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A mitigation fund to compensate existing Salt Lake City hotels for lost business is now part of legislation seeking public financing for part of a convention-center hotel.

The Utah Hotel & Lodging Association has accepted a compromise that would set aside $8 million — spread out over four years — from a $75 million incentive that Salt Lake County, Salt Lake City and the state would offer to a private developer willing to build a 1,000-room headquarters hotel adjacent to the Salt Palace Convention Center.

"We are hopeful that the convention-center hotel, over time, will induce demand and will generate increased traffic for our great state," Lodging Association executive director Jordan Garn said in a Salt Lake County news release.

Existing hoteliers had complained that the public incentive, which would be used for land beneath the hotel and meeting rooms within it, put them at a competitive disadvantage in the years before the megahotel helps Salt Lake City attract more big conventions that fill every hotel room in town.

But this mitigation fund, included in a revised version of HB356, would appear to cover those losses and take care of the last major source of resistance to the financing mechanism for a headquarters hotel.

Earlier, Salt Lake County Mayor Ben McAdams and the bill's legislative sponsors built rural support for the concept by diverting part of the incentive to a fund promoting tourism in other areas of Utah.

"It's a very rigorous process to build the consensus we have built," said Rep. Brad Wilson, R-Kaysville, House sponsor of HB356. "Everyone realizes the city is going to benefit from having this expanded meeting space and being able to attract larger conventions and retain some conventions we have now."

He referenced Outdoor Retailer, which brings large conventions to Salt Lake twice a year and has pushed for a headquarters hotel for years.

Sen. Stuart Adams, R-Layton, the bill's Senate sponsor, said this newest version "is a victory for taxpayers and our state's economy … in a way that is sensitive to the short-term concerns expressed by several local hotels."

Garn said hoteliers were gratified that McAdams and the legislators "not only listened to the hotel industry's concerns but [found] creative solutions to address them."

McAdams' adviser Jeremy Keele said the Governor's Office of Economic Development will manage the relief fund for hoteliers who show the megahotel hurt their bottom lines.

GOED also will administer the $75 million tax incentive — $25 million from each government entity — that returns money to the developer as a post-performance rebate once the hotel is generating money for Utah's economy.

A 2013 study for Salt Lake County said a privately financed hotel worth roughly $335 million would mean big money. It projected hotel construction alone would add $602 million to the economy and 4,400 jobs. Ongoing operations would add $170 million annually, mostly in salaries for 2,060 workers.

Over 30 years, the study added, the hotel's tax benefits will approach $608 million, dwarfing the initial $75 million public investment.

"With a headquarters hotel, Utah will soon be the Rocky Mountain destination for more large conventions, tens of thousands of new visitors and millions of dollars in new revenue," McAdams predicted.

And, he added, "if the hotel doesn't generate any revenues, it receives no rebates."

A site for the megahotel hasn't been selected.

Twitter: @sltribmikeg

Robert Gehrke contributed to this article. —

What's next?

HB356 still must receive approval from the full House before being considered by the state Senate.