Portland city leaders signed off on the framework for the proposed $198 million Oregon Convention Center Hyatt hotel on Wednesday, voting 4-1 to approve a key agreement that moves the project forward.
The agreement, a memorandum of understanding, was approved after an amendment by Commissioner Nick Fish, who sought more oversight of Hyatt's pricing strategies.
It was the second of six votes needed to advance the hotel project toward final negotiations with Hyatt, which would take place later this year. The Multnomah County Commission is scheduled to make its two votes on Thursday, and the Portland City Council will vote next week on another part of the agreement.
Under the agreements, a visitor development fund would be amended to use room taxes from the Hyatt to pay down a $60 million bond on the hotel's construction.
In exchange for issuing the tax-free bonds, plus a $4 million city loan and $14 million in direct public subsidy, Hyatt would meet a number of development conditions, including having a union workforce and leaving 500 of the hotel's 600 rooms available to future conventions.
After a three-hour hearing, Portland Mayor Charlie Hales said the hotel's development proposal met his standards.
"The risk is reasonable, the opportunity is considerable and that investment supports our values," Hales said. "I think that decision passes those tests."
The plan was mostly acceptable to Fish, with one caveat – that there wasn't enough done to keep the Hyatt from undercutting rates at other hotels in the city if hotel business is lean.
For a variety of reasons, Fish said, setting a minimum on room rates would be unworkable. But Fish asked his fellow city council members to require Metro, Multnomah County and Portland officials to periodically review how much Hyatt was charging for its rooms.
According to a copy of the amendment tweeted by Portland Mercury news editor Denis Theriault, the agreement would now say "Metro will seek to obtain agreement from the OCC Hotel Project Operator to provide a quarterly pro forma variance report (to) the Financial Review Team during the first two years of hotel operation, subject to a confidentiality agreement, to enable the Financial Review Team to monitor hotel performance during the important initial stabilization period."
Fish said his plan is "a concept that would allow the decisionmakers to get some data to test the question of whether the blended rate is undercutting the market over the first 5 years."
The concept was amenable to Kimo Bertram, a Hyatt regional vice president who said he expects his hotel to charge betwen $30 and $50 a night more than downtown hotels.
"It's an issue we would need to work through but something we'd be open to discuss," Bertram said.
But Portland Commissioner Steve Novick was unmoved by Fish's proposal, saying the hotel project could set a dangerous precedent by encouraging any business to ask for taxes generated to go back into business development.
"It strikes me as a real slippery slope," he said.
Beyond that, Novick said he doesn't think governments should be picking winners and losers in the private sector. He said he supports the union jobs that would be created by the hotel, and asked Metro officials to go back and re-negotiate the finance plan, which has been under development for more than a year.
WIth the city vote over, the question for tonight is whether Fish's amendment jeopardizes support for the plan at the county. Last week, Multnomah County Commissioner Loretta Smith said there was enough support at the county to approve the agreements, but that was before the changes on Wednesday afternoon.
After the hearing, Metro Council President Tom Hughes said he didn't think the change was significant enough to risk flipping votes at the county.
"(The amendment) provides more security for all of us, so I don't think it'll cause any problem for the county at all," Hughes said. "We've worked with him (Fish) enough to get language we could support."
Note: An earlier version of this story indicated that the Metro Council had voted on both of the agreements for the hotel plan. Metro had only voted on the finance agreement, and not the memorandum of understanding. This version has been corrected.