Will Salt Lake City raise sales tax for Delta Center, downtown revitalization? Decision coming

Salt Lake City is poised to raise its sales tax to generate hundreds of millions of dollars to renovate the Delta Center to accommodate both the Utah Jazz and the new Utah Hockey Club as part of an ambitious downtown makeover project.
The City Council discussed the tax increase along with Smith Entertainment Group’s proposal to redevelop the area around the arena during a work session Tuesday afternoon. The seven-member panel could vote on the plan after a final public hearing Tuesday evening. It unanimously endorsed a participation agreement with SEG, which owns the basketball and hockey teams, in July.
“Nothing has been taken for granted in this deal,” Council Chair Victoria Petro said during the work session, adding all aspects of 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 a sports, entertainment, culture and convention district encompassing 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 better connect the east and west sides of downtown, would impact the Salt Palace Convention Center, Abravanel Hall, Utah Museum of Contemporary Art and Japantown.
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 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.
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.
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.
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.
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 Puig 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.