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Taxpayer Subsidized Mega Hotel Nets Only One Bid

Salt Lake County needs to head back to the drawing board with its plan to subsidize a mega convention center hotel in downtown Salt Lake City. After claiming there were multiple developers interested in building such a facility near the Salt Palace, only one company submitted a bid in the county’s request for proposals (RFP) for the project. One. Not five or ten, only one.

This is surprising, as supporters of the hotel boondoggle continually told lawmakers and the public that this was a project that would generate a lot of interest from many businesses itching for the opportunity to bring their services to Utah.

The results say otherwise.

Your Utah Taxpayers Association has opposed the hotel convention center plan since its conception and worked vigorously to challenge it throughout its life. The Association successfully blocked the first edition of the proposal, as it was voted down on the last night of the state legislature’s 2013 session. But Salt Lake County mayor Ben McAdams was able to lobby enough lawmakers, after some minor tweaks to his first bill, to push it through to final passage in this year’s session.

Now other Salt Lake City hotels are left with an uneven playing field as they face the prospect of going up against a major competitor with a built-in government endorsed advantage.

The fact that only one company wanted to bid on Salt Lake County’s proposal is a warning signal that the plan is misguided. While media reports indicate at least eight companies showed interest in building the hotel initially, only one decided it was worth the risk to move forward. Salt Lake County needs to find out why the other seven backed away.

With only one company submitting a bid, it is impossible to know if Utah’s taxpayers are getting the best value for the subsidies they will be providing. This also brings up questions about the RFP itself. Salt Lake County needs to reevaluate the parameters of the request it is making and see if it can create a proposal that is attractive to more investors.

Again, this is a problem of government trying to be in the business of doing business, rather than leaving such things to the private market. Instead of allowing businesses to see a profitable opportunity for a large hotel near Salt Lake City’s convention center, the government is attempting to create a need that requires taxpayer subsidization. This is done at the risk of hurting businesses that have long been a part of the fabric of our community.

In a recent study commissioned by your Taxpayers Association, performed by hotel and real estate consultants (HREC), it was found that existing hotels in Salt Lake City would lose $105 million in revenue over the first five years to this government subsidized hotel.

The Association’s study also discovered the claim that Salt Lake City is missing out on conventions because it lacks a 1,000-room hotel to be false. According to data provided by Salt Lake County and its convention and visitors bureau (Visit Salt Lake), HREC found that of the 99 conventions that Visit Salt Lake courted but that opted out of coming to Utah declined because either the Salt Palace was already booked, the organizations wanted a destination with warmer weather, or they were seeking a location with a livelier nightlife. The study also found that in its first year of operation, the new hotel would receive 53% of its revenue at the direct expense of the already existing hotels in the downtown area.

With these facts in mind, and facing the reality that only one company chose to bid on the county’s RFP, the Utah Taxpayers Association calls on Salt Lake County to rethink its effort for a taxpayer subsidized mega hotel. At the very least, the bid process should be reopened to attract more interested parties, or if no other businesses see Salt Lake as a destination ready for such a facility, then the time has come to abandon the effort and allow the market to dictate when such a project should occur.



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