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Portland, Oregon Proposed Convention Center Hotel Faces
 Large Funding Gap, City Council Opposition

By Ryan Frank, The Oregonian, Portland, Ore.
Knight Ridder/Tribune Business News

May 25, 2006 - Portlanders, you want a shiny new hotel next to the Oregon Convention Center?

Pull out your checkbook.

The city must scrape together as much as $79 million in taxpayer money if it wants to entice private investors to fork up the rest of the $150 million tab.

If that's too rich, the city may have to just build and own the hotel itself.

That was the message delivered by the Portland Development Commission on Wednesday. The city's redevelopment arm has tried for 17 years to get a hotel that attracts more, larger conventions to Oregon's biggest city.

But Portland still has a long way to go. Everyone involved expected a funding gap. But Wednesday was the first time the city publicly released a figure.

Given the stiff subsidy needed for a private hotel, the commission on Wednesday said it would take a closer look at a publicly owned project -- an approach other cities have used to land lower interest rates. The commission stopped short of endorsing the idea.

Even before the agency launches more studies, it looks like a publicly owned hotel won't make it through the front door of City Hall.

A majority of the City Council -- Mayor Tom Potter and Commissioners Erik Sten and Dan Saltzman -- opposes city ownership. A group of Portland hoteliers also opposes a publicly owned competitor and has hired lobbyist Len Bergstein to make its case.

The council is lukewarm even on investing much public cash into a hotel project, which could make the $79 million estimate a tough sell.

So far, the development commission's budget sets aside cheap land and $4 million in property taxes raised through urban renewal to help private developers.

Searching between the city's couch cushions, Michael McElwee, the PDC's hotel project manager, found a maximum of $40 million in taxpayer funds. All of them require approval from the city or other government agencies:

  • Dedicate existing hotel room taxes paid by the convention center hotel visitors back into the hotel.
  • A new 2 percent per night surcharge on rooms in the convention center hotel.
  • A five-year property-tax waiver on the hotel.
  • Cash from Metro, the Portland area's regional government that owns the convention center.

Last year, the city picked a development team led by Lloyd District property owner Ashforth Pacific and Dallas, Texas, developer Garfield Traub to build the hotel. If the project goes forward, the agency will sign a deal with the hotel developers in December.

The development team and PDC looked at four hotel options from 400 to 600 rooms. Under the most recent concept, a 600-room hotel with 39,000 square feet of meeting space would cost $150 million plus the land cost. The city bought the land for about $11 million, McElwee said.

Eric Parsons, PDC chairman, said the hotel is "an investment that should be made" but he pushed for some progress on the long-debated project in the next three or four months. Parsons and other commissioners pointedly called on other governments -- primarily Metro -- to help plug the funding gap. Commissioner Bertha Ferran said: "I don't think PDC can do this alone."

Reed Wagner, Metro's policy coordinator, told Parsons that Metro hadn't committed any money for the hotel yet and wanted to see more information on a government-owned hotel.

McElwee said publicly owned hotels have grown popular across the country in recent years because government borrowers can get lower interest rates than private developers. The commission's research found that seven of eight similar hotels built since 2003 were publicly owned.

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To see more of The Oregonian, or to subscribe the newspaper, go to http://www.oregonian.com.

Copyright (c) 2006, The Oregonian, Portland, Ore.

Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.


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