Senate approves tax credits to attract convention center hotel to SLC
SALT LAKE CITY — A bill that would provide tax incentives for a private developer to build a convention center hotel in downtown Salt Lake City narrowly passed the Senate on Monday.
Under the proposal, a private developer would finance construction of the hotel, while public funds would be used to purchase the land for the property and to build a parking structure, costing taxpayers an estimated $99.5 million.
The projected public investment would be paid back in 7½ years and would yield a 14.6 percent return, according the Strategic Advisory Group, a firm hired by Salt Lake County to assess the economic impact of the project.
Once built, the hotel would receive a 20-year sales tax rebate from the state, contingent upon its success.
"This is a post-performance tax credit," said Sen. Stuart Adams, R-Layton, the sponsor of SB267. That means the developer wouldn't receive the incentive unless the hotel makes money. The state offers the same incentives to businesses, including Goldman Sachs, IM Flash and eBay, to locate or expand in Utah.
The Senate approved the bill 15-13. It now goes to the House, where Speaker Becky Lockhart has expressed opposition to the measure.
Sen. Stuart Reid, R-Ogden, said he considers the hotel an extension of the Salt Palace Convention Center, which also was built with tax subsidies.
"In the end, in my view, it's inevitable this hotel gets built," he said. "We are not making a decision on the hotel. We're simply saying we're willing to rebate part of the revenue from the hotel."
Currently, the annual summer outdoor retailers show is the state's biggest convention, bringing 11,000 vendors, 27,000 visitors and $32 million to the state. But Sen. John Valentine, R-Orem, said he doubts Utah will be able to attract other conventions that large which would hurt the hotels already here.
"Are we going to have five conventions the size of outdoor retailers?" he said. "We won't be able to achieve those goals very easily."
Lockhart, R-Provo, said she believes if a convention hotel was truly needed, the private sector would step up and build it without government help.
"Me, personally, I'm not in favor of it. I'm not convinced it's a good use of taxpayer money to subsidize a hotel," Lockhart said, acknowledging that there are "always tradeoffs" when it comes to economic development issues.
"Economic development is one of those areas that has some gray to it," she said. "I'll freely admit that."