Smith Entertainment Group estimates spending $525 million remodeling Delta Center

People walk past the main entrance of the Delta Center with "NHL in Utah" branding on display on April 19, 2024 in Salt Lake City, Utah. The NHL has allowed the sale of the Arizona Coyotes and the team will relocate to Salt Lake City. (Chris Gardner/Getty Images)

Salt Lake City has drafted an initial agreement with Smith Entertainment Group to raise its sales taxes by 0.5% to renovate the Delta Center to accommodate a National Hockey League team and revitalize three downtown blocks.

The tax increase is expected to raise about $900 million for what’s known as the Capital City Revitalization Zone over the next 30 years. Smith Entertainment Group estimates that $525 million will be used on the remodel of the Delta Center and $375 million will go to cover costs to develop the district, said Katie Lewis, Salt Lake City’s attorney, who explained the agreement to the City Council on Tuesday.

The deal would not only keep the Utah Jazz and Utah Hockey Club downtown, a flagship goal of her administration, Salt Lake City Mayor Erin Mendenhall said during the meeting, but offer tangible public benefits for Salt Lakers.

“We are the home of sports, entertainment, convention and culture and this deal secures our position as such in the state of Utah. We know also that urban centers across this country suffer without intentional investment,” Mendenhall said. “And the lure of cheaper property can pull investments, first pulling people, and then jobs and commerce and amenities that ends up hollowing out and gutting urban centers.”

The agreement includes a non-relocation provision in an effort to keep both the new NHL and NBA teams in the Delta Center for the duration of the 30 year-agreement. “If either team ceases to play its home games at Delta Center, the City has a variety of remedies, including specific performance or payment of damages,” the draft reads. 

Smith Entertainment Group is planning to use the public money to redevelop the block where the Delta Center sits, as well as two blocks directly east of the arena. In addition to the tax revenue, the company estimates investing at least $3 billion in the downtown area.

Anytime Smith Entertainment Group asks for a draw on the bonds, it will submit construction phasing and budget for the city’s review, Lewis said. The whole project must be completed and in operation 10 years after the participation agreement’s approval. 

The City Council is potentially voting on the participation agreement next Tuesday. If the council approves it, the Revitalization Zone Committee — created by SB272 and appointed by state officials — will consider the agreement in a public meeting before August 13. If that committee gives the deal a nod, it will go back to Salt Lake City for final approval and a potential adoption of the sales tax.

The final deadline to adopt the sales tax increase is Dec. 31.  

The deal includes several public benefit commitments, as well. Smith Entertainment Group is expected to impose a fee on each ticket sold for Delta Center events that will go to a public benefit account. The goal is to spend those funds on family-sized and affordable housing, among other city initiatives.

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That fee will be $1 per ticket priced at $25 or less; $2 for tickets with prices ranging between $25 and $200, and $3 for tickets with prices greater than $200.

The company also committed to maintaining community and workforce development initiatives, establishing apprenticeship, internships, high school shadowing and other youth programs, especially for low-income families. There will also be free and subsidized tickets to encourage “individuals from Economically Disadvantaged Families in Salt Lake City to attend NHL and NBA home games,” according to a summary of the draft participation agreement.

Community representatives from Japantown — a downtown stretch on 100 South in between 200 West and 300 West, the remaining  piece of what was once a large community of Japanese Americans, displaced by history and the construction of the Salt Palace Convention Center — must also be invited to coordinate in shaping the plans. The proposal includes money and efforts allocated to reduce truck loading and unloading in areas facing Japantown, and to develop pedestrian connections, historical markers and public art.

During the construction portion of the project, Smith Entertainment Group also committed to use sustainable development elements and “to incorporate its construction contract bidding process readily available to and easily accessible to small-, minority-, veteran-, and/or woman-owned contractors and subcontractors.”

The redevelopment plans also include gathering spaces like an outdoor event space, walkways and landscape features, which would be owned and operated by Smith Entertainment Group and “will include a statement affirming SEG’s support of non-discriminatory behavior on the basis of race, creed, color, ethnicity, national origin, religion, sex, sexual orientation, gender identity and expression, age, or physical or mental ability.” 

Most members of the City Council showed excitement for the plans, with council chair, Victoria Petro describing the likely positive outcomes for the city as “remarkable,” and calling the agreement a “really, really good document.”

“I am really thankful to be here at this moment sharing it with you and don’t take it lightly at all what we’re discussing,” Petro said. “And I’m eager to allow the public to finally put their eyes on something, and for us to discuss things in a deeper context that’s going to allow us to become the expansive city that has space for everything.”

However, Council Member Darin Mano said that though he’s happy to see the terms in writing, the move made him still nervous.

“This is a huge responsibility. Mike, please please don’t let us down,” Mano told Mike Maughan, the Smith Entertainment principal who is overseeing the project. “I do not want to look back in my old age and think tech can’t regret having voted for it or being part of this process.”

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