FARMINGTON -- A new hotel here could bring as much as $365,522 in additional tax revenue over 10 years, even if it takes incentives to make the project happen, a study shows.
Farmington officials recently released the findings of a benefit analysis linked to attracting a hotel, suggesting the facility could be a catalyst for other commercial development.
The study shows the city could lose as much as $38,000 in revenue if it gives up two years of transient room tax, but that loss would be offset dramatically by increased sales and property taxes.
"This is a good deal," City Manager Max Forbush said of the offer to Shyrea Management Inc., of Evanston, Wyo., to develop an 84-unit Hampton Inn at 491 W. Bourne Circle, near Park Lane and Lagoon Drive on the city's north side.
City officials are required to do a benefit analysis whenever an incentive of public dollars is made to a business or developer.
The study shows the hotel could generate $112,639 in sales tax over a decade, as well as an additional $225,282 in transient tax and approximately $65,600 in property tax for the same 10-year period.
The analysis projects an incentive of $38,000 in transient tax, which would be given to the developer, as part of the overall package.
Negotiations between the city and Dharmesh Ahir, who owns Shyrea Management Inc., have been ongoing since May, when the developer approached the city council about possible incentives or a break on impact fees as part of the development package.
City officials countered with a package that would give the hotel owner a break on the timing of paying those impact fees, plus some of the transient tax revenue the project is expected to generate.
Impact fees for the structure are expected to cost $150,000 to $160,000. The package allows Ahir to defer a portion of those fees until the structure is finished.
City officials approved an incentive package in August, but now that the analysis of that incentive is public, they voted unanimously again last week to move ahead with the package.
A public hearing was scheduled as part of a special meeting, but no one spoke on the issue.
Ahir has expressed an eagerness to break ground on the project as soon as possible.
City leaders still hope the county will be part of the package, and the agreement has provisions to cover what incentives will be offered if Davis County becomes a partner.
Kent Sulser, director of community and economic development for Davis County, told city officials earlier this year that he sees the political will for the county to help attract the new hotel.
He suggested a hotel along Park Lane would benefit Lagoon, the city's largest employer, as well as the county fairgrounds and a new Farmington Station.
Sulser said, even in a good economy, securing financing for hotels is a difficult process.
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