150 MAIN PROJECT

When the RDA bought the property, a reuse plan was not identified. But one of the primary goals was to use the property to activate Main Street, which at the time had long suffered from high vacancy rates in the wake of the 2008 economic downturn.

A 2010 Salt Lake Tribune article announcing the purchase, quoted then Salt Lake City Mayor Ralph Becker as stating, “We’re interested in seeing the most activity for the amount of money we can spend.” The article also reported on a range of redevelopment options noted by city officials, including “to demolish the theater and construct a new building with leasable space on its footprint,” as well as “preserving the theater’s original feel,” and a potential “massive rebuild.” 

Prior to purchasing the theater, the RDA had an interest in potentially using the structure as a Broadway-style theater. However, by the time the RDA closed on the property, using the structure as a Broadway-style theater had already been eliminated as an option due to limited seating capacity, inadequate loading access, and stage size. 

The RDA worked for nearly 10 years to find a financially viable way for the theater to be rehabilitated. In order to be financially viable, there has to be an end-user identified that produces sufficient revenue to support the rehabilitation costs and operating expenses to make the project feasible. Without an economically viable use or operator, the project would require scarce tax payer dollars in order to fill the development gap as well as any ongoing operating deficit. 

As such, the RDA engaged a variety of potential end users at the local, regional, and national level, including entertainment, theater, media, events, hotel, office, and institutional companies and developers. Other stakeholder groups engaged by the RDA to explore preservation and reuse options included local and regional arts alliances, charitable foundations, academic institutions, historic preservation groups, urban advocates, and City and County entities. In late 2010, the RDA hosted tours and an open house for the purpose of engaging the public and generating developer interest in the theater’s reuse. Unfortunately, the RDA’s outreach efforts did not yield an end-user that was willing and able to partner on rehabilitation of the theater, leaving the estimate and need for public investment monumental. 

Resources in the RDA’s toolbox are limited to a land write-down, potential tax increment, and a potential loan. Additional financial resources were considered, including Historic Preservation Tax Credits, and other external sources, as follows: 

• New Market Tax Credits: While the Property is located in New Market Tax Credit (“NMTC”) eligible census tract, the census tract is not considered severely distressed. Most NMTC allocators want to see all of their investments qualify as severely distressed and those projects will be prioritized and take precedence for funding. In addition, without an identified end user or project, NMTC eligibility cannot be determined, as the project would need to meet the program’s definition of a “Qualified Active Low-Income Community Business”. 

• Opportunity Zone: The Property is in a designated Opportunity Zone census tract, within which Opportunity Funds can invest in the construction of new buildings and the substantial improvement of existing unused buildings. However, not every project is eligible for Opportunity Zone tax benefits even if located in an eligible census tract. The project would need to be an income producing business that meets the program’s standards for a qualified Opportunity Zone business. 

• Bonds: In 2013, the RDA and Salt Lake City issued bonds in the amount of $78 million dollars for construction of the Eccles Theater and surrounding improvements downtown.  Due to these contractual obligations of future tax increment in the Central Business District (CBD) and Block 70 project areas to service this debt, the RDA and Salt Lake City have limited bonding capacity for redevelopment projects. 

As permitted under state law and RDA policy, the RDA occasionally negotiates exclusively with adjacent property owners to facilitate a project that could not otherwise be implemented at the same level without the adjacent property owner’s participation. Two exclusive negotiation agreements have been executed for the theater property, as follows: 

• December 2015: The RDA entered into an exclusive negotiations agreement with an adjacent property owner, the LaSalle Group, for development of the Utah Theater property. This agreement was discussed in a public meeting, authorized by the RDA Board via Resolution No. 764.07, and executed by Mayor Ralph Becker and former RDA leadership. The reuse plan under this agreement called for the repurposing of the theater as a dinner and live entertainment venue. However, at the time of executing the agreement, the project had not yet been analyzed either from a logistical or financial perspective. The project was later deemed as unfeasible and this agreement expired. 
• January 2017: The RDA entered into a subsequent exclusive negotiations agreement with LaSalle Group (160 Main LLC) that also included Hines, which owns the Kearns Building immediately to the north of the Utah Theater, as a second development partner. This agreement was discussed in a public meeting, authorized by the RDA Board via Resolution No. 772.03 (approved on July 12, 2016), and executed by the Jackie Biskupski administration and under former RDA leadership. As discussed in the public meeting, the objective of this agreement was to determine a viable redevelopment plan that included a “multi-family project on the portion of the site that faces Main Street, and integrating with this project the restoration of the Utah Theater and other amenities and uses that will activate the site and engage Main Street.” Due to structural and financial insufficiencies, the project was later deemed unfeasible with restoration of the theater. Based on the conclusions of this agreement’s due diligence and following RDA policy, the RDA began negotiations with 160 Main LLC and Hines for the conveyance and development of the property which resulted in the execution of the current Purchase and Sale Agreement. Policies for the conditions under which the RDA may exclusively negotiate have changed over the years, as has the process for executive/legislative approval of agreements. 

In 2019, the RDA commissioned an appraisal by Integra Realty Resources, which appraised the market value of the land at $4,070,000. The RDA negotiated specific public benefits in return for writing down the land value to $0. Pursuant to a Purchase and Sale Agreement, executed by Salt Lake City Mayor Jackie Biskupski’s administration on November 7, 2019 and a RDA Board Resolution (R-23-2019) adopted on December 3, 2019, the developer required to implement the following public benefits: 

• Affordable Housing: The project will include approximately 40 residential units affordable to households earning 60% to 80% of the area median income (“AMI”) for a minimum of 50 years. Rising income inequality, combined with high housing costs, and a shortage of affordable rental housing is particularly prevalent in the city’s Central Business District. These new affordable units will assist in addressing the growing housing affordability crisis. Additionally, these units will represent some of the only affordable units in the city that are not supported by other local, federal, and/or state subsidies beyond the RDA’s land write-down. 

• Midblock Plaza/Walkway and Park Space: The midblock walkway/plaza and park space will provide unique urban outdoor space that will serve as an invaluable amenity for downtown residents, workers, and visitors. Hines will create, maintain, and program the space, while also ensuring public access. The midblock walkway/plaza will draw pedestrians from Main Street to the park space located atop the project’s parking structure. Design elements include hardscaping, greenspace, plantings, seating, and shade structures. Approximately half of the parking structure and open space will be located on the Kearns Building property to the north. As such, the open space will expand beyond what is now RDA-owned property and, combined with a shared parking model, will allow for the optimization of density and land uses. Additionally, the incorporation of the Kearns Building property will allow for vehicular access to the RDA’s otherwise landlocked property. 

• Historic Repurposing, Archival, and Documentation: The Project will include the repurposing of theater elements that pay homage to the previous use of the site, and the preservation of elements for archival purposes. Elements that will be re-used include brick and the atrium ceiling skylight. Other architectural elements may be salvaged and re-sued or archived. In addition, the RDA commissioned Modern Out West to complete a professional analysis, documentation, and public archival of the structure and the historically-relevant pieces within. It can be accessed here. 

• Public Art: The Project will include an art installation that contributes to the vitality of the public space and builds community identity of the neighborhood. 

From the outset of this redevelopment project, several potential scenarios for the property have been considered, ranging from restoration to renovation to new construction. The most extensive and detailed study was the Salt Lake County Film and Media Arts Center Feasibility Study (FMACFS) completed in 2012. This study was completed by a comprehensive team of consultants including architects, structural/mechanical/civil/electrical engineers, historic preservationists, urban planners, and construction cost estimators. Schematic design and capital improvement costs were completed by the team’s architect, Architectural Nexus, as a follow-up in 2014. At this time, capital improvement cost estimates totaled $35,584,709 to bring the theater up to a vanilla shell, $42,062,569 for an extensive renovation of the theater, and $85,934,020 for an extensive renovation of the theater coupled with the development of additional stories above. Ultimately, the Film and Media Arts Center project concept did not move forward due to limited public resources and the inability for the partners to agree on a unified path forward. These cost estimates are now believed to be low considering market-driven construction cost increases over the past seven years and more recent seismic cost estimates. In 2017-18, Big-D Construction and Okland Construction estimated that baseline seismic retrofitting costs alone would be between approximately $13,900,000 and $20,000,000. 

Following the FMACFS, the RDA completed additional, yet less comprehensive, studies. Studies completed by Jones Lang LaSalle (JLL) and the National Development Council (NDC) analyzed the viability of multiple redevelopment scenarios. Additionally, studies were done that assessed structural, seismic, asbestos, and mechanical systems. Resulting information generally concluded the following: 

• Cost estimates vary widely depending on the scale of proposed project and reuse plan. 
• Prior to any reuse of the theater, structural issues would need to be addressed and all building systems would need to be brought up to code. 
• “Restoration of the theater would require significant investment by the RDA, other public partners, or the private sector to restore and/or repurpose.” (JLL) 
• Repurposing the theater as office, hotel, or multifamily uses would not be financially feasible, particularly under the as-of-right 100 foot height limit. “All uses under the 100 foot height limit are not financially feasible.” (JLL) 
• “From NDC’s perspective, none of the development scenarios- due to development cost, operating revenue, or financing structure- were financially viable as presented.” (NDC) 
• All development scenarios would have “a funding gap that is made greater with the inclusion of the Utah Theatre restoration”. (NDC) 
• Even if historic tax credits were available, a financial gap would remain that would need to be filled with public subsidy. (JLL and NDC) 

When the RDA purchased the property, the square footage south of the Utah Theater structure was largely unusable. As a 2010 Salt Lake Tribune article reported: “multiple RDA [Board] members favor the idea of preparing the 15,000 square feet of retail space in hopes of securing short-term commercial tenants.” 

Later in 2010, the Board officially approved funding to renovate the four retail spaces that would serve as an interim use of the street-facing elements of the property. After the RDA invested in the interior and facade renovation of these new spaces, Southam Gallery (August 2011), Beckett & Rob (September 2011), Twisted Roots (September 2011), and Ray’s Barbershop (October 2011) entered into short-term leases with the RDA. The RDA was always transparent with the tenants that the retail spaces were only temporary and they would eventually need to relocate. The tenants entered into these short-term leases aware of the long-term redevelopment goals for the property.  

During the tenants’ many years in those spaces, the RDA worked hard to foster and support their businesses by providing continued maintenance and below-market rent. From approximately April 2020 to January 2022, the RDA waived rent entirely. 

In January 2022, in preparation for the building’s demolition, Main Street Tower Owner LLC ended the tenant leases. The RDA then worked with the retail businesses with a timeline for vacating the spaces and connected them to City resources who could help find new retail locations.  

HISTORIC STATUS 

The building was not on any local or national historic registers. Over the course of completing due diligence on the property, the RDA was advised by multiple sources that the building’s historic integrity had been compromised due to extensive damage and modifications to the building. Correspondingly, these sources indicated that the building’s ability to be listed on the National Register of Historic Places, and therefore eligible for 20% tax credits, had likewise been compromised. However, the RDA understood that the property would be eligible for the 10% tax credit, which doesn’t require the property be listed on the National Register, prior to it being eliminated with 2017 tax reform. These reports and position statements impacted the RDA’s decision to convey the property. Sources include: 

State Historic Preservation Office (SHPO) 

At the time the RDA decided to convey the theater, the State Historic Preservation Office (SHPO) database had labeled the theater as an “ineligible/non-contributing” structure. While it has since modified this position, SHPO had only done so in March of 2021 when it notified the city that it was changing the status to “potentially eligible.” SHPO staff indicated that this change was prompted because the “building has been in the spotlight and we’ve had numerous inquiries from a group(s) wanting to save it and nominate it.” 

Within any process to nominate a structure for the National Register of Historic Places, the recommendation for the possibility of listing would be left to the State Board of History who would review the nomination and approve it, but with final review and assessment by the National Park Service. In September 2021, SHPO notified the City and the RDA that the building was formally nominated to the National Register of Historic Places. And while SHPO nominated the listing to the National Park Service, ultimately, the building was not placed on the National Register of Historic Places because the owner, Main Street Tower Owner LLC, objected to the listing. As such, the property only ever received an official Determination of Eligibility.   

Note: In late 2019, the RDA became aware of a letter, dated November 6, 2019, from the Utah State Historic Preservation Office (“SHPO”) to Preservation Utah that stated, “while listing the Utah Theater on the National Register is not a guaranteed slam-dunk due to the building’s alterations and current state, we believe that it does have a chance and is certainly worth trying.” 

Preservation Utah 

In 2013, the non-profit preservation group Utah Heritage Foundation, now Preservation Utah, issued a position statement on the Utah Theater that included the following statement on tax credit eligibility: 

“Due to irreversible and unfortunate major alterations by previous owners, the building is not eligible for the National Register of Historic Places. Therefore, rehabilitation would not qualify for the federal rehabilitation investment tax credit at the 20% level. However, because the building was constructed before 1936, rehabilitation would qualify for the federal rehabilitation investment tax credit (FRITC) at the 10% level.” 

Note: 2017 federal tax reform eliminated the 10% FRITC. 

Note: In February of 2018 Preservation Utah issued another position statement that advocated for the renovation, adaptive reuse, or mothballing of the theater. This statement did not discuss the theater’s eligibility for the National Register for Historic Places or tax credit eligibility. 

Note: In September of 2018, Amber Anderson of the Utah State Historic Preservation Office (SHPO), acting as a member of Preservation Utah’s Board of Trustees, stated that “there is no reason that after the building has been renovated, if done properly, that the building could not be listed on the National Register as a contributing building and would be eligible for a 20% tax credit.” This statement was made in the context of a Utah Preservation Board meeting and SHPO’s official status of the structure remained as “ineligible/non-contributing.” Regardless, in a November 2019 RDA Board memo, RDA staff noted that while the RDA had been advised that the structure is not competitive for listing on the Historic Register, “there is a possibility that the Theater could become eligible once a restoration was complete”. 

Utah Film + Media Arts Center (UFMAC) Study – April 2014 

The UFMAC Study, as commissioned in partnership with Salt Lake County, evaluated the feasibility of utilizing the Utah Theater as the site of a new world-class center and magnet hub for the film and digital media arts industries. The consultant team included historic preservation experts, and a Statement of Historic Significance was incorporated into the final document that reads as follows: 

“The SLC Pantages Theatre (Utah Theatre) is significant for its association with important figures in the history of theater and entertainment arts. The site is not eligible for listing on either the Salt Lake City Register of Cultural Resources or the National Register of Historic Places. Though the site lacks the overall historic integrity required for formal designation, it retains important interior spaces and finishes from the historic period as a Pantages Theatre (1920-1929).” 

Kirk Huffaker – September 16, 2014 Meeting of the RDA Board of Directors 

RDA staff stated that the UFMAC Study indicated that the theater does not meet the definition of a historic site and had discussed this with Kirk Huffaker, then Executive Director of the Utah Heritage Foundation (now called Preservation Utah). Mr. Huffaker, present at the meeting, stated that while the property has cultural and historical relevance to the community, it is unlikely the building could meet the standards necessary to be placed on the Historic Register. Mr. Huffaker stated that the façade has been changed, and no determination has been made whether the existing façade has historic significance. Further stating that the National Register would base their classification on the exterior of the building rather than the interior. 

The Utah State Historic Preservation Office (SHPO), National Park Service (NPS), and Preservation Utah, have distinct roles with historic preservation projects. SHPO is the liaison between applicants to the National Register of Historic Places and the NPS. Within any process to nominate a structure, the decision on the possibility of listing would be left to the State Board of History which would review the nomination and approve it, but with final review and assessment by the NPS. Preservation Utah is not directly involved in deeming a structure eligible for tax credits but rather is a non-profit organization that preserves, promotes, and protects Utah’s historic built environment through public awareness, advocacy and active preservation. 

While multiple historic preservationists have advised the RDA that the theater is unlikely to be placed on the National Register of Historic Places, other preservationists have recently opined that there is a potential chance it could qualify. Additionally, as pointed out by RDA staff during the November 12, 2019 Board meeting, the theater could be eligible if one of the area’s historic districts were expanded to include the theater and the theater was deemed to be a contributing structure. 

If available, the tax credit would provide 20% of qualifying expenses (generally costs associated with structural and architectural features) of the rehabilitation. This credit would generally be allowed in the year in which the building is placed in service (provided the substantial rehabilitation test has been met). As such, a project would need to upfront the capital costs of the rehabilitation unless the tax credits are “syndicated”. Syndication is the process by which the owner of a building brings an investor into the ownership structure of the building so that the investor can claim the credits (and other economic and tax benefits), typically in exchange for providing equity to the project. However, investors are only interested in projects that include a financially viable rehabilitation plan and end-use. 

The RDA had not previously applied for designation on the National Register based on the previous studies, recommendations, and position statements from preservationists and consultants. Additionally, the RDA did not petition SHPO to nominate the theater on the National Register of Historic Places because even if the theater was listed, it is unknown if the potential renovation of the theater would have qualified for tax credits. This is because tax credits are not available for all renovations of historic structures and the applicability of historic tax credits depends on the scope of the project at hand. A qualifying project would need to be completed to the Secretary of the Interior’s Standards for Historic Preservation and be an income-generating property for commercial or residential use. 

The Secretary of the Interior’s Standards are a series of concepts about maintaining, repairing, and replacing historic materials, as well as about designing new additions or making alterations. These standards require that the structure be used for its historic purpose or be placed in a new use that requires minimal change to the defining characteristics of the building. As such, without a viable end-user or project, the ability for the project to qualify for tax credits is ambiguous because it would depend on the proposed reuse plan and scope of capital improvements.