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Tax break for downtown hotel survives Senate

Published March 11, 2013 8:15 pm

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A bill that could mean a $33 million tax break to help build a major convention center hotel in downtown Salt Lake City squeaked through the Senate Monday, and now faces some skeptics in the House.

SB267, sponsored by Sen. Stuart Adams, R-Layton, argued the taxpayer support is needed to bring the hotel to Salt Lake City and could serve as a magnet pumping tens of millions of dollars of convention business into the economy.

Sen. John Valentine, R-Orem, said he has "grave concerns" about the bill and believes the projected benefits of the project are over-ambitious.

"The city, county and state together will be paying for 30 percent of the project. That's a great deal if you happen to be the person who is operating the hotel," Valentine said. "The philosophical question you must face is this: Should the state subsidize one competitor against another and then exempt that competitor from tax? I don't think so."

Proponents of the hotel have put together a menu of up to $100 million in city, county, state and local district tax breaks that bidders for the hotel project could choose from, but backers the winner almost surely would not try to claim them all.

The total project is expected to cost about $300 million.

If the new hotel is built and performs as promised, it would be allowed to keep as much as $32.8 million in state sales and use tax over the next 20 years. Supporters say it would generate that much in new tax revenues for the state in 7 ½ years.

Lobbyists and officials from Salt Lake County, including Mayor Ben McAdams, a former state senator, have lobbied aggressively for the bill over the past week.

The measure passed 15-13 and goes to the House, where Republican leaders were questioning the urgency and justification for the incentive.

"Personally, I'm not in favor of it. I'm not convinced it's a good use of taxpayer money," said House Speaker Becky Lockhart, R-Provo, who also noted that the House is just receiving the bill with a few days left in the session.

House Majority Leader Brad Dee, R-Ogden, said that when he makes a decision on taxpayer incentives he wants to see a detailed business model and projections.

"We haven't had the opportunity to see that on this particular project," Dee said. "Until I see that this is indeed a post-performance incentive, I can't support an incentive of that particular amount until we've had some in-depth study about what it really does for the [state]."