Category: Utah Jazz

If you were getting all excited about former Salt Lake City Mayor Rocky Anderson saying he planned to stage a public referendum on the city’s plans to sell $900 million worth of Utah Jazz arena renovation bonds and pay for them with a sales tax hike — for new readers, yes, this is the kind of thing people can get excited about here, don’t say you weren’t warned — you can stand down, as Anderson said late Friday that he’s not actually gonna do that:

We know many are disappointed that the issue of a new sales tax was never put to public vote. We share in that frustration. However, efforts to pursue a referendum will distract time, effort, energy, and resources from the important work of addressing essential issues facing our city, and undermine the opportunities for working together with SEG on matters of mutual passion and concern. Also, there is no certainty about the prospect of meeting the requirements for the sales tax increase to appear on the ballot for a vote. Therefore, to achieve a cooperative alliance that allows us to work together from this day forward for the benefit of the entire community, we will not pursue a referendum.

That’s a lot of words (and a lot of nosism) that comes down to two things: 1) I’d rather work with Jazz owner Ryan Smith than agin’ him, and 2) that whole referendum thing might not have worked anyway. Door #1 sounds more like a cover story for #2 than the other way around, and FoS commenter Ian noted last week that the referendum felt dodgy from the start: Utah referenda can’t be used to overturn legislative decisions that passed by a two-thirds supermajority in both the state house and senate, and the sales tax hike for the arena easily cleared that threshold. So it looks as if Anderson may have been talking before his ass had had a chance to talk to its lawyers, and now that he’s heard back he’s decided to pivot to “Can’t we all just get along?”

The Jazz/Utah Hockey Club (man, is that going to get old to type by the end of this season) arena deal still isn’t finalized, mind you, since Smith and the city still need to agree next year sometime to a lease extension on the renovated arena and the planned surrounding development. With city and state legislators both overwhelmingly in favor of the deal — even if Utahns as a whole are not — it doesn’t seem real likely that this will be a major roadblock, but stranger things have happened, occasionally. If you’re a local (or ex-mayor) with hopes of changing this sales tax subsidy, you know which clouds to yell at.

The Salt Lake City council finally got around last night to authorizing the $900 million in city bonds that were first approved back in July for renovations to the Utah Jazz arena, plus building out a wider entertainment district around it. The bonds will be paid off via a 0.5% citywide sales tax hike, though what happens if sales tax revenues fall short still isn’t clear.

In fact, a whole lot still isn’t clear about the details of the arena plan, even three months after it was first announced. In particular, Ryan Smith, the owner of the Jazz (and whatever the Utah Hockey Club ends up being called once it gets around to picking a name), still hasn’t worked out a lease deal for the arena and surrounding land, which you really would have wanted to work out before cutting a $900 million check. That’s not going to be resolved until sometime in 2025, so really yesterday’s approval wasn’t any more final than July’s was, though it’s certainly another step toward finalizing the deal.

I’m writing all this from a weird time zone, so going mostly off a very poorly written KSL-TV article, but there are at least some signs of opposition to the deal, including former Salt Lake City Mayor Rocky Anderson saying he plans to subject the arena plan to a public referendum, sometime in the future, maybe. Earlier reporting indicated that the project is popular because it brings together both the business community that wants downtown “revitalization” spending and arts groups that want the Utah Symphony’s Abravanel Hall preserved, but also that Utahns as a whole oppose the tax hike by a 54-38% margin, so maybe not actually popular? Utah journalists have until sometime next year to get their act together and actually report on what’s being negotiated and what people think about it, I’m not holding my breath but we can always hope!

Currently recovering from round two of COVID over here at FoS HQ — really wouldn’t have minded if the CDC let people under 65 get vaccine boosters more than once a year, given that they start fading in efficacy after three months, just saying — but I do want to dig into the Utah Jazz arena renovation deal details that have emerged in the last few days, so let’s see what my fogged brain can do with the available info:

• Jazz owner Ryan Smith plans to move ahead with a renovation of the Delta Center over the next three years, before moving on to building up a “downtown sports, entertainment, culture and convention district” around it.
• Smith would be able to use $575 million in bonds for arena renovations, plus $325 million more for entertainment district costs. These bonds would be repaid with the proceeds of a citywide 0.5% sales tax hike, which the Salt Lake City council will vote on later this year.
• Smith has said he’ll spend $3 billion of his own money on the stadium district development, though it’s not clear whether that’s a firm commitment or something he can walk away from once the arena renovations are done, if he no longer thinks the bigger project would be profitable.
• The city would have “no obligation or liability” to make bond payments that couldn’t be covered by sales tax proceeds, leaving it unclear what the backstop payment procedure would be so that people will actually buy the bonds without risking being left holding the bag if sales tax receipts are negatively impacted by, oh, let’s say, another pandemic, or arsenic dust storms. The proceeds from the sales tax hike alone were previously estimated to be enough to support about $673 million in bonds, but that’s not to say other public funding sources won’t be found elsewhere.
• If either the Jazz or whatever Smith’s new Salt Lake NHL team ends up being called moved in the next 30 years, its owners would have to pay back all of the tax money plus damages, so that’s promising, at least, assuming there are no out clauses.
• Smith would add a ticket surcharge of between $1 and $3 (chosen by Smith? by negotiations with the city? no one can say!) that would be used to pay for city affordable housing projects. This is nice and all, but even at $3 a ticket, if the arena sells, say, 3 million tickets in a year, which would be a lot, that’s still only present value of around $140 million, far less than Smith would be receiving in city sales tax money.
• There’s still no lease agreement between Smith and the city, so things like rent payments and whether the city would get a cut of any increased arena revenues or naming rights or anything is very much TBD.

This giant bundle of ¯\_(ツ)_/¯ goes before the city council tomorrow, where it will be voted on and then possibly sent to the state for a vote and then back to the council. Plus there are still upcoming votes on the sales tax hike and the lease and zoning changes — so there’s a lot yet to be approved, although locking in the $900 million in tax money part would be a nice first step for Smith.

If this seems convoluted to you, be glad you’re not thinking about it with a head full of virus. I do feel confident in saying, though, that this remains at least a $750-900 million public gift to the Utah teams’ billionaire owner, with no firm guarantee of what Smith will provide in return. In other words, par for the course for most sports subsidy deals, where it’s all too often the case that the taxpayer check is written before all the fine print is actually worked out.