February 18, 2014 Updated: February 18, 2014 at 7:46 pm
SALT LAKE CITY (AP) — A proposal that aims to attract a company to build a large, convention-sized hotel in downtown Salt Lake City has cleared its first hurdle in the Legislature.
A House committee voted 9-0 Tuesday afternoon to approve the measure, which now advances to the full House for consideration.
The proposal authorizes up to $75 million in public money to go toward tax rebates to a private developer that builds a hotel with 850 to 1,000 rooms.
Salt Lake County Mayor Ben McAdams and other local officials have argued that large scale hotel with added meeting space would secure convention business and the tourism revenue it generates for the state.
The push for a mega-hotel in downtown Salt Lake City is partly driven by the world's largest outdoor gear trade show.
At least through 2016, Salt Lake City is slated to host the convention, which draws more than 20,000 people to each of its biannual shows. Organizers of the show have said they need more hotel space to handle the crowds if they're going to keep the show in Utah.
Kaysville Republican Rep. Brad Wilson is sponsoring the measure, which requires the hotel to meet certain benchmarks for tourism revenue in order to be eligible for tax rebates.
The hotel itself would be built with private money. The developer would only be allowed to use the tax rebate as reimbursement for the cost of building public areas such as parking and convention space in the building.
The bill also requires that hotel be built with at least 500,000 square feet of convention and meeting space and be located within 1,000 feet of the Salt Palace Convention Center.
The hotel could cost about $335 million, something no developer will build without government help, McAdams has said.
Wilson said Tuesday that significant amounts of public money have gone into building up the convention center. Luring a developer to build a large hotel nearby will give Utah an edge as it tries to attract and keep conventions in the state, he said.
"I believe that the state, top to bottom, wins if we do this," Wilson said. "We'll be able to maximize our investment that we already made in the Salt Palace."
Wilson and McAdams have said Salt Lake lost about 30 conventions last year because of a lack of space.
Linda Wardell, the general manager for City Creek Center, said tourists and convention-goers are a key part of business at the downtown mall.
Best of all, "Once travelers make a purchase, they rarely ever make a return," she said.
Last year, lawmakers in that chamber killed a similar proposal on the last night of the legislative session. But this year's bill is returning with backing from House leaders including Speaker Becky Lockhart, R-Provo.
Lockhart, a co-sponsor of the proposal, said she's on board this year because of a provision requiring some tourism revenue to be used to promote tourism and attractions throughout the state.
Even though the Salt Lake City hotel is a valuable investment for Utah, she said the deal needed to have something that residents throughout the state would find beneficial.
"It's important to me and my constituents to understand that it's not just about Salt Lake City. It's not just about Salt Lake County," Lockhart said. "It's an enhancement, if you will."
Opponents of the bill say a tax subsidy will give one hotel an unfair advantage over the existing hotels.
Royce Van Tassell, the vice president of the Utah Taxpayers Association, said the proposal would be better if the tax incentive hinged specifically on the state landing new conventions.
Jordan Garn, the executive director of the Utah Hotel & Lodging Association, said Wilson's bill, "at its core, is government financing our competition."
A 1,000-room hotel would flood the Salt Lake City market with extra hotel space, and the tax rebates would incentivize the mega-hotel to "poach" business off existing hotels, he said.
Garn said that while the association acknowledges the hotel and convention center will attract new business, it may take years before existing hotels start to see spillover business.
"That's a long time to try and stay in business, to weather the storm," Garn said, "to hopefully see a carrot at the end of the stick."
HB 356: http://1.usa.gov/1fu91G3