In return, downtown will gain 840 more parking stalls that will be free 10 nights out of the year.

With the City Council's Thursday approval of the grant - which jumps up to $9.2 million with interest - the 21-story tower will be under construction at 222 S. Main St. in January. Built by Hamilton Partners and Wasatch Property Management, it will include 450,000 square feet of Class A office space and should open in 2009.

“This is something that is going to help Salt Lake City and Main Street,” said John Dahlstrom, Wasatch's executive vice president.

The city's Redevelopment Agency will pay out the money through property taxes generated by the high-rise. If property taxes don't jump, the RDA won't pay.

“In a way, it's self-funded,” said supporter Councilman Dave Buhler.

Only Councilwoman Nancy Saxton voted against the deal. With a 1.9 percent vacancy rate for Class-A office space downtown, such a tower is “extremely marketable” already, she noted.

Without the subsidy, the building would have generated $12 million in property taxes over 20 years for the city to spend on other downtown redevelopment projects. Now, about $3 million will be left over after the grant and interest payments.

Dahlstrom maintains the high-rise - the first for Main Street in about eight years - wouldn't have been built without the subsidy. And he says it is needed soon before potential tenants look to locate in the suburbs.

As part of the deal, the owners will build an 840-stall parking garage. One hundred slots will be available to the public for the price of parking at a meter, which is now $1 an hour - cheaper than current private parking rates. And the city can pick 10 nights a year when all 840 stalls will be free. The RDA estimates the value of those two perks at $5.4 million.

“Public parking is such an important issue downtown,” Valda Tarbet, deputy director of the RDA, told the City Council. “It's a financial detriment to them and a PR benefit to you.”

In addition, the property owners will build public walkways through the block to connect Main Street to West Temple and to provide access to another parking garage, which should aid Main Street retailers.

There are also conditions to limit the owners from snatching tenants away from other downtown office towers.

hmay@sltrib.com