Sports and Entertainment District, Part 3 – City Council limits zoning changes as Mayor’s deal points with SEG emerge

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The Mendenhall Administration presented to the City Council last night the outlines of the draft agreement negotiated with Smith Entertainment Group (SEG) for a three-block area including the Delta Center and the Salt Palace Convention Center for the investment of nearly $1 billion of new sales tax collections.

SEG, majority owners of NBA’s Utah Jazz, NHL’s Utah Hockey Club (relocated from Phoenix), and soccer’s Real Salt Lake and Utah Royals, have insisted that “it’s not about an arena, it’s about revitalizing a downtown that desperately needs investment.”

Mayor Erin Mendenhall has embraced the initiative, on Tuesday declaring victory in “accomplishing a flagship goal of securing not only the Utah Jazz but a new NHL team in our Downtown core.”

Details of the draft Participation Agreement outlined by SB 272, passed in this spring’s state legislative session, will be released later in the week at City Hall. In the meantime, an outline of the deal was surfaced to the public for the first time at the Council’s work session on Tuesday.

Let’s briefly look at the deal while we also review the City Council’s take on SEG’s proposed zoning changes for the district.

Outlines of the deal

Required to transmit a participation agreement to state authorities by Sept. 1, City Hall has been feverishly working to meet the deadlines set by SB 272 – while also advancing city priorities in the agreement as much as deemed possible.

Council Chair Victoria Petro opened the briefing by acknowledging the efforts put in by Administration and Council staff to get to this point.

“This is a culmination of a lot of work for us, and I’m really proud of the work you, my co-counselors, did,” Petro said.

The briefing was led by head City Attorney Katie Lewis, who trotted the Council through deal points that had been informally approved by Council Members previously, but only transmitted to the City Council office just minutes before the briefing began.

For the public, at first blush it looks like City Hall’s demands for community benefits met the ears of willing partners in SEG. 

While the city received no guarantees that the NBA and NHL franchises won’t ever leave Downtown, a number of conditions are proposed to benefit the community at large as well as disadvantaged individuals and families in the city.

Here are some of the proposed agreement’s main points, as released by the Administration on Tuesday:

  • Maximum amount of net bond proceeds that SEG may receive is $900 million. This will be paid from the Revitalization Tax collected by the City over 30 years, which is anticipated to generate revenues of approximately $1.2 billion. 
  • Those funds must be spent in 10 years. Of that $900 million, SEG commits to spend $525 million in the Delta Center remodel and $375 million for the other district improvements. Private funds will make up the difference between sales tax revenue and actual construction costs.
  • A fee on tickets will be charged to fund a Public Benefit Account. Each ticket, depending on price, will be taxed $1-3 “To be spent on family-sized and affordable housing and other public benefit initiatives as determined by the City, and other initiatives the City identifies.” These funds can be spent in any area of the city – and are already committed in the draft agreement for items like public art.
  • Gathering spaces–privately constructed, owned, and operated by SEG–will be open to all, according to guidelines that seem to model Federal inclusivity standards, including sexual orientation and gender identity.
  • Japantown: At least $5 million investment in Japantown, as well as spatial respect for the Japanese Church of Christ on the north side of 100 South. District 5 Council Member Darin Mano, a Japanese-American with family history in the diaspora and dispossession of Japanese Americans during and after WWII, told his colleagues that “the community didn’t get all they wanted in these negotiations, and I want to hear more about that.”
  • Transparency and reporting requirements between the City and SEG.
  • Community support and workforce development: including apprenticeship programs, college internships, high school shadowing programs, youth athletics programming, community outreach requirements, and free and subsidized tickets for income qualifying individuals.
  • Requirements that a lease agreement is in place between SEG and Salt Lake County for the two Salt Palace blocks.

The full draft agreement will be available “in the next 24 to 48 hours,” according to the Mayor’s communications team. Here’s the outline released Tuesday afternoon. 

And the zoning?

Provo-based SEG CEO Ryan Smith and his frontman for public negotiations, Mike Maughan, are making some pretty big asks for land use and zoning changes in the area between the Salt Palace at West Temple and The Gateway at 400 West.

Instead of proposing to upzone to the city’s most intense zone, D-1, and following its rules, SEG wants new rules for D-4, the zone currently existing on its targeted parcels.

On the developer’s wish list: up to 600 feet in height, stadiums, plaza-building ability (negating maximum setbacks), as well as major signage and advertising changes.

The Planning Division’s latest recommendations for changes to the D-4 zone look to have aligned with City Council’s priorities:

  • Height limit: 600 feet, and design review required over 75 feet. In D-1, heights are unlimited with design review.
  • Heliports as conditional use, and stadiums/arenas as permitted.
  • Allow larger signs than are currently allowed in the D-4 zone throughout the three-block district, like those currently allowed at the Delta Center sign overlay, at the Leonardo, and at LA LIVE.
  • Those signs, which can be digital, can’t advertise ”off-site” products/events. In other words, they can’t become what the city calls billboards.

The sign overlay for the Delta Center currently allows these types of signs. The overlay is recommended to be extended to the two blocks east. Courtesy SLC Planning.

The prohibition against off-site advertising seems secure, backed up by the Planning Division and a majority of City Council members. 

Planning Director Nick Norris told the council Tuesday that the city had received similar requests, including along the city’s grand boulevards.

“It’s better to have those more focused and given the time they need to be discussed, versus trying to get something in place before Sept. 1, because I think that will potentially have some unintended consequences in other parts of the city,” Norris said.

While full-on digital billboards advertising whatever will likely be disallowed, large video screens look to be an integral part of SEG’s design, given initial renderings.

The potential “nuisance” effects of signs already exist in city code (dwell time, twirl, and brightness), and wouldn’t be otherwise regulatable unless petitioners have to go through design review or otherwise need a development agreement, Norris told the Council. 

In June, the city’s Planning Commission rejected the requested zoning changes in a unanimous vote. One commissioner warned of “a jumbotron-fueled, oversized and glitzy sports center” that will not “be anything but a relic needing overhaul in less than 20 years,”

Nevertheless, City Hall seems to be primed to make SEG’s Sports, Entertainment, Convention and Cultural District happen.

The City Council is set up to vote on the terms of the Participation Agreement at its next meeting, next week on July 9. 

The zoning changes will have a public hearing at the Council on August 13, with a vote to be taken before September 1.

 Editor’s note: A previous version of this story mis-stated the date of zoning changes being considered by the City Council for a vote.

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Posted by Luke Garrott

Luke Garrott, PhD, has published in The Salt Lake Tribune and the Deseret News, and written features for the Salt Lake City Weekly City Guide and The West View. A former two-term councilman in Salt Lake City's District 4, he lives in Downtown Salt Lake City and grew up in the Chicago area.