Faced with the potential of years of litigation about the proposed convention center hotel project, Metro announced Tuesday that it's turning to a somewhat obscure bit of law in hopes of answering all of the legal challenges at once.
The regional government filed a "validation action" in Multnomah County Circuit Court on Tuesday, part of a legal procedure spelled out in Chapter 33 of the Oregon Revised Statutes.
The procedure, in a nutshell, asks a judge to review Metro's proposed bond sale, and assess whether it's being conducted legally. Following the filing, anyone is entitled to challenge the sale for any reason, with the courts responsible for deciding whether the objection to the bond sale is valid.
Metro is also asking the court to determine that the Metro Council's votes on the project aren't subject to referendum.
"It is unfortunate for Oregon workers and local business owners that a small but well-funded group of opponents seeks to obstruct and delay this important project," Metro Council President Tom Hughes said in a statement released by his office. "This group has filed lawsuit after lawsuit to halt progress and their track record suggests more are on the way."
In the court filing kicking off the validation procedure, Metro's lawyers ask the court to approve the project's term sheet, development and finance agreement, authorization to issue the revenue bonds and execution of the finance plan.
The filing asks a court to determine that the project's finances don’t require voter approval. It also asks the court to determine that parts of the agreement can't be overturned by voter initiative.
"The Metro Council commences this validation proceeding for the purpose of efficiently and effectively establishing the regularity and legality of the actions and contracts described in this pleading, which involve a significant expenditure of public funds and significantly affect the lives and businesses of a significant number of persons within the Metro district," the filing says.
A spokeswoman for the Coalition for Fair Budget Priorities, which opposes the hotel's finance plan, said Metro should just turn the issue over to voters.
"Instead of wasting more taxpayer dollars on ridiculous lawsuits, Tom Hughes and Metro should just let the voters vote, and this whole thing could be settled quickly and inexpensively," spokeswoman Paige Richardson said.
It was unclear Tuesday whether the validation action would affect a lawsuit, filed in Clackamas County by Richardson, challenging the hotel.
The Metro Council, and its attorneys, are caught in a serial novel of lawsuits from hotel opponents, mainly downtown hoteliers led by Provenance Hotels. Shortly after the downtown hoteliers lost their first lawsuit, they filed another, saying state law prohibits Metro from issuing bonds to support a convention center hotel without a region-wide vote.
Metro officials say that state law became obsolete when the voters of the region passed a new charter in 1992 and amended it in 2000 and 2002.
The serial legal challenges have Metro leaders thinking about recent history in Tacoma, where development of a proposed Residence Inn by Marriott has been held up since 2009 after a number of legal and political challenges by Provenance, which owns a competing hotel nearby.
According to the Tacoma News-Tribune, five years of litigation ended recently when the Tacoma City Council agreed to give Provenance a $2.5 million subsidy on parking lots adjacent to a Provenance-owned hotel, selling them to Provenance for a third of their assessed value.
Given the history in Tacoma and the recent track record in Oregon, Metro officials said they felt compelled to try to address the legal challenges all at once.
"There's a pattern of (opponents) being willing to obstruct and delay by pursuing endless litigation," said Andy Shaw, Hughes' chief of staff. "We want the court to examine all potential challenges now, and clear away any doubt that we have the legal authority to move the project forward."
In some respects, the procedure spelled out in ORS 33.710 is a risky maneuver. If the court finds flaws in Metro's bond sale plan, Metro could have to go back to the drawing board on the financial structure for the proposed Hyatt hotel next to the convention center.
"We believe the court will find that we've structured the project correctly. However, if they find a flaw, we can correct it sooner," Shaw said.
The validation action is expected to take months, if not longer, to litigate.
In the structure, the private-sector developers would contribute about $120 million of the 600-room hotel's $198 million cost. Another $18 million would come from state and regional grants and loans.
The remainder, about $60 million, would be paid by room taxes on stays at the Hyatt. Opponents say if the Hyatt doesn't meet financial expectations, visitors to other Portland hotels would have to pay room taxes to pay for the Hyatt's construction.
"The only one issue at hand here is whether the $80 million in public subsidy should be given to a private company that gets all the profit, while taxpayers hold all the risk," Richardson said.
"That's the only issue we're talking about here. Metro left us no choice (but to sue). They blocked us at the ballot, so we attempted. We had more than 20,000 citizens sign within 3 weeks so they blocked that. and continue to block our path to the ballot in Multnomah County. So we went to the entire region to say, get us to the ballot on this," she said, referencing the lawsuit filed in Clackamas County.
A Metro-produced financial analysis says that even with two significant dips in the convention economy, modeled off of the post-Sept. 11 recession and the Great Recession, room taxes at the Hyatt would be able to cover the bond payback.
Advocates of the hotel project at Metro say the financial structure is key to securing a deal with Hyatt, which, in exchange, would hold about 80 percent of its rooms for recruiting conventions, build large ballrooms that wouldn't be constructed in a Lloyd District hotel and meet other criteria set by the regional government.