Pleasant Grove to get share of tax pie

PROVO — No doubt it won't be a laughing matter for guests to Utah Valley hotels come April 1 when hotel bills increase because of a no-joke tax increase that will kick in across the county.

Utah County commissioners voted unanimously Tuesday to increase the county's transient room tax rate by 1.25 percent in order to generate more funds for tourism promotion and convention center construction.

Several Provo hotel representatives voiced their support of the tax increase at a public meeting Tuesday, but no entity was happier than Pleasant Grove, which signed an interlocal agreement with the county that will return a portion of the increased tax revenue to their city.

"We are so fortunate," said Pleasant Grove Mayor Mike Daniels. "I think (the commissioners) did the right thing. They cut where it was appropriate and they gave where it was appropriate, and we're very pleased."

According to the interlocal agreement unanimously approved by county commissioners Tuesday, Pleasant Grove will receive 2.25 percent of the transient room tax produced only by their proposed convention center project, as well as 75 percent of the site's incremental property tax increase over a period of about 25 years.

The city will use the money to pay back a debt the city incurred to purchase 50 acres, located off of I-15 at exit 275. The city is giving the land to John Q. Hammons, a developer, for the construction of an elite convention center, with rooms that are expected to cost about $240 a night.

Although the project is expected to break ground in May 2007, the project won't begin generating tax revenue until 2008.

According to Pleasant Grove economic development director Richard Bradford, the county collects $36 a year in property taxes on the land.

Once the project is finished, Bradford estimates the county will receive $995,998 a year from the property after the city's portion has been deducted.

"It's financially a good decision for the county," Bradford said. "It's going to open up a new destination project to bring new tourism dollars that aren't coming here now to the existing hotels."

Because Pleasant Grove will be collecting tax money only from its 50-acre project site, the interlocal agreement between the city and the county should not exclude any other convention center projects from coming to fruition, said County Commissioner Steve White.

In White's opinion, the commission passed the room-tax increase as a preliminary step, in order to provide more funds to pay for a convention center in Provo.

"I would think the (convention center plans) coming forth from Provo city would just fly right through," White said. "I'm saying that's my opinion. On a reasonable timeline, it will come to fruition."

According to White, the county should receive $453,750 from the tax increase on top of about $1 million that is currently generated from the transient room tax on existing properties. After April 1, 2007, the total transient room tax in Utah County will be 4.25 percent.

Though Pleasant Grove's 50-acre project will be exempt from providing its room tax increase to the county for a convention center project, Provo doesn't seem to mind.

"It's fine with all of us," said Provo City Council chairman George Stewart. "From our standpoint, we're supportive. If, in fact, (Pleasant Grove) can pull that project together, we don't see any impact on us doing one here. ... I view what happened today very positively."

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