CRA board adopts term sheet for amended Delta Center lease tying team covenants and expanding tenant responsibilities

The Salt Lake City Community Reinvestment Agency board on Aug. 12 voted to adopt a term sheet for an amended and restated lease of the Delta Center that would preserve public ownership of the land beneath the arena while granting a long-term lease to Jazz Arena Investors, an affiliate of Smith Entertainment Group (SEG).

Mayor Mendenhall told the board the update "reflects the changes and the growth that we've seen in the area" and emphasized that the city will maintain ownership of the land beneath the arena. "The dollar amount has never been the purpose of this lease. It's about long term value that we see in the arena and in our downtown core," she said.

Mark, representing the city's negotiating team, outlined the principal terms in the term sheet: an initial 30-year lease term with seven optional 10-year renewals (potentially a 100-year term), an initial fixed rent of $1 per year so long as at least one of the NBA or NHL franchises (Utah Jazz or the Mammoth) uses the Delta Center as their primary venue for home games, and a shift to market-rate rent determined by third-party appraisal if neither franchise uses the arena as a primary home. The tenant's leasehold would be net: the tenant would pay insurance, taxes, maintenance, utilities and other operating costs.

The term sheet incorporates the Jazz and Mammoth 30-year home-game covenant from the participation agreement into the lease and links a "first-class" maintenance standard to that covenant while the teams are present. If neither team uses the arena, the maintenance standard reverts to one comparable to similarly sized multipurpose facilities.

The term sheet allows SEG or its affiliate Jazz Arena Investors (JAI) to mortgage or encumber the leasehold and to hold naming rights. It contemplates subleasing and sets CRA consent rules that vary by type of sublease, use, and timing (for example, five business days for certain approved retail/hospitality uses in the first 15 years, longer review periods for other scenarios). The lease also includes indemnity and environmental provisions and detailed insurance requirements. Mark summarized the insurance minimums: full replacement-cost property coverage, umbrella/excess liability of at least $50,000,000, commercial general liability (CGL) not less than $1,000,000 per occurrence, automobile insurance with limits of at least $2,000,000, business interruption coverage for 12 months, cyber insurance of at least $5,000,000, and specified contractor and professional liability coverages during renovation work.

Board member Pui asked about public art on the north side of the Delta block; Mark said CRA staff and the tenant would discuss it. Board member Lopez Chavez moved to adopt the term sheet; board member Pui seconded. The motion passed; the board recorded the term sheet as adopted. The board's stated record for this item noted the vote passed 6 to 0 with board member Young absent.

Why it matters: The term sheet ties long-range arena activation and the teams' home-game covenant to a formal lease, preserves public ownership of the land under the Delta Center, gives the tenant strong rights to invest and control naming and improvements, and shifts operational and insurance costs to the tenant while establishing CRA review rights for non-arena development on the parcel.

Next steps: The term sheet adoption directs staff to continue negotiating and finalize the lease consistent with the adopted terms; additional contract documents, insurance certificates, and sublease proposals will be evaluated under the consent rules in the term sheet.