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Home My WebLink About13 of 2025 - Amended and Restated Lease for Delta Center1 SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY RESOLUTION NO. ___________ AMENDED AND RESTATED GROUND LEASE WITH JAZZ ARENA INVESTORS LLC TERM SHEET RESOLUTION OF THE BOARD OF DIRECTORS OF THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY APPROVING THE TERM SHEET FOR AN AMENDED AND RESTATED LEASE AGREEMENT BETWEEN THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY AND JAZZ ARENA INVESTORS LLC FOR PROPERTY LOCATED AT 301-365 WEST SOUTH TEMPLE, SALT LAKE CITY, UTAH WHEREAS, the Salt Lake City Community Reinvestment Agency, a public agency (formerly known as Redevelopment Agency of Salt Lake City) (“Lessor”), owns certain real property at approximately 301-365 West South Temple which is located in CRA’s Central Business District Project Area and more particularly depicted and described on Exhibit A of the Ground Lease Term Sheet (“Premises”). WHEREAS, on June 8, 1990, Lessor and Larry H. Miller Arena Corporation, a Utah corporation (subsequently renamed Jazz Arena Investors LLC, a Utah limited liability company (“Lessee”)) entered into a lease for a term of fifty years to construct and maintain a sports and entertainment arena on the Premises (as subsequently amended, the “1990 Lease”). WHEREAS, on February 2, 2022, the 1990 Lease was amended to, among other things, provide the Lessee with the option to renew the 1990 Lease for two ten-year renewals periods following expiration of the 1990 Lease in 2040. WHEREAS, on December 10, 2024, Salt Lake City, Smith Entertainment Group, LLC (“SEG”) and SEG Real Estate, LLC, affiliates of Lessee, entered into a Participation, Tax Sharing and Reimbursement Agreement in support of the development of a downtown Sports, Entertainment, Culture and Convention District (“Entertainment District”) in connection with SEG’s ownership (through subsidiaries) of the Utah Jazz, a National Basketball Association (“NBA”) franchise and the Utah Mammoth, a National Hockey League (“NHL”) franchise. WHEREAS, the Lessee has requested that the 1990 Lease be amended and restated to provide for new and modified terms in connection with development and operation of the Entertainment District. WHEREAS, the citizens of Salt Lake City have supported and enjoyed the presence of professional sports in Salt Lake City such that the Utah Jazz and Utah Mammoth franchises are an integral part of the community, and Lessee, by keeping the NBA and NHL franchises in Salt Lake City, are dedicated to and furthering their investment in the community. 13 of 2025 2 NOW, THEREFORE. BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE SALT LAKE CITY COMMUNITY REINVESTMENT AGENCY, that the Ground Lease Term Sheet attached as Exhibit A is hereby approved. Passed by the Board of Directors of the Salt Lake City Community Reinvestment Agency, this _______ day of August 2025. ________________________________ Darin Mano, Chair Approved as to form: __________________________________ Salt Lake City Attorney’s Office Jennifer Huntsman Date:____________________________ The Executive Director: ____ does not request reconsideration ____ requests reconsideration at the next regular Agency meeting. ________________________________ Erin Mendenhall, Executive Director Attest: ________________________ City Recorder 12th Jennifer Huntsman (Aug 12, 2025 16:53:55 MDT) Jennifer Huntsman 08/12/2025 Darin Mano (Aug 12, 2025 19:10:11 MDT) Darin Mano Erin Mendenhall (Aug 13, 2025 11:16:48 MDT) 4 3 EXHIBIT A Ground Lease Term Sheet Jazz Arena Investors LLC Delta Center Property DRAFT Ground Lease Term Sheet Jazz Arena Investors LLC Delta Center Property Purpose To continue to draw people to downtown Salt Lake City and the Central Business District Project Area by encouraging numerous sports, entertainment, cultural, and recreational activities, including home games of a National Basketball Association (NBA) franchise and a National Hockey League (NHL) franchise, among others. Parties Jazz Arena Investors LLC (“JAI”), an aﬃliate of Smith Entertainment Group, LLC (“SEG”), and the Salt Lake City Community Reinvestment Agency (“CRA”). SEG, through its subsidiaries, is the current owner of the Utah Jazz NBA franchise and the Utah Mammoth NHL franchise. JAI is the current lessee and operator of the Delta Center property. Property to be Leased The Delta Center property owned by the CRA and located at approximately 301-365 West South Temple in CRA’s Central Business District Project Area, as shown on Exhibit A. This property is referred to as the “Property” throughout this document. General Description The CRA and JAI have in place a long-term ground lease on the Delta Center property that, including extensions, is set to expire in 2060 (the “Current Lease”). JAI has requested an amended and restated lease in connection with the planned renovation and redevelopment of the Delta Center and surrounding property described in the Participation, Tax Sharing and Reimbursement Agreement (the “2024 Participation Agreement”) executed between SEG, SEG’s aﬃliate, and Salt Lake City in December 2024. Under the proposed amended and restated lease (the “New Lease”), CRA will lease the Property to JAI for up to one hundred (100) years, during which time JAI may renovate existing improvements, build new improvements (collectively, the “Improvements”), and, at JAI’s option, enter into subleases with businesses in a wide variety of industries including retail, hospitality, restaurants, bars, entertainment, and professional and personal services. Proposed Major Lease Terms  Rent Fixed Rent. Similar to the Current Lease, the rental fee will be one dollar ($1) per year for the duration of the term so long as a certain condition is met (“Fixed Rent Condition”), speciﬁcally:  Either an NBA franchise or an NHL franchise (or both) must be using the arena as its primary venue for home games.  The home game requirement excludes international games pursuant to a league- wide program, outdoor games, or “home games” played at other venues as intermittently required or permitted by the respective league and reﬂected on the league’s oﬃcial schedule.  The home game requirement also excludes temporary closures required for maintenance, renovations, force majeure events, oﬀ-season, or other temporary interruptions that are customary for similar facilities. 2 Market Rent. After the initial term of thirty (30) years, for any period of time during which the Fixed Rent Condition is not met, CRA has the option to charge “Market Rent” which is deﬁned as a rental rate that is equal to the then-prevailing fair market rental rate for the continuation of a ground lease under the terms of the New Lease. Any period during which Market Rent applies, the Market Rent amount will be determined as follows:  CRA and JAI each will hire its own independent third-party appraiser experienced in comparable sports and entertainment venues.  Appraisals will assume an arm’s length ground lease for the Property including all Improvements located on the Property at the time in question.  The appraisals will be conducted on an “as-is” basis, assuming the Improvements have been maintained in accordance with the facility standard required under the New Lease.  If the fair market rental rates determined by the appraisers are within ten percent (10%) of each other, rent for the remainder of the Renewal Term will be the average of the two appraisals.  Otherwise, the parties’ appraisers will select a third appraiser to conduct an appraisal based on the same assumptions. Rent will be determined by the average of the two of the three appraisals with the closest rental rates.  NNN Lease The Fixed Rent and Market Rent (as applicable) are absolutely net to the CRA. JAI will pay for all insurance, taxes, utilities, repairs, maintenance and other services and costs (of whatever kind or nature) relating to the Property and the Improvements throughout the term of the Lease.  Lease Term and Renewals The initial term will be for thirty (30) years, expiring in 2055 (“Initial Term”). JAI will have the right, subject to speciﬁc conditions, to renew the lease for up to seven (7) additional consecutive terms of ten (10) years each (“Renewal Terms”).  Tenant Improvements JAI will have the right to modify the existing improvements, add or remove improvements, or modify later constructed improvements however it deems suitable, as long as any such change does not materially and negatively aﬀect the operational capability or structural integrity of the improvements. Consistent with the terms of the 2024 Participation Agreement, CRA will not have the right to approve the arena renovation construction budget and estimated timetable for construction, including any construction phasing. However, for new non-arena improvements that will be subleased to third parties (not controlled by, or under the common control of, JAI), depending on the planned use, CRA may have the right to review the nature and scope of the proposed construction or improvements, along with other information.  Arena Operation After the ﬁrst thirty (30) years, once the Home Game Covenant (as deﬁned in the Participation Agreement) is no longer in eﬀect, JAI is required to use commercially reasonable eﬀorts to ensure that the arena remains open, operational, and activated throughout the year. However, it does not require that any professional or other sports team use the arena. 3  Assignment and Subleasing Assignment or Sublease of the Entire Property. JAI is permitted to assign its entire interest in the New Lease or sublet the entire Property as long as it obtains CRA’s prior written consent; provided that similar to the terms of the 2024 Participation Agreement, JAI may, without CRA’s consent, assign or otherwise convey all or any portion of JAI’s rights and obligations under the New Lease or equity interests, so long as, in the case of a sale involving the NBA franchise or the NHL franchise that requires the NBA’s and/or NHL’s approval, the NBA or NHL, as applicable, has approved such sale, and JAI provides notice of the transfer to CRA. CRA’s consent or denial of JAI’s request to assign or sublet its interest in the New Lease must be based on business experience, ﬁnancial ability, or credit-worthiness of the proposed assignee or sublessor. Subleases That Do Not Require Notice or Consent. Subleases that (a) involve less than the entire Property and have a term of less than one (1) year or (b) are entered into with entities controlled by, or under the common control of, JAI, do not require notice to or approval from CRA. In addition, once an improvement or portion of an improvement is subleased, JAI is not required to notify or obtain approval of CRA before replacing the original subtenant with a new subtenant once the original sublease expires. Non-Arena Subleases. JAI will be permitted to enter into subleases or similar contractual arrangements related to a non-arena improvement subject to prior notice to CRA and, in some cases, CRA’s approval. Where prior notice is required, JAI must also provide CRA with certain information about the planned arrangements.  CRA will have the right to review and approve a proposed sublease or other arrangement in the following scenarios: o Scenario #1: Within the ﬁrst ﬁfteen (15) years of the initial term of the New Lease, for a sublease or other agreement that ﬁts within a set of pre- approved uses, including: retail, entertainment, hospitality, services (e.g., health and wellness services, ﬁnancial institutions, or professional services), bar or restaurant (the “Approved Uses”), the CRA will have ﬁve (5) business days after receipt of the information above to object in writing to the proposed use. CRA may decline to approve only on the basis that the use is not one of the Approved Uses. o Scenario #2: Beginning in year sixteen (16) of the initial term of the New Lease, for any sublease or similar arrangement involving an Approved Use, the CRA will have ten (10) business days to review and object in writing if the proposed subtenant lacks suﬃcient business experience, ﬁnancial ability, or credit-worthiness necessary to perform its obligations under the proposed agreement. o Scenario #3: For a proposed use outside of the Approved Uses, CRA will have thirty (30) days to review the information provided and object in writing on a commercially reasonable basis. o Scenario #4: To facilitate the regular turnover of subtenants in any non- arena improvement, once an improvement has been subleased, JAI may replace the subtenant upon expiration or termination of the existing sublease without CRA’s prior written consent.  As-Is Lease; Tenant Indemnity CRA is oﬀering the Property on an “as-is, where is condition with all faults, without warranty or representation of any kind.” In addition, the New Lease will include an 4 indemniﬁcation provision requiring JAI to indemnify the CRA against claims arising from JAI’s acts or omissions, as well as claims or losses arising out of or related to certain JAI-caused environmental conditions or the use, storage, generation or disposal of hazardous materials, at the Property. CRA will be obligated to reimburse JAI for all cleanup costs and related expenses, plus a ﬁve percent (5%) administrative fee, if a court determines that the CRA or Salt Lake City caused contamination resulting from a release of hazardous materials occurring after commencement of the New Lease.  Property Condition Standard; Maintenance During the term, JAI will be required to maintain and repair the Property and all Improvements as follows:  In a “ﬁrst-class condition” (reasonable wear and tear and casualty excepted), in compliance with NBA and/or NHL Rules as long as one of the teams is using the arena as its primary venue for home games, and taking into account factors such as age, design, and location.  Otherwise (if neither team is using the arena as its primary venue), JAI will be required to maintain the Property to a ﬁrst-class standard comparable to other, similar multi-purpose facilities without an NBA or NHL franchise. However, other than ensuring that the arena is returned to the CRA in a condition consistent with the facility standard, JAI will have no obligation to restore or replace the arena or any other improvements constructed on the Property at the end of the lease term.  Insurance JAI will be required to maintain the following insurance:  Commercial General Liability (CGL) coverage at $1,000,000 per occurrence.  Umbrella/excess liability coverage of $50,000,000.  Auto insurance of not less than $2,000,000.  Business interruption insurance (12 months).  Workers compensation insurance.  Employment practices insurance of at least $1,000,000.  Cyber insurance with not less than $5,000,000 per claim.  Terrorism insurance (in an amount at JAI’s discretion).  Pollution liability insurance during construction with $1,000,000.  Liquor liability insurance with at least $1,000,000.  During the arena renovation, builder’s risk insurance for full replacement value, professional liability insurance (architects, engineers, design professionals) for $5,000,000 per claim, and CGL of not less than $20,000,000 to cover the risk of crane collapse. In the event that damage to or destruction of any improvement occurs, insurance proceeds will be applied to the restoration or repair of the improvements (subject to the supervision and control of leasehold mortgagees once JAI mortgages its leasehold interest in the Property). In the event that the arena suﬀers damage that is greater than ﬁfty percent (50%) of its replacement costs, JAI can elect to either (a) restore the arena to its pre-damage condition or better, or (b) notify CRA of its intent to terminate the New Lease. In the event JAI opts to terminate, insurance proceeds will go ﬁrst to the 5 leasehold mortgagee. Any remaining proceeds will ﬂow to JAI to either repair the arena or raze it. Then, to the extent any insurance proceeds remain, they will be divided equally between JAI and CRA.  Leasehold Mortgage JAI will have the right to mortgage, encumber, assign, pledge or otherwise collaterally transfer its leasehold interest under the New Lease to one or more lenders without CRA’s consent.  Naming Rights JAI will have the exclusive right to name the arena and other improvements and to sell, assign, license, pledge, or otherwise exploit all naming, sponsorship, entitlement, and related intellectual property rights and to receive one hundred percent (100%) of all revenue, royalties, cash, or other economic beneﬁts. The limited restrictions on naming include that any name cannot: (a) be obscene, (b) violate applicable law, (c) contain racial slurs, obscenities, or products or messages of an explicit sexual nature; or (d) include the name of another city in a manner that reasonably suggests that the arena is located outside of the Salt Lake City.  Default; Remedies Events of Default. Material default under the New Lease includes, among other things, failure to:  pay rent,  maintain the required insurance,  maintain, repair, or restore the improvements to the required standard,  comply with the Home Game Covenant, and  utilize the arena on a reasonably continuous basis as required under the New Lease if/after both the NBA and NHL franchises are no longer utilizing the arena for home games. Remedies. In the event of a JAI default, CRA is required to provide JAI and any leasehold mortgagee written notice of the default. If the default continues after the applicable cure period, CRA may exercise any right or remedy available at law or in equity, including but not limited to termination of the New Lease. Conditions to Lease Execution  JAI must provide Certiﬁcates of Insurance evidencing it is in compliance with the Ground Lease’s insurance provisions, including that CRA is listed as an additional insured.  CRA and JAI must agree on a comprehensive lease agreement for the New Lease.  The New Lease and all its terms must receive approval from the attorney’s oﬃces of CRA and the City on all matters pertaining to the legality, suﬃciency, and form and substance of any other documents that are deemed reasonably necessary for the execution of the New Lease. CRA Resolution 13 of 2025 Amended and Restated Lease for Delta Center Final Audit Report 2025-08-13 Created:2025-08-12 By:Caitlin Carlino (caitlin.carlino@slc.gov) Status:Signed Transaction ID:CBJCHBCAABAArSKxL_uBy0CK-Qi0lLc3rEGwOx51W4P5 "CRA Resolution 13 of 2025 Amended and Restated Lease for Delta Center" History Document created by Caitlin Carlino (caitlin.carlino@slc.gov) 2025-08-12 - 10:49:46 PM GMT Document emailed to jennifer.huntsman@slc.gov for signature 2025-08-12 - 10:53:07 PM GMT Email viewed by jennifer.huntsman@slc.gov 2025-08-12 - 10:53:27 PM GMT Signer jennifer.huntsman@slc.gov entered name at signing as Jennifer Huntsman 2025-08-12 - 10:53:53 PM GMT Document e-signed by Jennifer Huntsman (jennifer.huntsman@slc.gov) Signature Date: 2025-08-12 - 10:53:55 PM GMT - Time Source: server Document emailed to darin.mano@slc.gov for signature 2025-08-12 - 10:53:57 PM GMT Email viewed by darin.mano@slc.gov 2025-08-13 - 1:09:46 AM GMT Signer darin.mano@slc.gov entered name at signing as Darin Mano 2025-08-13 - 1:10:09 AM GMT Document e-signed by Darin Mano (darin.mano@slc.gov) Signature Date: 2025-08-13 - 1:10:11 AM GMT - Time Source: server Document emailed to Erin Mendenhall (erin.mendenhall@slc.gov) for signature 2025-08-13 - 1:10:12 AM GMT Email viewed by Erin Mendenhall (erin.mendenhall@slc.gov) 2025-08-13 - 1:10:17 AM GMT Document e-signed by Erin Mendenhall (erin.mendenhall@slc.gov) Signature Date: 2025-08-13 - 5:16:48 PM GMT - Time Source: server Document emailed to Keith Reynolds (Keith.Reynolds@slc.gov) for signature 2025-08-13 - 5:16:50 PM GMT Email viewed by Keith Reynolds (Keith.Reynolds@slc.gov) 2025-08-13 - 5:23:34 PM GMT Document e-signed by Keith Reynolds (Keith.Reynolds@slc.gov) Signature Date: 2025-08-13 - 5:24:13 PM GMT - Time Source: server Agreement completed. 2025-08-13 - 5:24:13 PM GMT