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Council to eye hotel

Plans not yet firm, but some already fear a ballooning budget
by: DENISE FARWELL, Ownership has yet to be determined for a possible headquarters hotel on land owned by the Portland Development Commission across the street from the Oregon Convention Center.

Although Metro still is studying whether to build a publicly owned hotel across the street from the Oregon Convention Center, the City Council will soon be asked to authorize the Portland Development Commission to contribute $11.85 million worth of land and $4 million in urban renewal funds to the project.

On Wednesday the PDC board of directors voted to ask the council to authorize the contributions by amending the Oregon Convention Center Urban Renewal Plan, which governs the urban renewal district around the center. The Portland Planning Commission is scheduled to consider the amendment Thursday, after which it would be submitted to the council for approval in May.

PDC project manager Fred Wearn said council authorization was necessary to allow Metro to complete its analysis of the project and is not legally binding on the city. Wearn said if Metro agrees to build such a hotel, both the PDC board and the council will need to formally approve the agency's contribution again.

'We would go back to both the PDC (board)and City Council before spending capital dollars or releasing the land,' Wearn said.

At least one critic of the potential project believes the council should withhold any commitment until the details of the project are known, however.

'This is a rush to judgment before all the information is available,' said Len Bergstein, a political consultant retained by a number of Portland-area hotel owners and operators.

Bergstein compares the authorization request to the early phases of the Portland Aerial Tram, whose budget grew from around $15 million to more than $58 million after the council first authorized it. Last week Mayor Tom Potter announced he was commissioning an outside audit of that project to understand why the costs increased so much.

'Metro hasn't completed its financial analysis yet. Why not wait until the details are known?' Bergstein asked.

The project under consideration is known within the convention industry as a 'headquarters hotel.' It would include 600 rooms and such special features as extra suites and meeting rooms that can be configured for groups of different sizes. The Portland Oregon Visitors Association argues that such a hotel would bring more than a dozen additional conventions to town, pumping millions of dollars into the regional economy.

The PDC - the city's urban renewal agency - has long supported the construction of a headquarters hotel on two blocks it owns along Northeast Martin Luther King Jr. Boulevard across the street from the center.

It had considered contributing the land and up to $4 million in urban renewal funds to a privately owned hotel until late last year, when internal studies showed that the project would require more than $80 million in public support. Total costs were estimated at more than $150 million.

At the direction of the City Council, the PDC then asked Metro to consider building the hotel as a public project. The elected Metro Council voted to consider the project in February and appropriated $250,000 to the Metropolitan Exposition Recreation Commission - which operates the convention center - for more study.

MERC is recruiting consultants to prepare an economic analysis and potential financing package for the Metro Council to consider this summer. Options to be considered include using lodging taxes generated by the hotel to finance construction bonds issued by Metro.

'The council won't proceed unless a financial package is in place that will protect the public,' said Ken Ray, Metro's senior public-affairs coordinator.

Bergstein's clients argue that a 600-room hotel is financially risky. They favor the construction of a smaller, privately owned hotel on the same site, although they say the PDC may still need to donate the land and urban renewal funds to make it happen.

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