Only a few loose ends now stand in the way of car dealer and Utah Jazz owner Larry Miller starting construction on a 20,400-seat sports and entertainment arena in west downtown Salt Lake City.
Mayor Palmer DePaulis, acting as chief administrative officer of the city's redevelopment agency, said he expects to execute a lease agreement between the RDA and Larry Miller Wednesday. The action would finalize the lease approved in a 5-1 RDA board vote Tuesday night.The RDA board, which doubles as the City Council, voted to approve the lease on the condition the mayor and RDA attorney William D. Oswald worked to spell out who would pay property taxes if Miller and his wife, Gail, were to die or default on the arena project or sell the Utah Jazz.
After a two-hour discussion, Chairwoman Roselyn Kirk lead the board to a vote despite reservations about the deal. She said delaying action would be "psychologically" detrimental to the project and send the wrong "vibes" to Miller and the community. The lease agreement will clear the way for a Japanese bank to begin payments to Miller on a $66 million construction loan, according to Miller's attorney, Dennis Haslam.
Technically, the RDA board signed the 24-page lease agreement with the Miller Arena Corp., a "shell" corporation which will construct and manage the arena. The president is Gail Miller and the secretary is Larry Miller, according to William D. Oswald, RDA board attorney.
Miller broke ground on the arena May 23 after five months of negotiating the loan with the Los Angeles agency of the Japanese Sumitomo Trust and Bank Co. Ltd. Miller wants to build the arena to help ensure the Jazz stay in Utah. The Acord Arena at the Salt Palace has become too small.
In its action, the board said it also wants to investigate whether it can obtain insurance on a $20 million bond issue to help build a parking terrace and improvements around the 10-acre site where the arena is to be built.
The bonds would be paid back over 25 years. Part of the bond payback will depend on an estimated yearly payment of $500,000 to $800,000 in property taxes. Miller will be required to pay $1 a year on the 50-year lease. In 2040, the property will return to the redevelopment agency.
Opposition to the lease came from Nancy Pace, a member of the board, who said she was uncomfortable approving an agreement when she didn't know how much of Millers' property may be tied up as collateral in other business activities. She said she wasn't satisfied with a personal guarantee signed by Larry and Gail Miller to fulfill the terms of the lease agreement.
She said wanted to look at a personal financial statement to know how much money would be available to bail out the arena in case the Jazz left town or the arena project went sour for some other reason.
"This is not a vote of no confidence against Larry Miller or his project. I just hate to sign something I haven't seen," Pace said.
Haslam assured the board that protections were in place to protect the RDA bond including the fact that governments are first in line to receive back taxes in the event of a default. He also said that the Millers' children would likely inherit the stock and obligations to pay taxes for the corporations.
Board member Don Hale told the board several times that there wasn't anything to be concerned about in the deal.
"I think this man (Miller) is solid enough," he said.
Along with finalizing the lease agreement, obtaining title to the northern half of the arena site is still an obstacle that must be met before full-scale construction can begin. The redevelopment agency has been attempting to get signatures on agreements including Travelers Insurance Co. and a Canadian bank.
Richard Turpin, the RDA's interim director, said he hopes to have the signatures concerning the land sometime this week.
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Sticking points
-The RDA board wants to be assured that if the Utah Jazz are ever sold that proceeds from the sale would help to continue to pay off a $20 million bond.
-The RDA board wants to be assured that if Larry and Gail Miller die that their heirs will pay taxes on arena property that will in turn pay off the bond.
-Mayor Palmer DePaulis, acting as the RDA's chief administrative officer, is also investigating the availability of an insurance policy to help protect the bond before he finalizes an agreement with Miller.