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Downtown convention hotel gets committee approval

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SALT LAKE CITY — Utah's capital city is one step closer to having a new hotel adjacent to the Salt Palace Convention Center.

On Tuesday, the Senate Economic Development and Workforce Services Committee passed SB267, which establishes a tax credit for the proposed hotel.

Many community members testified to the enormous economic impact the hotel could have on the city and state.

"Last year, we lost future conventions that would have brought 150,000 people, created $140 million and supported 5,000 jobs,” said Carlene Walker, executive committee member of Visit Salt Lake.

Bill sponsor and Senate Majority Whip Stuart Adams, R-Layton, said the hotel would give more validity to the convention center.

"I think it may be a win-win as long as we don't misuse the public money and use private money for the hotel," Adams said.

Under the proposal, a private developer would finance the construction of the convention center hotel, while public funds would be used to purchase the land for the property and to build a parking structure, costing taxpayers $99.5 million up front.

The projected public investment would be paid back in 7½ years and would yield a 14.6 percent return on the investment, according to Jeff Sachs, of Strategic Advisory Group, the consultant hired by Salt Lake County to assess the economic impact of the project.

Once built, the hotel would receive a 20-year sales tax rebate from the state, contingent upon its success.

But some lawmakers and local business leaders say the plan would create an uneven playing field. Clint Ensign of Sinclair Industries, representing the Grand and Little America hotels, said Grand America could not compete with the convention hotel if it received the proposed $20,000 per day tax subsidy.

Gov. Gary Herbert said he'll look at the proposal for a convention hotel but isn't convinced government needs to be involved in the project.

"I'm a free market guy," Herbert told reporters during a media availability Tuesday. "I'm a little concerned about subsidizing one entity against the private sector and others who are not getting help from government. It doesn't seem fair."

The governor said if there really is a need for a convention hotel, "somebody in the private sector will step forward and fill it."

Herbert said he's heard concerns that the proposal would mean taxpayers off the Wasatch Front would end up subsidizing "what is just a downtown Salt Lake event, where there's going to be minimal benefit to them in the rural parts of the state. Is this the right way to utilize taxpayer dollars?"

House Speaker Becky Lockhart, R-Provo, also raised questions about the proposal.

"As it's been explained to me, this is how other cities do it," Lockhart said. "Just because everyone else is going it, doesn’t mean we need to. I'm still in the evaluation stage of this proposal and am not convinced taxpayer dollars need to be spent."

The committee amended the bill, getting rid of a required minimum number of rooms for the hotel.

Although committee members expressed concerns over the bill, it passed with a 6-1 vote and will now head to the Senate floor.

Contributing: Lisa Riley Roche

E-mail: mmellor@deseretnews.com