City Hall announced that $1 billion will be awarded to Smith Entertainment Group (SEG) to transform the area around the Utah Jazz and newly acquired NHL franchise's existing downtown stadium. Fast-tracking approval of $1.62 billion in sales tax transfers.
Tonight, the City Council heard that SEG and the Mendenhall administration are negotiating an agreement to create a sports and entertainment zone, which is required by state law to be completed by September 1st and the mayor hopes to approve in July. Hear from a representative.
Given the expedited calendar set forth in the bill effective from the Legislature's 2024 session, the city is being asked to suspend some of its normal operating procedures. We recently reported on SB 272's requirement to complete capital plans, master plans, and zoning changes, mandating schedules that violate normal city planning policies.
Additionally, demand for public benefits, which are always part of the city's requirements when applicants request public funds, may be shrinking.
These public benefits typically revolve around the city's sustainability, equity, and affordability goals and are used as criteria for city grants and loans.
However, given the “long-term positive impacts” of the sports and entertainment zone that SEG claims, there may not be a need to apply the city's standards.
For Salt Lake City residents, who pay 40 percent of the sales tax collected by the city, the $1.62 billion transfer equates to $106 per person per year. Most of it is paid by visitors and tourists.
Over 30 years, we would collect $3,180 from every resident, young and old. This means that the average tax on a household is 3,180 times the size of her family.
There is broad consensus in the peer-reviewed academic literature that publicly funded stadiums are a bad public investment. Perhaps the creation of a broader sports and entertainment district will change the calculus. SEG suggests this will be the case due to increased tourism, increased tax revenue and increased real estate values.
What SEG wants, and what it thinks it's delivering: 'Long-term positive impact'
SB 272 establishes expedited review and special zoning rules beyond those enjoyed by property owners in the city's current zoning categories.
SEG's initial proposal encompasses land within the blue rectangle, including two blocks of the Salt Palace Convention Center, which is owned and operated by Salt Lake County. We at BSL were first to report that SEG had its sights set on county-owned land. The Green Square is a 10-acre surface parking lot, and the LDS Church says it is not subject to development.
The Utah Symphony Orchestra's Abravanel Hall is in the eye of the wrecking ball, SEG claimed.
A capital reinvestment zone can include up to 10 square blocks.
The Jazz arena and two blocks to the east are currently zoned D-4, which allows the uses and building heights requested by SEG in its application. But now some of the uses, such as the stadium, helipad and roadside parking, are conditional and must be approved by the Planning Commission. SEG wants them to be allowed by rights.
Will this be an obstacle for the SEG blueprint? Not likely. “Most of the zoning needed to support the entertainment district is already in place with the downtown building height and street activation code changes adopted last year,” Planning Director Nick Norris said. Ta. Additional changes are still in the conceptual stage. ”
Currently, unlimited building heights are permitted in both D-4 and D-1 districts, subject to design review.
What about public interest? SEG's application to the city, which was received on April 4, cites the following “significant and long-term positive impacts of the project.”
• Promote, create and maintain employment
・Improve the value of surrounding assets
•Attract increased external private and public investment
•Increase in tax revenue
•Improve the overall aesthetics and functionality of the project area and surrounding area
•Expanding cultural and recreational opportunities
•Increase in tourists
• Increase the vitality of Salt Lake City as a whole
Such claims are not uncommon in pitches from owners seeking public financing. It remains to be seen whether City Hall will require specific commitments from his SEG to achieve these goals.
But a peer-reviewed study of new models for stadium development, including mixed-use developments focused on food, beverage, housing, office and entertainment options, offers a grim assessment for boosters.
For example, claims about the number of jobs created are potentially ambiguous and usually cannot be verified. Jeffrey Profetter of the University of Colorado Denver told Chicago's South Side Weekly.That could mean he gets 1000 jobs and he lasts 30 years. [each]Or 30 jobs last a thousand years. ”
Chicago is currently hearing proposals from the NFL's Bears and MLB's White Sox to build a new stadium.
Additionally, you can choose how to collect the “economic impact” numbers. Studies such as J.C. Bradbury's evaluation of the Atlanta Braves' relocation to Cobb County and the construction of the Battery Entertainment District do not support claims that a new stadium and surrounding area will boost tax revenue, property values, and tourism. do not have.
However, decision-makers continue to claim that stadiums will boost the local economy, clearly contradicting reality.
Kennesaw College's Bradbury said, “Much of the local spending is diverted from other local facilities. Cobb residents who attend baseball games at SunTrust Park or the restaurants and shops at the Battery do not If not, the proceeds would likely have been spent on other Cobb businesses such as restaurants, movie theaters, and retail stores, which would have provided equivalent sales tax revenue to the county and schools.”
Typically, one development captures from another in exchange for increasing the tax revenue pie. This debate has been going on in Salt Lake City for years.
The development of the LDS Church's Main Street Mall (ZCMI and Crossroads) and subsequent Gateway competitors (supported by the Redevelopment Agency) brought to the fore whether downtown retail was a zero-sum or positive-sum game. In an era when brick-and-mortar businesses face structural disadvantages when it comes to online sales, the scarcity argument is likely to prevail.
Indeed, Bradbury's analysis found that property values and sales tax revenue have not increased compared to the counties surrounding Cobb City in the Atlanta area. Conclusion? A new stadium is not the economic booster it claims to be.
Meanwhile, the Braves reported $59 million in 2023 revenue from the Battery, which is primarily rental income. According to a report in the Atlanta Journal-Constitution, the Braves' total revenue in 2023 will be $641 million, of which $582 million will come from baseball personnel and $59 million from batteries. Ta.
Southside Weekly reported that the Braves organization claimed $272 million in revenue for the third quarter of 2023 alone.
Mayor: “An immense public benefit that is difficult to reflect in a simple ROI analysis.”
When asked by Building Salt Lake about the public return on investment (ROI) of the deal, city decision makers expressed both confidence and ambiguity. The same rosy vagueness characterizes SEG's comments on public interest.
What will the public demand? A study of stadium deals in other U.S. cities yielded the following list:
•Economic Performance Objectives – Accountability for revenue-generating claims
•Commitment to keep the team in the city
• Damages if the team moves
•Profit sharing with city government
• Create quality jobs (most entertainment and hospitality jobs are unqualified)
• Compliance with the City's current priorities of sustainability, equity and affordability
The City Council, which has the power to amend, veto, or approve agreements between SEG and the Mayor, has indicated that its most important public interest is its significant contribution to Japantown.
Council Chair Victoria Petro said: That is the council's first and final reckoning. ”
We'll see if the council can follow SB 272's fast-tracked schedule to “maximize the benefits of each Salt Lake resident.”
When asked about the public benefits of building Salt Lake, the mayor's office responded with the following words:
“Public financing in this district will not only benefit the sports arena; it will reshape the downtown core, improve east-west connectivity, improve streetscapes, stimulate economic activity, and provide significant In particular, it creates more attractive spaces for families downtown, an intentional investment in the capital that produces immense public benefits that are difficult to reflect in a simple ROI analysis. .”
Is it a “huge public benefit” or something we cannot afford to lose?
Whether Mayor Mendenhall's City Council Administration will require actual financial public benefit for Ryan Smith's $1.62 billion request from SEG will pass through council by the end of July Considering the mayor's goal, it will likely be confirmed at City Hall soon.
As with most stadium financing proposals, it appears to be a very favorable deal for team owners, but less so for the general public. Unless, of course, the taxpayer is satisfied with the intangible goods.
Having a Major League team in your city increases your city's prestige, civic pride, and national recognition. Rooting for the same team unites people and provides a civic bond that is increasingly rare in today's world.
Despite the dramatic wealth transfer authorized by SB 272, city decision makers may have no choice but to approve SEG's proposal. Can you afford to say, “I want a better deal?”
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