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Metro inches closer to big hotel

$200 million project could add 600 rooms near convention center


by: TRIBUNE FILE PHOTO: L.E. BASKOW - A headquarters hotel would boost business at the Oregon Convention Center. The Metro Council will consider a resolution next week authorizing negotiations with a development team. After years of delays and false starts, the Metro Council appears ready to approve negotiations to build a specialty hotel next to the Oregon Convention Center.

The Metro Council is scheduled to consider a resolution next Thursday authorizing negotiations with a development team. A final vote is scheduled for the following week. The site, cost, and potential public subsidy will be determined during the negotiations.

During a Tuesday afternoon work session on the project, only Metro Councilor Kathryn Harrington expressed any reservations. Harrington, who represents parts of Washington County, requested information on the benefits of national conventions for the region.

Metro owns the Oregon Convention Center on Northeast Martin Luther King Jr. Boulevard. Convention planners long have argued that many national gatherings skip Portland because it lacks a large hotel with additional meeting rooms and other facilities — known as a headquarters hotel — nearby.

Metro and the city of Portland have considered building such a hotel several times. The Portland Development Commission has even bought two blocks just east of the convention center as a potential site. But all of the previous efforts have foundered on the increased costs of the added features, which have caused potential developers to say require a public subsidy.

An evaluation committee appointed by Metro has recommended entering into negotiations with a development team that includes Mortenson Development, Mortenson Construction, Hyatt Hotels Corp., ESG Architects, Ankrom Moisan Architects, Piper Jaffray & Co., Jones Lang LaSalle Hotels and Star Terra LLC/Schlesinger Companies.

According to a staff report presented to the council, the Mortenson group submitted four options ranging from a 597-room hotel to a 614-room hotel. The project would be built on either Star Terra-owned property north of the convention center or on the PDC-owned property.

Total costs are estimated between nearly $157 million and $200 million. The group is asking for public investments ranging from $10.3 million to $36.1 million, depending on the project. In addition, the group requested that 11.5 percent of the 12.5 percent hotel/motel tax be invested in the project during a 30-year period.

The other proposal was submitted by a team consisting of Langley Investment Properties, Garfield Traub Development, LLC, Starwood Hotels/Sheraton, ZGF Architects, RTKL Architects and Turner Construction Company. It proposed a 587-room hotel on the the Northeast corner of the OCC known as the MLK Plaza. Costs were estimated at $175 million. Public subsidies include a PDC/Metro loan of $8 million.

In addition, the group requested that 10.225 percent of the 12.5 percent hotel/motel tax be reinvested in the project for a 15-year period.

Both groups said the hotel would be built by union contractors. Each group also has signed a pledge that unions would be allowed to try to organize the hotel employees.

Council members said the city insisted on the union requirement.

Regional benefits

The idea of building a headquarters hotel has been discussed since the first phase of the Oregon Convention Center was built during Bud Clark’s first term as Portland mayor. The center was expanded when Vera Katz was mayor, without the hotel project going forward, however.

Although the convention center has attracted some national conventions, the local travel industry long has insisted Portland is losing national conventions to other cities because it lacks such a hotel. Organizations holding conventions frequently conduct business meetings and social gatherings in such hotels, outside the convention centers.

The recent recession derailed recent discussions on the project. The Metro Council entered into negotiations with a development team several years ago, but broke them off when the only option seemed to be a publicly financed and owned facility.

Some local hotel owners strongly opposed that idea, saying the government would essentially be competing against them for business.

The idea seemed dead until the leadership changed at the three governments that must sign off on the project. Metro President Tom Hughes, Multnomah County Chair Jeff Cogen and Portland Mayor Sam Adams are willing to take it up again.

Although the public subsidies have yet to be decided, they are likely to include a portion of the hotel and motel taxes that are distributed regionally.

The potential regional benefit was on Harrington’s mind during Monday’s work session. Although she did not question the premise that a headquarters hotel would increase national convention business, Harrington wanted information on how such business would benefit the entire region.

Hughes said he is convinced there are regional benefits. A former Hillsboro mayor, Hughes said he has heard from people in the tourism industry in both Washington and Clackamas counties who are eager for the project to proceed.

Regional tourism promoter Brian McCartin is convinced the benefits are real. McCartin is executive vice president of convention and tourism sale with Travel Oregon, a nonprofit organization that promotes Portland and the region. McCartin says his organization has conducted surveys and interviews with convention planners which reveal that many people who attend national conventions in Oregon also travel throughout the region.

Some come early or stay late to explore the area, while others return after the conventions because they want to see more, McCartin says.