Bill would give tax break to downtown hotel
Utah lawmakers could give a $33 million tax break to an 850-plus room hotel in downtown Salt Lake City aimed a luring new convention business, despite opponents who say it misuses taxpayer money and disadvantages existing hotels.
Salt Lake County and several economic development groups say the hotel is needed to attract large-scale convention business that could pour millions into Utah’s economy.
Carlene Walker, a former senator and now an officer in Visit Salt Lake, said that last year alone the city lost convention business that would have brought 150,000 people to the city, generating $140 million in commerce and supporting 5,000 jobs.
What the city is lacking, she said, is a major hotel adjacent to The Salt Palace Convention Center.
SB267, sponsored by Sen. Stuart Adams, R-Layton, would allow taxpayer funds to be used for the purchase of land and construction of meeting space, but not hotel rooms. 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 more than pay for itself with the new tax revenues generated in just 7 1/2 years.
Gov. Gary Herbert said Tuesday that he has reservations about taxpayer subsidies, especially if there is limited benefit to rural parts of the state.
“I’m not much of a subsidy guy for anything. I’m a free-market guy. Build a better mousetrap and you’ll find success,” he said. “I’m a little concerned about subsidizing one entity against the private sector and others who aren’t getting any help from the government.”
Jordan Garn, director of the Utah Hotel and Lodging Association, said the tax break would give the new hotel a competitive advantage over existing lodging and could be devastating to hoteliers.
All told, the company that builds the hotel could ultimately take advantage of as much as $100 million in public assistance — although supporters think the actual aid will be far less.
Clint Ensign, senior vice president of Sinclair Companies, which owns the Grand America and Little America, said the total subsidy for the new hotel would work out to $20,000 a day for 20 years.
“How does the Grand America, that is a convention hotel in every single respect, compete with another hotel a few blocks away that is getting that kind of subsidy?” he asked.
He said the reason that conventions don’t come to Salt Lake City isn’t the lack of a hotel, but the public perception that you can’t buy a drink or enjoy nightlife, and a hotel won’t change that.
The bill will go on to be debated by the full Senate, but several members said they still might not vote for it, mainly due to concerns about the subsidies and Sen. Peter Knudson, R-Brigham City, said he isn’t comfortable that everyone is being included in the planning.
“I’m really concerned that this is being railroaded without proper dialogue and that concerns me,” Knudson said.
A separate resolution, SR1, sponsored by Sen. John Valentine, R-Orem, expresses opposition to using any taxpayer funds to build the hotel.