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SALT LAKE CITY — Salt Lake leaders on Tuesday approved a $7 million low-interest loan to help finance an eight-story boutique hotel meant to "re-energize" The Gateway and preserve the historic Union Pacific Depot.
The finance approval paves the way for the massive, $80 million luxury hotel — coined the Union Pacific Hotel — to break ground in early 2020. Construction is expected to take roughly two years.
"This makes sense," Salt Lake City Councilwoman Amy Fowler, acting as chairwoman of the city's Redevelopment Agency, said Tuesday. "Historical preservation of one of the most unique and amazing buildings we have downtown is huge."
Council members, acting as the redevelopment agency board, voted Tuesday to approve the $7 million loan to Athens Group, an Arizona-based company that specializes in building luxury hotels such as the Montage Deer Valley in Park City, the Montage in Beverly Hills and the Four Seasons Resort in Hualalai, Hawaii, among others, according to the company's website.
The hotel's design plans, which the city's planning commission approved in December, call for between 210 and 225 guest rooms in a sweeping, eight-story building that will curve around the west side of the historic Union Pacific Depot passenger station.
The hotel will also feature an exterior courtyard on the west side of the Union Pacific Depot's grand hall, restaurants, coffee shops and a ballroom, according to design documents filed with the city.
Plans also call for incorporating the historic depot building's grand hall and entire south wing, while the north wing will continue to operate as The Depot music venue. The upper levels of the depot's south wing are slated to be converted into "signature hotel suits," while the ground level will become a new restaurant, according to design plans.
The hotel's developers are partnering with The Gateway's new owner, Vestar, to help revitalize the downtown area that has languished since economic downturn and the opening of City Creek Center. Vestar officials aim to revitalize the once-bustling shopping mall into an "entertainment district."
The Union Pacific Hotel would also breathe new life into the historic train station, Rob McIver, chief financial officer for the Athens Group, told the City Council on Tuesday.
"We're are very excited about the opportunity to redevelop and energize the (Depot)," McIver said, calling it an "amazing asset."
"We fell in love with it when we saw it," he said.
Council members were largely supportive of the project, though Councilman Andrew Johnston lamented that the new eight-story hotel structure will tower over the historic depot building and completely block it from view on the west side, where he lives.
"From my house's perspective, it's gone. It's not there anymore," Johnston said, though he and other council members ultimately unanimously voted to approve the loan financing.
McIver acknowledged the west-side view of the hotel blocks the historic building, but he said the building was designed to be "economically viable" while also preserving the historic character of the depot.
Councilwoman Erin Mendenhall also applauded the project, saying, "This is exactly what The Gateway area needs" and is a "fantastic way to see this historic structure really light up and utilized in such a fun way."
"Heck yes," she said. "Let's do this."
The Gateway hotel comes at a time when Salt Lake City's skyline is expected to dramatically change over the next several years, with several skyscraper projects slated to begin construction.
Also on Tuesday, City Creek Reserve, a real estate arm of The Church of Jesus Christ of Latter-day Saints, announced construction is slated to begin fall of 2021 on a 393-foot high office tower officially named 95 State at City Creek, expected to be the first high-rise development on State Street in decades.
The terms of the loan from the city's redevelopment agency include several interest rate write-offs for public benefits including historic preservation, job creation, sustainability, economic impact and transit alternatives, lowering the final interest rate to roughly 1.89 percent, according to city documents.
The hotel's developers project the additional taxes generated by the hotel to be about $58 million over 15 years, while the city would receive about $15 million of the new tax revenue, according to a city staff report.
The total term of the loan is 12 years, with two years between 2020 and 2021 waived while the hotel is under construction. The loan is slated to be paid off, with interest, in 2031.