Hotel dream a likely nightmare
- Leonard Bergstein
- Portland Tribune - Opinion
Two views • Convention Center hotel would bring city millions of dollars - or saddle it with an unwise risk
Oh, I know Mayor Sam Adams isn't likely to ask my advice about his plans for a $300 million headquarters hotel. But if he did, I'd tell him: fugettaboutit.
In soothing tones, I'd remind the mayor that he seems to be the only politician in Oregon who wants to put the public in debt for 30 years on this risky project that ought to be financed by the private sector, if at all.
When Mayor Adams - according to Multnomah County Chairman Ted Wheeler - tried his best imitation of Don Corleone, basically saying, support the hotel or the Sellwood Bridge sleeps with the fishes, Multnomah County told him: fugettaboutit!
After years of study and really wanting to spend millions, Metro reached the only fiscally prudent conclusion: fugettaboutit!
Strong-arm tactics to 'reason' with the state of Oregon to divert millions of dollars - each year for 30 years - from the crippled general fund for this hotel (Senate Bill 813), gets a similar response from the governor and state Legislature: fugettaboutit!
What do they know that Mayor Adams doesn't? They see that project costs keep going up (the mayor's hand-picked advisory committee wants to add 'Platinum LEED' costs to the already-expensive project) and that project revenues keep going down (operating income may fall short by several million dollars annually, according to testimony from local hotel experts).
And worst of all, there is no end to the madness.
Other crazy communities will use sub-prime financial instruments to mortgage themselves into huge debt - to build even glitzier hotels with sub-market room rates that will compete with Portland for a declining, volatile convention market. We'll be locked into a costly 'arms race' to win a smaller slice of the convention pie, chasing down a risky path to dig ourselves deeper into a financial hole that will threaten our ability to use our city's credit someday to finance something we really need.
Intuitively, most sane people conclude that this hotel is a luxury we just can't afford. And the inconvenient truth is that the overly optimistic projections for success, provided by the consultants/architects/ bond counsels and developers, just don't add up. Otherwise, they'd wait to get their millions of dollars in fees when the hotel turns a profit - instead of taking theirs at the front end and leaving taxpayers to hold the bag for 30 years.
So, hopefully, Mayor Adams will see that there is no disgrace in forgetting about this bad idea. Surely, in these tough times, he and his colleagues can focus their attention on some more worthy projects that require public financing - and when he finds the right one, I'm sure he'll make Portlanders an offer we can't refuse.
Leonard Bergstein is president of Northwest Strategies, Inc. His firm has represented several downtown hotel owners and developers, who have raised objections to the proposed convention center hotel. He lives with his wife, Betsy, near Washington Park in Southwest Portland.