Utah lawmakers scrap raising hotel tax for MLB stadium

Utah lawmakers Tuesday scrapped plans to raise the hotel tax for construction of a potential Major League Baseball stadium on Salt Lake City’s west side.

Opposition to increasing the transient room tax or hotel tax came from hoteliers, leaders in southern Utah as well as some Utah House Republicans. Now, the proposed Utah Fairpark Area Investment and Restoration District would rely on the state’s portion of sales tax generated within its boundaries and a 1.5% increase in the car rental tax to fund the project, which includes improvements to the Utah State Fairpark and Jordan River and plans for an MLB stadium. The district would run north of I-80 between 1000 West and Redwood Road.

“We’re going to use largely that to fund the development of that project,” Sen. Lincoln Fillmore, R-South Jordan, the Senate sponsor of HB562, told reporters.

The House passed the revised measure 52-21. The Senate is expected to vote on it as early as Tuesday night.

“This is an opportunity that is unlike something that we’ve had before, probably similar to the Olympics a little bit, only this one stays. It doesn’t last two weeks and then go away,” Rep. Ryan Wilcox, the bill’s House sponsor, said during floor debate on the legislation.

In describing baseball as a family friendly sport, Wilcox said “Utah’s made for baseball. But baseball isn’t the only reason. If this bill didn’t include baseball, it’d be worth it. Maybe the more important parts right now apply to what we’re doing for that community.”

West side favors baseball stadium

Salt Lake City’s west side has long been neglected, falling prey to gentrification, failing businesses and crime.

Earlier this, the Larry H. Miller Company announced plans to invest $3.5 billion in a mixed-use development in the Fairpark area, including a potential MLB stadium. The company is pursuing an MLB expansion team for the city. The proposed Power District development includes cleaning up the Jordan River and improving the state fairgrounds, which leaders had previously considered moving outside the city.

“We are prepared to make significant generational investment in this project,” said LHM Company CEO Steve Starks told the Senate Economic and Workforce Services Committee on Tuesday. “We want this to be high impact, not only potentially a major league baseball team and a ballpark, but also to bring to life the Jordan River like it never has been, to enhance the state Fairpark and, most importantly, it’s about the people and lifting a community.”

Rep. Sandra Hollins, D-Salt Lake City, a west-side resident for 30 years whose district includes the Fairpark neighborhood, said community leaders favor the project.

“One of the things I have never seen was major economic development like this on the west side,” she said on the House floor. “It is something that we have wanted. ... We have sat and we have watched economic development throughout this state, throughout this entire state, and in the city, and have always wanted this on the west side.”

Nigel Swaby, the immediate past chair of the Fairpark Community Council, told the Senate committee, an MLB team would be a “huge catalyst” for the neighborhood. He added that crime issues in the area need to be dealt with as quickly as possible.

Opposition to raising taxes

Lawmakers who backed the original bill argued that hotel and car rental tax increases would be borne by out-of-state visitors. But the Utah Hotel and Lodging Association maintained that Utah residents account for about half of the hotel stays in the state. The organization says as more taxes are layered on, hoteliers would have to adjust their rates to compensate for the increases.

Americans for Prosperity-Utah, a conservative political advocacy group, called the bill a “lose-lose” for Utah taxpayers, who would face higher taxes and fewer public services if it passes.

“The MLB hasn’t even made an offer for an expansion team in Utah yet. While every Utahn would be excited for new sports teams, the wealthy sports franchises who want new stadiums should foot the bill themselves. If a billion dollars of hardworking families’ money is the price to play ball, Utah shouldn’t play the game at all,” Kevin Greene, state director for AFP-UT, said in a statement.

Dozens of churches and faith leaders also questioned spending millions of dollars on proposed baseball and hockey venues when the state has so much need with homelessness and affordable housing.

“A state that can afford to dedicate at least $60 million a year to two projects that are appealing, but not necessary, can also find a way to make comparable new investments in efforts to address our state’s two highly related crises of homelessness and skyrocketing housing costs,” read a letter to lawmakers from the Faith and Advocacy Coalition to End Hunger Homelessness.

The revised bill still approves bonding for “half the actual cost of developing and constructing the qualified stadium or $900 million.” A “qualified” stadium must have a minimum capacity of 30,000 and be primarily used as the “home of a major league sports team.” The measure also calls for parking facilities, lighting, plazas and open space.

The state would own the stadium under the proposal. The Fairpark district would lease it to a team for $150,000 a month for 30 years, according to the legislation. If the team leaves the state before 30 years, it would have to repay the district for the taxpayer-generated funds. The latest version of the bill also stipulates that an MLB baseball team must have Utah, rather than a city, as part of its name.

Taxpayer subsidy?

Fillmore said no taxpayer money is going to fund a private entity, as some have claimed.

“What the state is doing is collecting a $900,000 direct donation in order to build the stadium that the state will own and the lease back to the private organization. That is the very opposite of taxpayer subsidy,” he said.

The measure would raise an estimated $600 million, said Senate President Stuart Adams, R-Layton told reporters, adding lawmakers will likely tweak the financing mechanism in the future.

“A lot of this is still undetermined. We’re still three or four years out with the stadium, so we want to make sure that we know exactly what we’re funding, the scope, we’ve seen different scopes. But we know that we’re going to allow them to have the money they generate within their project, which is the tax increment and other monies, and we think that will get them a long ways toward the stadium and then we need to come back and refine it. When we know more details, we’ll come back” Adams said.

Tax-increment financing calls for local taxing bodies to make a joint investment in the development or redevelopment of an area, with the intent that any short-term gains be reinvested and leveraged so that all taxing agencies will receive larger financial gains in the future.

Noting that tax-increment financing is commonly used to fund various projects, Senate leaders were asked what kind of pressure that puts on local government and how much is too much.

Sen. Wayne Harper, R-Taylorsville, said that is a valid question, and group lawmakers intend to study how much tax increment is out there, how much money is committed and what impact it’s having.

“Stay tuned. We are going to be addressing that,” he said.