Metro councilors voted unanimously Thursday to support a financing concept for a 600-room Hyatt hotel near the Oregon Convention Center, the first of four approvals needed from local governments.
But they got a preview of a possible battle about the financing plan, with opponents vowing to ask Multnomah County voters to review the project.
Parts of the $198 million Hyatt hotel's finance package must still be approved by the Portland City Council, the Multnomah County Commission and the Portland Development Commission. And the Metro Council still would have to approve a final development plan later this year.
The agreement with Portland and Multnomah County changes the three governments' room tax system to allow for Metro to issue as much as $60 million in bonds to help pay for construction of the Hyatt.
Those bonds would be repaid through the room taxes on guests of the Hyatt. Guests at other hotels would continue to pay room taxes towards regional tourism promotion, which is how those taxes are used now.
Metro councilors, in comments before their unanimous votes of support for the plans, said they felt this was the right finance package at the right time. Councilor Sam Chase pointed out that the money for the project isn't money that would otherwise go to social services.
The agreement says the room tax fund is "to support regional tourism and spectator facilities, the visitor and hospitality industry, and to maximize the economic development benefits associated with visitor facilities, programs and services for the Portland-Multnomah County area," Chase pointed out.
In fact, said Metro Council President Tom Hughes, the hotel project would bolster the region's social services.
"I'm a little bit like Councilor Chase – if I thought this was money that could be spent on human services or on education, this would be a tougher choice for me," Hughes said. "The way we fix schools, and the way we feed children, and the way we take care of human service needs is by giving people jobs. You feed kids by putting their parents to work," he said, pointing out that the Hyatt would have 600 jobs.
Carlotta Collette, one of the two Metro Councilors who were on the board the last time it tried to get a convention center hotel built, said this plan is much better than the one that fell apart a few years back.
"The payments forward are not coming out of income taxes or property taxes, they're coming out of lottery bonds, by MERC reserves and the hotel taxes that are going to be paid through the hotel," she said. "Those are revenues that are coming, not from the base of people in our community but from the people coming as tourists to use these facilities."
The project had detractors at Thursday's council meeting. In testimony before the council's vote, the Cascade Policy Institute's Steve Buckstein wondered whether Metro should be in the convention center business at all.
"Rather than moving forward today and doubling down on your bet by moving forward with the convention center hotel, I suggest you consider doing what most people consider the politically incorrect thing, which is to consider whether you want to be in the convention center business in the first place," Buckstein said.
But in support of the project, UNITE HERE Local 8 organizer Shellia Allen said the project would be good for the region.
"It's going to raise the standards for workers in the hospitality industry," she said.
Metro leaders hope to assuage fears that the hotel might lower room rates.
A late revision to the concept plan attempts to answer calls for minimums on room rates at the hotel, which downtown hoteliers have said are needed to prevent the Hyatt from hurting downtown business.
The concept plan says the development team "will work with Travel Portland and Metro to coordinate marketing plans and rate promotions on a regular, on-going basis to ensure the Hotel does not precipitate room rate decline in the Central City hotel market."
Tim Ramis, a lawyer representing downtown hoteliers, said the approval process might not be so simple as a few votes by Metro councilors and county and city commissioners.
If Multnomah County approves the finance plan, Ramis said, "that ordinance will be referred to the voters." A spokeswoman for the Coalition for Fair Budget Priorities, the most vocal critics of the finance plan, said that vote would likely be in 2014.
According to Metro officials, construction on the hotel could start in late 2014, with completion about two years later.