Utah signs off on $1.8B for downtown ‘reinvestment zone’ after big last-second changes

SALT LAKE CITY — A state committee has agreed on a $1.8 billion “reinvestment zone” where major downtown changes will take place next to a soon-to-be remodeled Delta Center.

Related: A Downtown Salt Lake revitalization could be beneficial. How could it come to life?

However, the vote didn’t come without some last-second drama as the project cost and zone size were drastically adjusted within a day of the vote as Salt Lake County and Salt Lake City race to meet an April 15 deadline to finance a Salt Palace Convention Center makeover.

The Housing and Transit Reinvestment Zone Committee, a section of the Governor’s Office of Economic Opportunity, voted 9-4 Friday to approve the Capital City Convention Center Reinvestment Zone. The zone includes the arena, the convention center, Abravanel Hall, Utah Museum of Contemporary Art and what’s left of historic Japantown, as well as nearly 9 acres of additional land added this week called “Block 67.”

The decision comes as Delta Center remodeling could begin as early as this month, setting off massive changes to the whole area.

“We still have a lot of work ahead of us, but we’ve got this part done,” said Ryan Starks, the office’s director. “I’m confident that this group can get us to a good place.”

A hefty price tag

County officials now estimate that renovating the Salt Palace by adding a second ballroom, additional exhibit space, new meeting space and making sure that it’s no longer a “barrier” between the east and west sides of downtown by cutting into it could cost about $1.28 billion to complete, according to another document made available ahead of Friday’s meeting. It was the lowest project cost of the options the county considered, said Darrin Casper, deputy mayor of finance & administration for Salt Lake County.

Renovations to Abravanell Hall, a potential rebuild of the Utah Museum of Contemporary Art and reconstruction of the block’s east plaza could tack on another $229 million, elevating the total project cost to over $1.5 billion. The addition of projects tied to Block 67 — including the site of a former downtown post office — increased the overall project cost to about $1.8 billion.

That’s where a new state law comes into play. SB26, which lawmakers passed last month, created both the Capital City Convention Center Revitalization Zone and the Convention Center Public Infrastructure District as financing options, setting aside existing tax options to pay for the projects.

“In the absence of the funding made possible through the CCRZ, such investment in infrastructure and assets would not be feasible,” Jim Grover, managing director of economic growth for the Governor’s Office of Economic Opportunity, wrote in a draft version revitalization zone application.

Salt Lake City leaders held a public hearing on the public infrastructure district earlier this week ahead of a vote expected to take place on Tuesday. Both the city and county have a tight window to work with, as the bill’s language lists an April 15 deadline to approve the zones while other parts of the bill don’t officially go into law until May 7 or later.

Drama over last-second change

Friday’s fireworks centered on a flurry of zone proposals filed since Tuesday’s city meeting. Six different versions were filed this week, with the biggest change being the addition of Block 67 to the project zone. The block, which includes the former downtown post office, is mostly owned by a private developer called the Ritchie Group.

The city only learned about the addition and the $300 million jump in project cost hours before Friday’s meeting, Blake Thomas, senior adviser on real estate and capital projects, told KSL.com. He asked the committee to delay the vote by a week so the city could review the impacts that it could have on the project area and the city, since it could have an impact on taxpayer spending.

Salt Lake City Councilman Dan Dugan and Salt Lake City School District officials joined in the plea.

“(Our concerns were) just the necessity of needing time to understand an updated budget without knowing it and what the uses would be,” Thomas explained after the meeting.

While his motion was backed by Salt Lake County leaders, state leaders and other committee members ultimately rejected the delay after a lengthy discussion, arguing they were up against a tight window and confident that the county would ensure that all funds are used wisely.

I hope it’s abundantly clear that Salt Lake City is supportive of the project. … We’re excited for the future and the outcomes that this funding will unlock.

– Blake Thomas, SLC real estate and capital projects

Block 67 was added to provide additional parking and increased revenues before the county seeks out bonds to pay for the project, Casper explained. The project would provide additional infrastructure to the district, added Ryan Ritchie, principal of the Ritchie Group.

Those details are still being hammered out, but any funding from the district would only be spent on parking, Salt Lake County Mayor Jenny Wilson clarified. She added the county will sign off on all future expenditures once the project gets to those stages.

It all comes as Smith Entertainment Group plans to begin Delta Center remodeling. Construction could begin as early as April 18, depending on whether the company can finalize everything with Salt Lake County by April 15, said Mike Maughan, an executive of the company that owns the Utah Jazz and Utah Hockey Club.

Any delays, he added, could impact the project’s “compressed” timeline. Lawmakers said they understood the city’s stance, but they argued that most of the project is still in a “preliminary” stage and construction could be impacted by delaying Friday’s vote.

“I’m not sure what another week does other than potentially causing some anxiety for SEG and some of the development that needs to start taking place,” said Sen. Kirk Cullimore, R-Draper.

Starks added it was unclear if the committee would have time to meet next week with how busy members’ schedules were. Thus, the committee voted to approve the zone now instead.

While disappointed in not receiving the delay, Thomas said the city is still committed to the downtown overhaul. It’s unclear if Friday’s vote will change next week’s public infrastructure district vote, which the City Council has indicated that it will pass.

“I hope it’s abundantly clear that Salt Lake City is supportive of the project. We’re really thrilled about the renovation of the county assets as well as the Delta Center,” he said. “We’re excited for the future and the outcomes that this funding will unlock.”