City, county, Metro officials iron out costs despite risks

Although the 2013 Legislature contributed $10 million toward the construction of a 600-room headquarters hotel at the Oregon Convention Center, the fight over the controversial project is far from finished.

Metro is pursuing the $195 million project to increase the number of large conventions at the center. Officials with the regional government currently are in discussions with their counterparts with the City of Portland and Multnomah County to finalize what must be a multijurisdictional financing package.

Opponents of the project, which include the owners of existing hotels in the area, continue to assail the project as risky for taxpayers.

“Metro says the hotel will attract more conventions, but there’s no guarantee of that. The public might end up subsidizing the hotel even more than the plan calls for,” said Paige Richardson, who represents a group of hotel owners. They include the owners of the Hilton, Benson, Governor, Lucia, deLux, Westin, Paramount and Mark Spencer hotels, in addition to the Asian American Hotel Owners Association, which has 275 members in the Portland area.

But a number of meeting planners are convinced such a hotel will attract more large conventions to Portland.

“I think they’re already lining up,” said Ed Potillo, conference and membership director of the National Alliance of Black Educators.

“I have no doubt that if Portland builds the hotel, it will attract more conventions to town,” said Dean Phelus, senior director of international programs and events for the American Alliance of Museums.

Potillo and Phelus are on the Customer Advisory Board of Travel Portland, a nonprofit organization that supports tourism in the region and backs the project. The board consults with the organization on its marketing and other strategies. Potillo and Phelus spoke to the Portland Tribune during a board meeting last Friday.

Logistics fall short

According to Potillo and Phelus, the current lodging situation at the center works against Portland. There are only a couple of older, smaller hotels within walking distance of the center. The vast majority of convention-goers must therefore travel to and from the center every day. But organizations that hold large conventions need a nearby block of rooms for those most involved with the gatherings, plus additional meeting and dining spaces to conduct all the daily business, including receptions and smaller gatherings.

“During our four-day conventions, we’ll hold 125 food and beverage events, business meetings and stakeholder meetings. And some of them need to be away from the main convention — but not so far away that the people can’t get there and back easily,” Potillo said.

Phelus agreed.

“We need the opportunity for some people to get away on occasion, but not so far that it becomes an obstacle,” Phelus said.

The headquarters hotel being proposed by Metro just north of the center will fill those needs, Potillo and Phelus said. Both noted the number of large conventions at the center in Fort Worth, Texas, increased after a headquarters hotel was built there.

Richardson countered that the organizations represented by the two men held conventions in Portland in the past when there was no headquarters hotel. And she noted they could not guarantee return visits if the hotel is built.

The idea of a nearby hotel with extra meeting, drinking and dining facilities has been discussed since before the center first opened in 1990. Although the Portland Development Commission spent more than $12 million to buy two blocks directly across Northeast Martin Luther King Jr. Boulevard from the center, Metro has never been able to put the project together. It has always required some level of public subsidy, which has proven too steep in the past.

Doing the math

The proposal requires the least amount of public subsidy so far, however. A development team led by Mortenson Development of Minneapolis is pledging $117 million. The state has committed $10 million in Oregon Lottery funds. Metro and Portland each have identified $4 million for the project. An additional $60 million would come from bonds to be repaid by the lodging taxes paid to the hotel during the next 30 years.

Most of the rooms will be reserved for upcoming conventions and only rented separately after deadlines pass. Metro President Tom Hughes said the deal is good for the region.

“We have a private hotel developer and operator ready to contribute 60 percent of the cost to build the convention center hotel. The direct public investment in this project likely will be less than 10 percent, which is justified to ensure we can hold the majority of this hotel’s rooms in reserve to help attract new conventions to town,” Hughes said.

Portland and Multnomah County must both agree to amend an existing intergovernmental agreement to allow the hotel’s lodging taxes to be dedicated to the bonds.

A Metro analysis says the hotel, which will be operated by Hyatt, will generate enough tax revenue to pay back the bonds. But Richardson says other such hotels have experienced financial problems, including one in Baltimore. According to a June 26 story in The Baltimore Sun, the city-owned hotel has lost $65.1 million since opening in 2008, including $11.2 million in 2012. The Metro project envisions a privately owned hotel, however.

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