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Metro hotel plan back on the block

No one expects anything concrete to be decided - yet
by: CHRISTOPHER ONSTOTT The Oregon Convention Center is reflected in a window at the Inn at the Convention Center, located just across the street. Previous plans called for it to be replaced by a 600-room Headquarters Hotel that would also occupy the adjacent vacant lot.

Metro President Tom Hughes has revived discussions about building a headquarters hotel near the Oregon Convention Center, and he's surprised by the reaction he's getting.

'People see me coming and they run the other way,' Hughes jokes.

Hughes is referring to the controversy that swirled around the last effort to build a hotel across the street from the center. Metro spent millions of dollars trying to figure out how to finance a 600-room hotel on two blocks owned by the city of Portland. Talks collapsed in September 2009 after Metro, the city and Multnomah County could not agree how to finance the $225 million publicly owned project.

But much has changed in the past 18 months. Hughes, a former Hillsboro mayor, was elected to head the regional government after running on a promise of creating jobs. He is interested in both the temporary construction jobs such a project would generate and the additional conventions it might bring to town. And Hughes is willing to consider a smaller hotel or a phased project if that's what it takes.

'The Oregon Convention Center was built as an economic driver, and I'm interested in maximizing that,' Hughes says.

Since the headquarters hotel was last considered, Jeff Cogen also has replaced Ted Wheeler as Multnomah County chair. Wheeler, who left the county to become Oregon state treasurer in March 2010, was critical of the need for the county to back city-issued bonds for the project. Cogen, who was appointed to replace Wheeler and elected chair in the November election, is open-minded about restarting the discussions.

'I'm not aware of any specific plan, but if anyone has one, I'm willing to talk about it,' Cogen says.

Meanwhile, Mayor Sam Adams, the strongest advocate for the project, never lost interest in it. Like Hughes, he is also willing to consider building a smaller hotel or phased project at this time.

Even some of the previous opponents are interested in what Hughes is thinking. The last time around, a number of area hotel owners hired lobbyist Len Bergstein to fight the project, which they feared would hurt business and cost too much public money. But now Bergstein says they want to be included in any new discussions.

'I think there's a feeling that Hughes knows how to get things done right,' Bergstein says.

Any workable solution

The headquarters hotel project did not completely die when Adams, Wheeler and then-Metro President David Bragdon pulled the plug in September 2009. The Portland Development Commission continued exploring its options in the area around the convention center, which is at 777 N.E. Martin Luther King Jr. Blvd. In recent months, the city's urban renewal agency has been talking with local developer Barry Schlesinger about constructing a 600-room hotel on property he owns just north of the center. It is currently occupied by a music venue called the TA Event Center at 300 N.E. Multnomah Blvd.

Schlesinger submitted a proposal to the PDC a few months ago. Unlike the previous proposal, it would be financed by a mix of public and private funds. Details have not been released, and the PDC has yet to respond formally to Schlesinger.

There is reason to believe a smaller hotel could have been built on the city property years ago. In 2003, the PDC originally sought developers to construct an 800-room hotel on two blocks it owns. One company, John Q. Hammons Hotel and Resorts, responded that it was prepared to build a smaller hotel with limited public subsidies at that time.

'If we are allowed to construct our proposed hotel of 400 rooms, then we would not request public financial assistance over and above flexible land acquisition terms and financial support for an underground pedestrian connection,' wrote John Q. Hammons, chairman and chief executive officer, in an Oct. 20, 2003, letter to the PDC.

When the PDC continued pursuing the 800-room project, the company did not respond again. Although the project was later reduced to 600 rooms, the PDC and Metro concluded it would need to be publicly funded. Portland was prepared to issue construction bonds backed by room charges at the hotel, but they needed to be guaranteed by hotel, motel and rental car taxes collected by Multnomah County. The project unraveled when Wheeler wouldn't agree.

Today, Hughes says a smaller hotel would have been better than nothing.

'That's a case of holding out for the best and not getting the good. I think you need to consider any workable solution,' Hughes says.

No specific plan

The convention center, which is owned by Metro and managed by the Metropolitan Exposition and Recreation Commission, generated $526 million in spending in the Portland region and $19 million in state and regional taxes in 2010, according to a recent Metro report.

The idea of building a hotel next to the convention center has been around since before it was completed in 1986. Proposals have always called for building headquarters hotel - a tourism industry term that means a hotel with additional meeting rooms, restaurants and lounges to accommodate convention managers and conventioneers staying at other locations. Local tourism experts have consistently argued for at least 500 rooms, to compete against other cities that already have large hotels next to their convention centers.

The PDC had originally been in charge of the project. Former Portland Mayor Tom Potter lost interest in 2007 when the estimated public subsidy for construction rose above $160 million. Metro then agreed to take the project over. After cost estimates soared to around $250 million, Metro whittled them down to $225 million.

But that still proved too high for Wheeler, who feared that guaranteeing the bonds would endanger hotel, motel and car rental taxes that subsidize the county's general fund. The funds also help pay for a variety of other tourism-related activities, tourism promotion, art programs, TriMet's Free Rail Zone (formerly called Fareless Square) and bond payments for the 2000 convention center expansion and 2001 PGE Park renovations. And they subsidize the operation of the convention center, which had a net operating loss of $8.3 million last year.

Portland, however, still has assets it can contribute to the hotel project. The PDC is prepared to donate the property, which was purchased in the past for about $12 million. It has also been carrying an urban renewal fund commitment for the project on its books for several years. It amounts to $3.2 million.

Hughes says he is interested in discussing with Adams and Cogen what else would be required to build any kind of hotel. Although he has no specific plan or detailed schedule in mind, he thinks a decision on how to proceed could be made by the end of the year.