SALT LAKE CITY — After 90 minutes of discussion, a House committee voted unanimously Tuesday to recommend a bill creating tax incentives for private development of a convention hotel.
State lawmakers narrowly defeated similar legislation in 2013.
A tax rebate incentive for development of a proposed convention facility would be allowed by a similar proposal, HB356, sponsored by Rep. Brad Wilson, R-Kaysville.
"We have made such a significant investment in tourism and the Salt Palace, but we're within 5 feet of the finish line, and we haven't crossed it," Wilson said. "And this convention hotel is the last step we need to take so that we can continue to grow our convention business and so we can continue to grow our tourism."
The post-performance incentive would require Salt Lake City and Salt Lake County to offer matching tax rebates. The Governor's Office of Economic Development would administer the incentive program upon occupancy.
A public-private convention hotel has been in the works for almost two decades now.
Under the current proposal, private investors would build a 1,000-room convention hotel with 80,000-100,000 square feet of public meeting space. Over the next 20 years, hotel investors would be repaid with sales and property tax rebates for fronting the cost of the meeting space.
"As we looked at how we can support this, our second largest export in the state of Utah, the tourism and convention business, we knew that we had a bottleneck that we needed to remedy to continue to see our market grow," Salt Lake County Mayor Ben McAdams told the House Economic Development and Workforce Services Committee.
McAdams said the county followed a model similar to Adobe and eBay, adding that the bill is good for the entire state of Utah and would strengthen the state's general fund.
Within six months, 30 percent of convention attendees in Utah come back and bring two or three people with them, Wilson said.
The convention facility also would benefit outlying areas of the state because 5 percent of the state incentive would go to a "Stay Another Day and Bounce Back" fund to promote statewide tourism to the convention delegates that stay in the hotel, he said. Visitors will receive a voucher to come back within six months and stay in a different hotel, with options throuhout state.
Supporters say a hotel would help Salt Lake City compete with neighboring convention cities Denver and Phoenix, which win bids for large conventions because they have large convention hotels.
"Right now, I think as in many areas, we box above our weight class. As a small city, we compete very well with cities that are much larger us," said Scott Beck with Visit Salt Lake.
However, Beck said, the convention hotel is needed to maintain that competitive edge. Meeting planners are choosing other cities for conventions that have hotels.
Opponents say a "subsidized hotel" would take a significant amount of business from existing taxpaying hotels.
While Wilson's data and others' testimonies revealed it can take a few years for the local market to absorb the new hotel rooms, many said that a couple years of struggle is the price of progress.
Hotel stakeholders are most worried about the first few years, saying the government would be financing their competition.
The Utah Taxpayers Association has voiced concerns about the bill. Last year, the association's fundamental concern was that the incentive was being provided to all economic activity.
"We have suggested and hope that instead of providing that incentive to all economic activity that it would really only be targeted to the growth in additional conventions. But as long as we’re going to be providing economic incentives that would occur in the community regardless, it’s just very difficult to justify that," said Royce Van Tassell, vice president of the Utah Taxpayers Association.
In conjunction with the Utah Hotel and Lodging Association, the taxpayers association commissioned a study to see how the bill would impact existing hotels.
Jordan Garn of the Utah Hotel and Lodging Association said the study revealed existing hotels would lose $105 million over the first five years, while the convention hotel would make $108 million during that same time period.
"This convention center hotel stands to poach a significant amount of business from existing hotels," Garn said.
The bill now moves to the full House for consideration.
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