Downtown • Financial analyst says public-private venture most lucrative way to go.
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A joint venture between the private and public sectors is the best way to pay for a big hotel to lure groups to the Salt Palace Convention Center, according to a study presented Tuesday at separate Salt Lake County and Salt Lake City council meetings.
Taxpayers would have to contribute $99.5 million to build the envisioned hotel, with its 1,000 rooms, dozens of suites, two ballrooms and abundant meeting space, said Jeff Sachs, managing partner of Georgia-based Strategic Advisory Group, a consultant paid $25,000 to analyze financial models for a downtown convention center hotel.
The public investment would go into meeting space and parking, while a private-sector partner would invest about $236 million into buying the land and building the rooms, he added.
Properly done, and if the timing is right, Sachs predicted the hotel could be a boon to Salt Lake City's relatively flat convention industry.
Construction spending would approach $602 million, employing 4,400 people directly or indirectly.
Ongoing operations would generate $170.4 million in financial activity annually, mostly in salaries for 2,060 workers, he said.
Looking long term, Sachs projected tax benefits over 30 years of $608 million $334 million for the state, $125 million to Salt Lake County and $73 million for Salt Lake City. The remaining $76 million would go to schools and other taxing entities, he added, estimating the public investment would be repaid in seven years.
"Say I'm wrong and it's only $300 million," Sachs said. "You put in $100 million, you still get $300 million back."
Neither council took action on the report, which will be given Wednesday to state economic development officials.
Reactions to Tuesday's presentations were generally positive, but with reservations.
Salt Lake County Mayor Ben McAdams said the study shows there is "a lot of promise … in expanding convention-center use in a way that attracts significant private investment if it's done in the right way." He hopes the report leads to "robust discussion" about the controversial topic of a government-financed hotel competing with existing private hotels.
Sachs said the convention center hotel likely would help other hotels by pulling in so much more new business.
"The [convention] industry follows the economy," he told the City Council. "During belt-tightening times they cut back. But this year, bookings are through the roof. The cities that don't [build convention hotels] put themselves as a competitive disadvantage."
When City Council Chairman Kyle LaMalfa questioned whether the hotel needs a ballroom since the Salt Palace already has one, Sachs said yes. "We have to [have] a holistic hotel to get private sector investment."
At the County Council, Republican David Wilde said he was still skeptical but not entirely opposed. "I'm more against than I am for it. But I may change my mind."
GOP Councilman Max Burdick said his subcommittee looking into the county's overall convention business will "have to get our arms around [the studies] to make critical decisions about ways we want to go in the future."
That was the study's purpose, said county Community Services Director Erin Litvack, contending the headquarters hotel idea is not being considered solely as a means of retaining the Outdoor Retailer trade shows.
"This is about a bigger issue than OR," she said. "This is about us as a future convention destination and as a competitive site going forward."
Tribune reporter Christopher Smart contributed to this article.
A study recommending joint private-public financing for a $335 million, 1,000-room convention center headquarters hotel in downtown Salt Lake City projected it would produce:
• 4,400 construction jobs
• 2,060 ongoing jobs, generating $170 million in annual economic impact
• $608 million in taxes over 30 years
• A 14.5 percent return on investment, repaying a projected $100 million public contribution in 7½ years
Source: Strategic Advisory Group