After several stops and starts, a long-desired hotel adjoining the Salt Palace Convention Center has a state-funding green light.
The Governor’s Office of Economic Development (GOED) board last week approved an incentive of up to $75 million in incremental state sales taxes over 20 years, and incremental city and county sales and property taxes over 25 years to get the $337 million project underway at the southeast corner of West Temple and 200 South and connected to the Salt Palace.
With the generation of $55 million in upfront equity, the project will feature $281 million in private equity from Portman Holdings, based in Atlanta, and third-party equity investors.
Construction could start in late 2019, with the 680,000-square-foot hotel opening in April 2022. As currently envisioned, it would have 725 rooms, 62,000-plus square feet of meeting space, an outdoor event terrace, a restaurant, parking and other components.
The incentive was awarded to Salt Lake City CH LLC, a joint venture among DDRM; Portman Holdings; Piper Jaffray; and other design, construction and operating partners.
The idea of a hotel on or near convention center property was studied in 2004 and 2008. The structure of a public/private partnership to develop such a hotel was formulated in 2013. Legislation passed in 2015 outlined that structure and the incentives for public space in the project and required the hotel be within 1,000 feet of the Salt Palace. In 2015, Omni Hotels and Resorts was selected as the project developer but a development agreement was never reached among the various parties. DDRM was selected in 2016 through a request-for-proposals (RFP) process.
The land for the hotel will be conveyed from Salt Lake County, which owns and operates the Salt Palace, to Salt Lake City CH LLC.
The site is “an almost ideal situation,” Roger Zempell, senior vice president of development for Portman Holdings, told the GOED board. “That direct connection will be a real plus for the hotel business and meeting planners and everyone involved,” he said.
Potential brands for the hotel are Marriott, Hyatt, Westin and Hilton, with a selection expected to be made in early 2019.
Mel Lavitt, chairman of the GOED board’s incentives committee, said the project likely will get the same results as those in Denver, which he said has become “a big convention city.”
“There’s probably nonstop conventions in Denver, which everybody benefits from – the whole downtown, certainly,” Lavitt said. “And I think that’s what will happen here because a rising tide lifts all boats. It may take a while and some of the current hotels maybe have to redo or refurbish their lobbies and their rooms in order to keep competitive, but that’s business.
“I think we need it. We’ve always needed it. It’s not the only answer, but it’s going to significantly help the city and the state.”
Board member Ted Wilson said the project is “one good sign we’ve finally turned a corner” following the loss of the twice-a-year Outdoor Retailer tradeshows, which bolted Salt Lake City for Denver. Board member Margaret Jacobs noted that the project opening will coincide with the completion of the Salt Lake City International Airport terminal reconstruction.
Board member Chrisopher Conabee, also a member of an independent review committee on the project, said the project “slays a lot of dragons.”
“You get the ability to take something that is not providing any tax base but now not only does it provide tax base, but it provides tax base that helps us subsidize the project moving forward,” Conabee said.