City Creek Center in Salt Lake City

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City Creek Center Mall in Salt Lake City

Questions

A number of criticisms are put forth regarding the City Creek Center Mall in Salt Lake City.

• What can you tell me about the Church's decision to develop the area of downtown Salt Lake City, including the large City Creek Center Mall project?
• Are tithing funds used for this project? Shouldn't the Church use the money instead to feed the poor and help the needy?
• Did the Church really spend 5 billion dollars developing this mall?
• When President Hinckley said that none of the funds used for City Creek were derived from tithing, some critics call this statement "deceptive" by claiming that all current funds belonging to the Church were ultimately produced as the result of tithing paid long ago.

Ensign, "News of the Church"

Ensign, (December 2006)

The Church first announced three years ago it was planning to redevelop the downtown area to energize the economy of the city that houses its headquarters and to bolster the area near Temple Square. No tithing funds will be used in the redevelopment.

Answer

Approximately 1.5 billion was spent developing the mall. No tithing funds are invested in the City Creek project. However, those funds that are invested may well pay dividends in the future, as well as providing many benefits to the community and those who live in it.

The motivation for the Church's involvement in the City Creek Center project is described in an extensive interview with Presiding Bishop H. David Burton: "Mormon leaders and Salt Lake City work together to transform land," Deseret News (7 March 2010). Deseret News has more information on the construction and financing (see here).

In the 19th-century, funds for church and state, church and business, etc., were all intermingled during a good portion of the Great Basin period leading up to statehood. This was because when the Saints arrived in Utah there was no pre-existing community. There was no infrastructure nor corporate entities providing for even the bare essentials of life. Everything had to come from the church and its members. And for the first few decades, none of the church's members were really in a position to invest large capital on projects like roads, bridges, canals, mills, and other necessities. Therefore, the church stepped in and was not only a source of spiritual aid but physical aid as well. Most of the "investment" made by members came in the form of goods and labor, not money deposited into a bank or brokerage account.

It is simply a cop-out for critics of the Church to simply go back in time until they can equate everything that the Church has to a tithing or offering donation. This does not make President Hinckley a liar.

• How many of you reading this have ancestors that owned slaves? Does that mean that you must consider slavery acceptable?
• How many of you have ancestors who were polygamists? Does that mean that you actually must accept polygamy?
• How many of you have ancestors that paid tithing to the Church? Does that mean that you paid that money?

Question: How much did the development of the mall cost? Did it really cost 5 billion dollars?

The City Creek Center cost is approximately $1.5 billion dollars

The City Creek Center cost is approximately $1.5 billion, not $5 billion. (The $5 billion figure is popularly used on ex-Mormon message boards)

From the Wikipedia article "City Creek Center": "The City Creek Center is part of an estimated $5 billion sustainable design project to revitalize downtown Salt Lake City. The City Creek Center project itself has been estimated to cost around $1.5 billion." off-site

The "$5 billion" dollar figure refers to the cost of the entire Salt Lake City downtown redevelopment project, referred to as "Downtown Rising." The City Creek Center cost $1.5 Billion. Details about these projects may be viewed at Downtown Rising. Other projects include the following:

• Utah Performing Arts Center
• Frank E. Moss Federal Courthouse
• Six Gateway
• Questar Corporate Headquarters
• Jessie Eccles Quinney Center For Dance and Capitol Theatre Renovation
• Public Safety Building
• Public Market
• Convention Center Hotel
• Utah Theater
• City Creek
• Gallivan Plaza
• Harmons City Creek
• The Leonardo
• 222 South Main
• O.C. Tanner

Question: How does the Church decide where to spend money?

The Church manages an extensive humaritarian effort

Some have insisted that funds would be better if directed to charitable works such as feeding the poor. The Church does have an extensive humanitarian effort. Critics on this point often overlook the fact that Church funds are best managed not by sitting in a bank account, but through prudent investment. Investment in land and real estate development is often a wise and ultimately profitable investment approach.

It is entirely possible that the City Creek Center Mall will eventually become a money making venture, as the Church collects rent from mall merchants. This investment strategy would allow the Church to, over time, recoup its initial outlay or even make money that could be further dedicated to the Church's religious and humanitarian goals.

Church funds are best managed not by sitting in a bank account, but through prudent investment

Critics also overlook the fact that if money is spent to feed the needy, that money is gone. On the other hand, if the Church reinvests in Salt Lake City's downtown core, this provides jobs and economic stimulus (for example, via construction and then the service-industry jobs which will fill the mall upon its completion). While providing fewer short term gains, this long term "teach a man to fish" strategy could ultimately benefit many more people, by allowing them to "help themselves." Presiding Bishop H. David Burton noted:

Reflecting on City Creek, Bishop Burton said that if he'd known seven or eight years ago that "we'd be facing the second-worst recessionary period in our history, I may have not suggested we proceed this quickly with the City Creek project. But knowing there would be on any given day upwards of 1,700 jobs in the community — and that could bless the lives of a lot of families," the church decided to move forward.

"And when you get the secondary impact of those 1,700 prime jobs and the multiplier effect, it is a substantial contribution to this state and this community and its tax base, Bishop Burton said. "Any parcel of property the church owns that is not used directly for ecclesiastical worship is fully taxed at its market value."

Investment of funds and service efforts are not mutually exclusive

Further, property investment does not preclude the Church from continuing its service efforts with other monies. This is not an "either/or" question.

If Salt Lake can avoid the fate of so many other inner cities--a lapse into disrepair, poverty, and crime--this will likewise benefit all the city's inhabitants. The Church seems to be taking a longer view to preserve the city core for the future. One observer has noted economic and social benefits already:

Natalie Gochnour, the executive vice president of the Salt Lake Chamber, points out that the development will include 524 residential units and is already pumping life into downtown. Over the last two years, more than a dozen new restaurants have opened within a two-block radius of the development.

Question: Are LDS standards required by the mall?

The partner developer is not affiliated with the Church, so some venues will be open Sundays and serve alcohol

Some have wondered if the mall will be required to adhere to LDS standards (e.g., no sale of alcohol, no Sunday openings). The City Creek development (which includes other establishments and housing in addition to the mall) is a joint venture between a real estate developer owned by the LDS church and another developer that is not affiliated with the church. It appears that alcohol will be served at some venues, and some venues will be open on Sundays, but that this will only be permitted at venues which are owned by the partner developer, NOT at the venues which are owned by the LDS church's development company.

Question: Since its opening, has the redevelopment had the impact hoped for?

The redevelopment of the downtown has turned out as hoped

As of July 2013, the redevelopment seems to be improving matters as hoped. The New York Times reported:

“The center has added 2,000 jobs and brought more than 16 million visitors into downtown,” according to the Economic Benchmark Report of 2013, paid for by the real estate firm CBRE. Taking into account the improving economy, the report credits the mall, at 50 South Main Street, with helping downtown retail sales increase by 36 percent, or $209 million, in 2012.

The “mall is the single most important thing to happen to Salt Lake City in 50 years, maybe more,” said Bruce Bingham, a partner with Hamilton Partners, a Chicago-based real estate developer. “It revitalized downtown.”

The mall also has, as of July 2013, a 98% occupancy rate, and data suggest that there was a demand for retail space that the mall helped to fill, shifting spending from on-line realtors to the local economy:

Linda Wardell, the general manager of City Creek Center, said the mall had a 98 percent occupancy rate, with 104 stores, seven restaurants and a 1,000-seat food court. “There was a real pent-up demand for shopping in this market,” Ms. Wardell said. “Some people were already buying from these retailers online and they were eager to come here.”

Convention visitors also have been vital to the mall’s success, providing 25 to 35 percent of its sales, she said. The city benefits from year-round visitors to nearby ski resorts, five national parks and, of course, to the Church of Jesus Christ of Latter-day Saints, she said.

The Church's involvement also makes possible a more long-term view that entities concerned only about profit do not have:

Jason Mathis, executive director of Salt Lake City’s Downtown Alliance, a business development group, acknowledged that the church-backed development had drawn a spectrum of opinions.

“In this community,” where about 40 percent of the city’s residents are Mormon, “the L.D.S. is such a powerful large entity, it will be more controversial and evoke strong feelings,” he said. “But they’re an interesting landlord. They’re not worried about the next quarter. They have a much longer perspective than many other investors would have had. They want to know what the city will look like in the next 50 or 100 years.”

Question: Aren't tithing funds from "long ago" ultimately the source of all current Church funds?

A review of the history of such funds and Church involvement in business suggests that this is not the case

Some have wondered whether tithing funds (even from long ago) aren't the "ultimate" source of the funds used in the redevelopment. A review of the history of such funds and Church involvement in business suggests that this is not the case.

In the first place, it should be remembered that to mix tithing (tax-deductible) funds with taxable funds from other sources would cause major issues with the IRS, something which the Church would be unlikely to risk--both because to do so would be dishonest, and because the legal and public-relations consequences would be severe, even if they were inclined to do so.

The church has a number of for-profit businesses including real estate, ranching and agriculture, media, mercantile, etc. They have carefully invested for over a century in order to have a good financial cushion in order not to be severely in debt as they were in the late 1890s-early 1900s, nor to be on the verge of financial distress as they were in the late 1950s-early 1960s from over-spending building church meeting houses and other church-related ventures and expenditures.

Church and state businesses were all intermingled during the Great Basin period leading up to statehood

As for where the money came from, obviously some of it would be considered sacred funds like tithing but we need to keep in mind that church and state, church and business, etc., were all intermingled during a good portion of the Great Basin period leading up to statehood. This was because when the Saints arrived in Utah there was no pre-existing community. There was no infrastructure nor corporate entities providing for even the bare essentials of life. Everything had to come from the church and its members. And for the first few decades, none of the church's members were really in a position to invest large capital on projects like roads, bridges, canals, mills, and other necessities. Therefore, the church stepped in and was not only a source of spiritual aid but physical aid as well.

The church used what precious funds it could to build infrastructure and provide for the needs of the people. In the process, the church and its leading members created companies like Deseret Bank and Zion's Bank, Deseret Produce Company, Deseret Salt Company, Deseret Telegraph, Deseret Manufacturing Society, Deseret Iron Company, Jordan River Canal Company, Davis Canal and Irrigation Company, Utah Central Railroad, Utah Southern Railroad, Utah Northern Railroad and a host of other companies. Some companies were successful and others were complete failures.

Members donated time to build infrastructure

Members donated time to build buildings, help build railroads, canals and other projects. Those with money "invested" knowing they would probably see only a partial return. Often, the stocks held by these investors earned pennies to the dollars invested and quite often were eventually turned over to the church as a gift. They were all doing what they could to build up the kingdom. Heber J. Grant, for example, had an insurance company that was sold for a very low price to the church and then combined with another insurance company to create Beneficial Life. Deseret Telegraph was later sold to Western Union. Even the hospitals and universities were originally church-owned and run ventures because they had to be.

So, that is where the original money came from that was then used to invest in more profitable business ventures and later used for projects like City Creek Mall. Some of these ventures became profitable and were sold as the church divested itself of businesses they felt other companies could run. The banks were sold, the hospitals were sold. The Church had originally been given an enormous amount of Union Pacific stock shares as well as rails and rolling stock to pay Brigham Young and other investors, including the Church, for labor building the road beds, etc., in Utah. Eventually the church sold its railroads, built from materials and money that came from Union Pacific, back to Union Pacific and made a good amount of money. That money was, in turn, reinvested in other ventures for later use.

The Church does not mix sacred money with Church investments

Ultimately, the church goes to great length not to mix sacred money with church investments but is constantly trying to use its investments to further the goals of the Church. City Creek Mall was made not to make money (although that has turned out to be a wonderful side-benefit thus far) but to create a place that would draw people back to downtown Salt Lake City. Church leaders were very concerned that downtown Salt Lake City was slowly dying. Stores were closing and the downtown was becoming blighted and unattractive. Church leaders did not want Temple Square and other church buildings to be surrounded by rundown blocks that few people were going to. Therefore, they felt it was worth the investment to build something beautiful and productive that would draw other businesses, restaurants, etc. and keep the blocks surrounding Temple Square vibrant. They seem to have succeeded, and also have provided an economic boon to the region.

For further information related to this topic

Financing of City Creek Center

Summary: The entire project was financed through the church's commercial real estate arm, Property Reserve, Inc.

Notes