Rep. Larry Lunt on Friday allayed fears by Salt Lake School District officials that legislation designed to help build a new Jazz arena would gouge district coffers.

Lunt, R-Salt Lake, is sponsor of HB390, which would take Salt Lake Redevelopment District tax revenue from the school district. The bill passed favorably from the House State and Local Affairs Committee Friday."The Salt Lake City School District would not be penalized in any way," Lunt testified.

The bill would return 20 percent of tax increment money, or $1.8 million annually, generated from new development in Salt Lake City's redevelopment district to the RDA to help build the $35 million arena.

This year, that money was supposed to be returned to other taxing entities. Salt Lake City schools would lose $372,000 annually under the bill, causing Salt Lake Superintendent John Bennion some initial concern.

But after assurances from Lunt that the school district would not be harmed, Bennion told the committee Friday he could support the measure.

"When we first became aware of this we were of course very concerned . . . (but) we're convinced the parties are acting in good faith in attempting to hold the district harmless," he said.

The bill is designed to provide a mechanism for helping the Jazz to build a new arena, enabling the team to generate more revenue from increased ticket sales at the 18,500-seat arena and "remain viable in Utah," Lunt said.

"The whole state of Utah has a very positive outlook toward the team . . . the decision by everybody is to provide a way for the Jazz to stay in Utah . . . that is the intent of this bill," he said.

The RDA money would be used to buy land on Block 79 between South Temple, First South and Third and Fourth West streets to be leased for $1 a year to Jazz owner Larry Miller.

RDA money would also be used to build a parking facility and other public facilities. Miller would fund construction of the arena privately, officials said.

The $372,000 annual loss to the school district would be made up in part by tax revenue from the Jazz arena, which would remain on the tax rolls and produce an estimated $526,000 in property taxes yearly, said William Oswald, RDA attorney.

"Another possibility would be Larry Miller making some contribution to the school district on an annual basis to contribute to the district's loss," Bennion said.

Miller and other Jazz officials were at the NBA All Star game and unavailable for comment, a Jazz spokeswoman said Friday.

In any case, Lunt testified the school district would be protected from any negative financial impact from the bill or he would withdraw his support for the bill on the House floor.

Under the bill, the district would also lose $507,000 in capital improvement and voted leeway money once supplied by the tax increment, but that money would be reimbursed by the state under the the state Minimum School Program.