Mortenson Development vice president Tom Lander discusses details of its proposed Hyatt hotel near the Oregon Convention Center.
A Metro-sponsored market study on a proposed hotel near the Oregon Convention Center says the development could actually lower the vacancy rates at hotels across the region, and points to nine conventions that could come to Portland if the hotel was built.
But Len Bergstein, an advocate for downtown hoteliers, remained skeptical of the study and questioned the public partners negotiating a public subsidy to get the project off the ground.
The so-called headquarters hotel is a proposed 600 room Hyatt hotel to be built just north of the center. Metro is leading negotiations with the project's developers about how much of the project's anticipated $157 million to $200 million cost would be picked up by the public sector.
Metro and the Portland Development Commission have said some public subsidy is required to guarantee that the hotel will keep 500 rooms open and available for large conventions.
"The hotel owner essentially does not have control of those rooms," said Tony Peterman, a partner at Strategic Advisory Group, the consultant responsible for the study. "The CVB (convention and visitors bureau), in this case Travel Portland, can go out and book those."
Where that subsidy ends up is anyone's guess, and negotiations are now expected to last into 2013. Developer representatives have called for a rebate of most of the room taxes paid by hotel guests.
Some estimates have that subsidy worth $111 million to the developers over 30 years; project proponents say those are taxes that wouldn't be collected by local governments in the absence of a convention center hotel.
Bergstein, who represents a consortium of downtown hotel owners, said he felt Metro and Hyatt should be negotiating the financing proposal in public.
"I think the public's going to be extremely skeptical as the numbers move up and up and up," Bergstein said. "I've heard the gap between the two parties is upwards of $80 million-plus. I think as those numbers leak out a little bit the advocates should be rushing as quickly as they can to have these negotiations in public."
Metro officials say that if the upfront public subsidy gets too high, the plan probably won't pass muster from the Metro Council, Multnomah County Commission, Portland City Council and Portland Development Commission – all of which must sign off on a financing plan.
"There's no appetite – at this elected body or at the other two or at the PDC board – for a big financial investment or risk on the part of the public sector," said Teri Dresler, director of Metro's visitor venues. "There's no appetite and there's no money, quite frankly. We don't do ourselves any good if that's what we're going to bring them, because they're going to throw it out the door."
She said the negotiating team continues to look at the developers' financing proposals to vet the project's costs. Already, negotiators have proposed moving planned underground parking to a PDC-owned lot adjacent to the hotel site.
"I want to see it end up in a scenario where we accomplish one of our beginning goals, which is minimal risk and minimal public investment," Dresler said. "That's the ultimate goal. I can't put a number on that."
The consultant's study said the hotel project would bring in $127 million in 2012 dollars to state, regional, county and local governments in taxes, and result in $121 million in spending annually once opened.
It found that the Portland market's hotel occupancy rate would temporarily drop by one-tenth of one percent for a year, before rising by 1.4 percent after that.
The report was presented at a joint work session of the Metro Council and the Metro Exposition and Recreation Commission, which oversees the convention center.
After the work session, Bergstein said he felt like the report was more of the same.
"There's nothing in there that was surprising," he said, adding that upcoming studies would give decision makers "a much more balanced perspective than they got today."
Metro Councilor-elect Bob Stacey, who was at the work session Tuesday, said he believed Tuesday's study and its report that the construction of the hotel near the center would be good for the hotel industry in Portland in general.
"What is the public investment or risk beyond the initial investment?" Stacey said. "How do we minimize that to get the benefits we saw there without overdoing it on the public side?"