After a scant five months of negotiation, American Stores has finessed a deal with Salt Lake City to build a corporate headquarters on Block 57 that city officials say will be a "crown jewel" in downtown development.
The $90 million project, which will include a 26- to 28-story office building and a multilevel parking structure, will also signal that the expansion and southward migration of Salt Lake City's downtown is under way.City officials and American Stores representatives unveiled plans for the project, which were approved by the city's RDA board Monday, during a late-morning press conference at the Gallivan Utah Center. American Stores is one of the 30 largest publicly held companies in the country. It has 127,000 employees scattered around the United States at its grocery and drug stores and distribution centers; the company does not operate any stores in Utah.
Its new 540,000-square-foot building will be on the northeast corner of 300 South and Main Street. Depending on its final height, it could be the second-largest building in downtown, surpassing neighboring Utah One Center.
American Stores will use most of the buildings for its corporate headquarters. It will locate 1,200 to 1,500 employees at the site, including 700 employees already working in Utah. The rest will be drawn from offices around the region.
"I really do believe it's the most significant redevelopment project for downtown Salt Lake City for a long, long time and for many years to come, because that block is a key block for us strategically," said Mayor Deedee Corradini. "This will really be that final push we've needed to make the total revitalization of the southern end of downtown and Main Street."
Another catalyst for revitalization of the area will come from the new Third District courts complex, which will be under construction in June along the west side of State Street at 400 South. Corradini expects small businesses to set up around the courts complex and the American Stores headquarters, catering to their employees.
"The (RDA) for the past 15 years has been working very hard to make the southern part of downtown Salt Lake City stable," said Alice Steiner, RDA executive director. "This is an important development in terms of moving the activity and sense of where the downtown is further down Main Street."
Corradini said the city has worked hard to find a corporation willing to locate on the block, rather than let the prime real estate be used for speculative office space.
The deal the city worked with American Stores calls for the company to pay $2 million for the 3.3-acre corner property, which ironically was the location of an Osco Drug Store, a chain operated by American Stores, until 1989. American Stores will occupy 70 percent of the building and will lease the rest.
The company will build a 1,450-stall parking structure fronting 300 South; 200 stalls will be available for use by surrounding businesses and the public. American Stores also will pay the city $100,000 annually for maintenance of the Gallivan Utah Center, located in the center of the block. It also has an option through 2008 to buy the Brooks Arcade building.
The city is pitching in with $14.5 million in demolition expenses, block improvements and subsidies to sweeten the project for American Stores. That subsidy was protested by RDA board member Sam Souvall, who said the city's money would be better invested in its neighborhoods.
Of the $14.5 million expenditure, $5.5 million will go to American Stores over the next 11 years to repay some of its construction costs for improvements required by the city's master plan, such as locating two levels of parking underground and putting a finish surface on exposed levels of the structure.
The RDA will extend the Gal-li-van Utah Center south to connect to the new building, creating a retail/restaurant pad in the area. It will build an L-shaped road in the middle of the block from State Street west and then veering south to 300 South.
It also will develop an entrance to the Gallivan Utah Center on Main Street between the American Stores building and One Utah Center.
American Stores also is receiving a $3.5 million loan from the state's Industrial Assistance Fund because of the new jobs it will bring to Utah.