SALT LAKE CITY — With new stadium and arena projects planned for Salt Lake City, the question is how will the state legislature pay for it.
First, it’s creating two special districts: Around the Delta Center, there would be a downtown entertainment district, while a special district would be created in the Fairpark neighborhood for a proposed Major League Baseball stadium and surrounding area.
Both projects would rely on sales tax generated within each district.
For 15 years, Margarito Parra has run El Asadero Mexican restaurant that sits across from the Utah State Fairpark. While the lunch rush was slow Wednesday, maybe a big league stadium in the neighborhood would change that.
“For business it’s good because [it attracts] a lot of people,” said Parra.
El Asadero sits right outside the special taxing district being created in the stadium legislation, and that could benefit someone like Parra.
“Anytime we're going to talk about a tax, you want to think about, who are the potential winners? Who are the potential losers?,” said University of Utah finance professor Nathan Seegert.
Seegert’s research focuses on tax policy.
“But oftentimes, the sales tax rate might come from lower business," he said, "that takes place because that the price is higher, right? And so anytime businesses have to lower their price to combat that, or as they lose business elsewhere, businesses might pay some of the sales tax as well.”
Seegert points out that Salt Lake City already has a sales tax rate of 7.75 percent. In Salt Lake County, only the ski towns of Brighton and Alta have higher rates.
Rather than pay even more for goods or services within the special districts, consumers might go a little farther, perhaps to a business like Parra’s.
As for the benefits of stadiums and arenas to a neighborhood, Seegert says the research is mixed.
“It's really hard to capture or estimate the benefits because it's not just the sales on game day, right, which is something you could you can observe, but it's really about the branding of the city,” he said.
Parra worries the projects will benefit bigger businesses than his own.
“...for a little business like me, it’s hard because I need to pay a lot of tax, employment, a lot of everything, you know,” Parra claimed.
Both the stadium and arena districts will be required to make reports on money spent and collected. That will help economists and taxpayer gauge the successes or failures of the projects.