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Metro, the Regional Government Authority Serving the Portland, Oregon Area, Takes Steps
 to Building and Owning a $150 million, 600-room Convention Center Hotel
.
Project Expeced to Boost the Financially Weak Oregon Convention Center
By Dylan Rivera, The Oregonian, Portland, Ore.McClatchy-Tribune Business News

Feb. 9, 2007 - The Metro regional government took its first step Thursday toward building and owning a $150 million, 600-room convention center hotel.

But even as the Metro Council voted unanimously to take on the hotel, several councilors expressed skepticism and indifference about whether the project, considered a high priority for 18 years by the Portland Development Commission, would ever become a reality.

At a public hearing Thursday, dozens of landowners, business owners and tourism promoters nearly uniformly praised the proposed hotel as a potential savior of the financially weak Oregon Convention Center and the mostly vacant neighborhood around it.

Several councilors said they would not risk Metro's assets on the project. They called for more information on the hotel's financing and cast doubt on the rosy picture painted by proponents.

"The state office building was going to change this area; our initial investment in the convention center was going to change this area," Councilor Carl Hosticka said. "Now we're hearing that the convention center hotel will do it. I'd be happy to be surprised."

The Metro Council on Thursday took over the project from the Portland Development Commission, which had been studying it and soliciting developers to build it. Metro accepted the development team chosen by the PDC, rather than launching its own search for a developer, which staff said could delay construction by two years.

The council also ordered a study by staff and consultants of how the hotel financing should be structured for public ownership. Some councilors said they wanted the study, expected to take three to six months, to include smaller and cheaper hotel options. However, Metro attorney Dan Cooper said he doubted there would be time for that.

Advocates say the hotel, also known as a "headquarters hotel," would enable the Oregon Convention Center to compete for larger gatherings that would bring millions in tourism spending to the region.

Planners of conventions with 3,000 to 4,000 delegates demand the ability to book large blocks of rooms near a convention center. They also want a hotel with meeting space that can support the convention center facilities.

Because such hotels are built with more rooms and meeting space than the private sector would normally build, they are financially perilous and often rely on government subsidy. A study last year indicated a privately owned 400-room, $150 million hotel in Portland would require as much as $79 million in upfront government subsidy.

A group of downtown Portland hotel owners has protested a government subsidy for the project, saying it would undermine their business just across the river.

Local government ownership, though, might make the project eligible for low-interest financing, thus lowering its overall costs, Metro staff have said. That raised the possibility that the city or another agency should consider owning it.

The Portland City Council has balked at the idea of city ownership or subsidy.

PDC President Mark Rosenbaum told the Metro Council that because the regional government owns the convention center, it makes sense that Metro should have oversight of the hotel serving it.

"You give this entire center the greatest opportunity for positive results," he said.

As is usual for the hotel project, the tourism industry offered nearly universal support and urged action.

"Don't get in the trap of endless studies," said Jeff Miller, president and chief executive of the Portland Oregon Visitors Association. Miller is the immediate past general manager of the Metropolitan Exposition Recreation Commission, an arm of Metro that runs the convention center.

Also as usual, an attorney for some downtown hoteliers expressed skepticism and pleaded for more study of a smaller hotel and other ways of subsidizing large conventions.

But councilors said they wanted to pursue some sort of new strategy for a convention center in need of help. Some councilors called for the tourism industry to support a higher hotel-motel tax to ensure financial feasibility for a project that would benefit the industry.

"Who's going to bear the risk if things don't work out as we hope?" said Councilor Robert Liberty. "Is the industry committed to the point they would bear the risk?"

-----

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

Copyright (c) 2007, The Oregonian, Portland, Ore.

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