some point, we’re going to have to rebuild our Salt Palace, and this is a great mechanism to do it.”

The focus now turns to what’s next.

While County Council members are eager for the block’s next chapter, Lynne Ward, a Japanese Church of Christ elder, also called on them to consider both the church and the Salt Lake Buddhist Temple once demolition begins. Both buildings are located next to the Salt Palace section that is now destined for demolition.

“There are some serious concerns about the demolition and construction phases,” she said.