Taxpayers’ group: Hotel plan a ‘transfer of wealth’
Economics • Foes of subsidized convention hotel produce study showing ill effects.
Published: January 8, 2014 10:07AM
Updated: January 7, 2014 10:49PM

The idea of a downtown megahotel to enhance Salt Lake County’s convention business isn’t bad, just the idea of using public money to do it.

That approach, Utah Taxpayers Association leaders told the Salt Lake County Council on Tuesday, represents a “transfer of wealth,” taking millions of dollars from existing hotels and giving it to whomever gets a proposed government incentive to build a 1,000-room headquarters hotel for the Salt Palace Convention Center.

“It’s hard to bring a large hotel into a small market and not expect big impacts,” said Clint Ensign, a vice president with Sinclair Oil, whose holdings include the Grand America and Little America hotels three blocks south of the Salt Palace.

He worked closely with the Taxpayer Association on a commissioned study by Hospitality Real Estate Counselors, a Denver-based consultant, to look at the impacts of a taxpayer-subsidized hotel on existing hotels.

It was done after a 2012 study, financed jointly by Salt Lake City and Salt Lake County, concluded a public-private partnership was the best means of financing construction of the large headquarters hotel that convention boosters consider vital to attracting major meetings beneficial to Utah’s economy.

That study served as a foundation for County Mayor Ben McAdams’ proposal to create a city, county and state coalition that would provide about $100 million in post-performance financial incentives to the builder of a megahotel, projected to cost about $335 million overall.

McAdams said Monday he will push his funding plan again this legislative session after coming up three votes shy of approval last year.

The Taxpayers Association study concluded that if a taxpayer-subsidized hotel is built downtown, it would siphon $28 million in revenues away from existing hotels in its first year of operation.

Over a five-year period, Ensign added, the convention-center hotel would take away 330,000 room nights of visitation from existing hotels, with a total value of $105 million. The incentives in McAdams’ plan would reduce tax revenues flowing to government agencies, too, he said.

Ensign also contended the 100,000 square feet of meeting space that would be financed with the taxpayer subsidy is far more than is needed.

“It would have a devastating impact” on existing hotels’ ability to hold onto their meeting business, he said, suggesting government incentives should be designed to attract big conventions rather than build a hotel.

While some parts of McAdams’ proposal are fine, Ensign said, “some are incomplete. I pledge to work with you and other government officials to look at this challenging and major issue.”

McAdams expressed appreciation for that offer, also promising to be sensitive to impacts on individual businesses while pursuing a solution he feels accomplishes the most common good.

Getting a convention-center hotel built does that, the mayor said.

“Study after study shows that it’s in the greater good for the public,” he added. “We need to look first and foremost at the greater good.… If we are able to bring in a fraction of the conventions we miss because we don’t have a convention-center hotel, we’ll have a net positive impact.”

County council members, who ultimately would have to approve the county’s $33 million investment in the project, did not take action Tuesday.

The Taxpayer Association’s study did not seem to sway any of their opinions. Democrats who supported the proposal before made supportive comments again, while Republicans who opposed it earlier reiterated those feelings.

The issue will be debated next during the legislative session, which begins Jan. 27.

mikeg@sltrib.com

Twitter: @sltribmikeg

New chairman

Michael Jensen, a Salt Lake County Council member since 2001, will be its chairman for the fourth time. Jensen, who is chief of the Unified Fire Authority, was selected to succeed fellow Republican Steve DeBry in an annual rotation of the leadership post.

Republican Richard Snelgrove will be vice chairman, while Democrat Arlyn Bradshaw will be minority leader.

The council is waiting for the Salt Lake County Republican Party to appoint a replacement for Councilman David Wilde, who resigned Jan. 1 to take a job in the county district attorney’s office.

Party officials will hold a special election Thursday evening to replace Wilde and Rep. Derek Brown, who is leaving his seat in House District 49 to work for Utah Sen. Mike Lee.