SALT LAKE CITY — After nine months of talks, Salt Lake County has pulled out of negotiations with Omni for development of a convention headquarters hotel, officials announced Tuesday.

"I'm disappointed that we could not get to 'yes' with Omni, but it reached a point where they were asking for too much in public financing which would benefit their bottom line at taxpayer expense," Salt Lake County Mayor Ben McAdams said in a statement.

Development of a convention hotel is an important part of growing the county's convention business, but Omni had asked for too much public participation, including $15 million above the post-performance rebates the county had offered, he said.

That means the county will reissue a request for proposals and prepare to work with new development partners, McAdams said.

"I strongly believe in this private hotel development and its economic value to the state, but not at any cost. Salt Lake County is a great place to invest, with a strong, vibrant economy. We just need to find a hotel developer that understands what an opportunity this is and wants to negotiate a fair deal," he said.

While disappointed in the county's decision, "the final economic terms were just not suitable enough for Omni to be able to commit to the project," Charlie Muller, Omni's vice president of acquisitions and development, said in a statement.

Muller said Utah stakeholders — the county, Salt Lake City and the state — had assembled "a very compelling incentive package that drove Omni's interest to work closely with HKS (Architects) to evaluate multiple potential sites. The county showed great flexibility throughout the site selection and negotiation process."

Muller said both sides were close to agreement, but the economic terms were "not suitable."

According to a Salt Lake County news release, one of the sticking points was hotel room rates for rooms blocked for citywide conventions. While Omni was willing to block rooms, it "wouldn't agree to the room-block market rate protection that was set forth in the original (request for proposals) and is typical for a convention headquarters hotel."

Without room rate protection, Omni could effectively get out of the agreement by offering above-market room rates not acceptable to event sponsors, the statement said.

Providing the incentives to the private hotel owner and then ultimately not having a viable room commitment was not acceptable to the county, McAdams stated.

"Beyond economic tax incentives, Omni understands and supports the need for a reasonable room-block agreement, which the company has reached to the satisfaction of other municipalities for similar projects," Muller said, "and Omni indicated to the county it would revisit its stance on room rate control should other economic incentives have been agreed to."

Related Story

Salt Lake convention hotel attracts developers

Local firms and major real estate companies are among half a dozen developers interested in building a large convention hotel in the heart of Salt Lake City, a project that comes with $75 million in possible tax credits.

In 2014, the Utah Legislature passed legislation that created post-performance tax incentives to be refunded to the hotel owner after project completion for the construction and maintenance of public spaces, including convention meeting rooms, public parking and other public amenities.

Salt Lake County issued a request for proposals later that year. Omni was the only national hotel chain that made a proposal for the hotel, which would be privately owned and built with private money.

Omni's original proposal indicated it would use the incentive package to develop a convention hotel and additional public meeting space. Last November, a 13-person committee reviewed the proposal and recommended that the county move forward with negotiations on project terms. By mid-July, Omni wanted that incentive and more, in the form of public grants and cash advances, the statement said.

The county has maintained it needs a convention headquarters hotel for its Salt Palace Convention Center to compete for major conventions. Officials with Salt Lake Comic Con and Outdoor Retailer have supported the convention center hotel.

Related topics