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Task Force Makes Preliminary Recommendation that Portland Should Move Ahead with
Plans for a $227 million Publicly Financed Hotel Next to the Oregon Convention Center
By Ryan Frank, The Oregonian, Portland, Ore.McClatchy-Tribune Regional News

March 11, 2009 - -A private task force appointed by Mayor Sam Adams has made a preliminary recommendation that Portland should move ahead with plans for a $227 million publicly financed hotel next to the Oregon Convention Center, Adams said late Tuesday.

The nine-member group of bankers, developers, union leaders and others suggested to Adams that the city and Metro, the regional government that owns the convention center, should pay for more detailed engineering work, the mayor said. That would cost another $5 million, according to city estimates.

But Adams has asked the task force to put its recommendation on hold until it digs deeper into the hotel's proposed operating agreement with Starwood Resorts & Hotels Worldwide. The task force has met three times since Feb. 18, and Adams said he expects the group to complete its work in the next three weeks or so.

Adams' task force has worked out of the public eye. He created the task force to report to him. If the task force made its report to the City Council, the group would have had to meet in public under the Oregon public meetings law.

Adams appointed a similar task force to study a proposal to bring a Major League Soccer team to town. That group met in public each time and accepted public comments.

Adams said he wanted the hotel task force to meet in private so it could give a "quiet and thoughtful evaluation of the proposal" and because the group had to review proprietary information. Unlike the soccer proposal, the hotel has had years of public comment, Adams said. The confidential information included financial projections from the hotel's proposed operator.

Portland leaders have sought a convention center hotel since 1989 and have been reviewing developers' proposals for four years.

Supporters say the hotel would bring new and bigger conventions to town and spur more spending at restaurants and shops. Opponents say a publicly financed hotel would provide unfair competition for existing hoteliers.

The city and Metro spent thousands of dollars on consultant reports on the hotel's economic impact, financing and risks.

Under the current proposal, Ashforth Pacific of Portland and Garfield Traub Development of Dallas, Texas, would build a 600-room hotel. Portland would sell bonds to pay for the hotel construction, then pay back the debt with hotel revenues.

One key stumbling block to getting the hotel built: The revenues wouldn't be enough to cover the debt payments and provide the cushion required by bondholders.

Metro tried to kill the project in December. But Adams revived the proposal after a closed-door meeting Dec. 16. "No question it's troubled," Adams said in December. "But we haven't exhausted all the possibilities."

That's what led to the task force, which has been led by Mark Edlen, one of Portland's most prominent developers as managing principal at Gerding Edlen Development.

After he took the mayor's seat in January, Adams asked the group to start over with another thorough review. The key questions, according to city records, that Adams wanted answered included the hotel's economic impact, financing and risk.

Adams also asked the group to decide whether the proposal is based on "thorough analysis and reasonable, informed assumptions."

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

Copyright (c) 2009, The Oregonian, Portland, Ore.

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