SALT LAKE CITY — Plans for a new convention center hotel in Salt Lake City collapsed Tuesday when county officials announced they've pulled out of negotiations with Omni Hotels & Resorts to avoid signing a deal they say would be bad for taxpayers.
The death of the deal sets the project back by at least one year and adds even more intrigue to a forthcoming decision from the lucrative Outdoor Retailer Show about whether it will stay in Salt Lake City beyond 2016. Representatives of the show, which is considering other cities with more lodging and convention space, said they support the county's attempt to get a smart deal and that the news won't have a major impact on the decision.
Salt Lake County Mayor Ben McAdams said Omni wanted $15 million in upfront cash in addition to about $100 in tax breaks from state, county and city governments that would kick in after the hotel opened.
Another sticking point in negotiations with Omni was the hotel company's refusal to provide room rate protections for conventions, McAdams said.
The extra rooms and meeting space a convention center hotel would bring are vital to attract new conferences and keep current ones, but McAdams said, "We can't do it at any cost."
Charlie Muller, an acquisitions and development consultant with Omni, said in a statement that the Dallas-based company was drawn to the project by a compelling incentive package and the two sides were very close. But he said, "The final economic terms were just not suitable enough for Omni to be able to commit to the project."
He said Omni offered room rate protections that have been suitable to other local governments. The company would have revisited that issue if the economic incentives were increased, he said.
The two sides had been negotiating for nine months. Omni was the only company to submit a bid after the state legislature passed an incentive package of up to $75 million. The county was prepared to add up to $25 in tax incentives on top of that, McAdams said.
The county now plans to put out the bid again in the next two months, he said. He doesn't think any more economic incentives need to be added to attract developers.
McAdams said this time they will clarify an incentive package that they found out last time from developers was a bit consuming to understand.
They also plan to dangle new bait that McAdams thinks may attract more developers: They've discovered that parcels of government-owned land on the north and south ends of the convention center property that could be available to build a hotel connected to venue.
"That would reduce the land cost and bring a hotel in closer proximity," McAdams said. "That might pique the interest of additional developers."
Darryl Denny, executive vice president of Emerald Expositions, which runs the Outdoor Retailer Show, expressed support and patience as the county looks for a deal that is acceptable for taxpayers. He said the Omni deal falling through won't have a large impact on the show's decision, expected to be announced in the coming weeks.
"The effort to get a headquarters hotel certainly remains important to Outdoor Retailer in the long term, but it's not something that would have been built within the next 24 months anyway," Denny said. "We remain optimistic about the eventuality."
The show has grown so much in its 18 years in Utah that it needs more lodging and convention center space. Show organizers have said they would like to stay in Salt Lake City, but are considering other cities that offer the lodging and floor space they need.
The show brings an estimated annual economic impact of about $45 million.
McAdams said he and other county officials are well aware of the high stakes of getting a deal done eventually.
"They've made it very clear the development of this hotel is an important part of their ability to stay here beyond 2018 and we understand that," said McAdams about the Outdoor Retailer Show. "We're committed to getting this done."