At almost the eleventh hour of the 2013 Legislature a bill to provide tax incentives for the creation of a large convention center hotel died on the final evening of the session. When it did, the public viewing gallery of the House floor seemed to deflate as disappointed county officials and developers sighed and poured out of the capitol. Tuesday, the opposite occurred after a committee unanimously supported the passage of a new convention center bill and hotel hopefuls left the committee room as loud and cheery as if their team just won the big game.
House Bill 356, sponsored by Rep. Brad Wilson, R-Taylorsville passed the committee against the objections of representatives of existing hotels and the Utah Taxpayers Association after having made some strong improvements from the bill's first attempt in 2013.
Like last year's version the bill calls for a developer to expand the Salt Palace Convention Center in downtown Salt Lake City and develop an adjacent hotel with up to 1,000 room capacity. The bill would also allow the developer to receive a rebate on sales tax from the construction of the convention center expansion--but not the construction of the hotel. A key point supporters say makes it so that the state is not in the hotel business, but rather is investing in expanding a public gathering facility.
Once the hotel opens the developer would receive rebates on sales, income and other taxes up to $3.5 million a year, for up to 20 years with a $75 million ceiling. The new bill would also take that rebate fund, and set aside five percent of it for a special “Bounce Back” fund, designed specifically for tourism marketing to convince new convention goers who might come to Utah for a convention like Outdoor Retailers to try and convince them to come back in the summer to visit Zions' National Park or check out other sites and festivals in the state.
While the sponsor touted these changes, the bill also received a boost in being co-sponsored this year by House Speaker Becky Lockhart, R-Provo, a major win for bill supporters especially considering Lockhart was a no-vote on the 2013 version of the bill.
In support and opposition of the bill, the arguments fell along the entrenched battle lines of free market ideology versus economic development. The phrase thrown around a lot during the committee was about the state-supported investment being able to raise the tide and lift all ships with it—in this case other ships being existing hotels having to compete with a state-supported full-service hotel. Critics, however, worried the rising tide would drown the hoteliers in the city who built their businesses up with sweat equity and without government assistance.
Jordan Garn director of the Utah Hotel and Lodging Association decried the legislation saying it was “government financing our competition.” He referred to a study released by the Utah Taxpayer Association that says that over five years a new convention center hotel would bleed the existing hotel market of $105 million.
It's a study critics say is inconsistent with other major studies on the hotel, but even Garn acknowledged that in the long term the current hotel industry would benefit from business brought into town by added conventions--but at a very dear cost.
“There may be some long-term growth in the hotel market,” Garn testified. “But how many hotels will be able to stick it out the for the rising tide to lift all boats?”
For Cliff Doner, Chief Financial Officer of Visit Salt Lake, the Salt Lake Convention and Visitor's Bureau said that while Salt Lake City and Utah have plenty of assets to be leveraged that without a unique hotel, one with good price points and proximity to the Salt Palace Convention Center that his marketing team was losing out against other cities with better convention centers and hotels. “My marketing team are showing up with a knife to a gunfight,” Doner testified.
Supporters argued that Utah lost out on between 20 and 30 conventions last year without a proper convention center, that could have brought up to 150,000 delegates to the local economy, including the American Legion convention bringing 10,000 delegates or the convention of the American College of Sports Medicine bringing 6,000 delegates.
“If we don't get in the game we're going to get pushed out of the game,” Doner testified.
As for government picking winners and losers, many supporters point out that city's redevelopment associations already support hotels with public funding. After Salt Lake County Mayor Ben McAdams testified that a new convention center expansion and hotel would signal that “the world is welcome here,” he also took to Twitter to point out other significant state public-private partnerships including the St. George Airport and the construction of Trapper's Loop supporting the Snow Basin ski resort in Huntsville.
By the end of the debate, Team Free Market lost out to Team Priming-the-Economic-Pumps, as the bill was voted out favorably and by a unanimous vote.
To read House Bill 356 click here. To contact Rep. Wilson about his bill click here. To find your legislator to contact them about this bill click here. For more updates from the hill visit CityWeekly.net and follow @EricSPeterson and @ColbyFrazierLP on Twitter.