|By Elliot Njus, The Oregonian, Portland,
Ore.McClatchy-Tribune Regional News
Sept. 04, 2012--A proposal for a publicly subsidized Hyatt hotel -- or maybe two -- at the Oregon Convention Center will go to a vote next week after an advisory committee Tuesday gave it a stamp of approval.
The group behind the Hyatt bid, which includes Minneapolis-based Mortenson Development Inc., Portland's Schlesinger family, Portland architect Ankrom Moisan and others, offered four proposals for a convention center hotel, ranging in cost from $157 million to $201 million.
With an evaluation committee's approval, the Metro Council and the Portland Development Commission Board of Commissioners will each meet next week. And with both of their OKs, Metro staff will start talks to refine the proposals and negotiate financing. A deal would require later approvals from Metro, the city and Multnomah County.
Portland leaders have for 20 years considered various plans for a convention center hotel. The most recent before this one had called for a bond-funded, Metro-owned hotel, but it died as the economy tanked and it became clear tourism revenues wouldn't cover cost of construction in the middle of a recession.
While this new proposal will be built by the private sector, there's no question it will involve public money. The proposals call for between $10.4 million and $36.1 million in PDC or Metro loans or grants, and each would call for a rebate of most of a citywide 12.5 percent lodging tax.
"I think there's reason to believe we can negotiate from the four alternatives presented to us by the team that was selected," said Metro Council President Tom Hughes. "I think we'll be able to reach something that meets all our principles."
A competing proposal from Sheraton hotels -- led by Langley Investment Properties of Portland on a team that included Garfield Traub Development, ZGF Architects and Turner Construction Co. -- called for a smaller public investment of $8 million in PDC and Metro loans and a smaller slice of the lodging tax over a shorter 15-year period.
But it would also put the $156 million hotel right on the convention center grounds, integrated with the existing building. They would share parking and meeting space.
It had a more complicated financing package, too, without letters of interest from lenders or investors.
"They had a very conceptual proposal around the financing package with limited details," said Teri Dresler, the Metro manager in charge of venues like the convention center. "We were concerned that would put the project at considerable risk."
The Hyatt team's Mortenson agreed to provide construction financing for their proposal, and Hyatt Corp. agreed to buy the hotel -- with no financial contingencies -- upon completion.
Of Hyatt's four proposals, two would be built on land owned by the Schlesinger family directly north of the convention center, and the other two would be built on a PDC-owned site to the east.
One of the plans on each site actually calls for two hotels, a Hyatt Regency with more than 400 rooms and a smaller Hyatt Place hotel.
Each proposal has a different mix of financing and subsidy. The Hyatt development team indicated it prefers the two-hotel configuration on the northernmost site, which calls for the smallest subsidy.
Only the dual-hotel proposals would allow a block of 500 rooms that Travel Oregon, the convention center's marketer, has said it wants to offer for big conventions.
Neither development team could be reached Tuesday afternoon.
An ongoing labor dispute could complicate the Hyatt proposal. The hotelier is locked in a labor dispute with Unite Here, a hotel workers union. Under the resolution being considered, Hyatt would have to enter into a labor peace agreement regarding employees of the hotel.
"We won't go forward with the negotiation unless that's accomplished," Hughes said, adding Metro could reverse course and explore the Sheraton option if there's no resolution. "At some point we could throw up our hands and go back to the other proposal."
Portland Mayor Sam Adams said he didn't feel comfortable comparing the latest to proposal to others that surfaced over the years. But he expressed untempered optimism that this may the hotel project that finally gets built.
"I'm more optimistic than I've been in the last two decades on this project," said Adams, who as chief of staff to former Mayor Vera Katz brokered tax increases on hotels and rental cars to pay for the Convention Center expansion. Although the latest project would largely be funded with private money, taxpayers would be on the hook now and well into the future.
Adams said returning room taxes to the hotel has always been part of the plan and he's comfortable with the proposed terms, which would limit collections that otherwise would go to city general fund and to Multnomah County to support the convention center.
Adams said there would be no room taxes to collect, anyway, "if there is no hotel."
The Hyatt proposal also suggests that 430 underground parking spaces may be built on land directly west of the Schlesinger property, which is owned by the PDC. Patrick Quinton, the agency's executive director, said that land, at almost a full acre and worth an estimated $3 million, has not been offered as part of any potential deal but could be negotiated.
"If that is the case," he said, "then they would be purchasing that property."
If a deal is approved, construction could start in 2013 for a 2015 opening.
Brad Schmidt of The Oregonian contributed to this report.
--Elliot Njus Follow @ORFrontPorch
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