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Decision time’s nigh for landmark
Meier & Frank rehab, hotel addition may get city nod May 11


It’s getting close to crunch time for the May Department Stores Co. to sign off on a development agreement with the city of Portland so the $137.3 million transformation of Meier & Frank’s landmark downtown store can begin.
The Portland Development Commission is set to approve the agreements on the project at its May 11 meeting.
Sage Hospitality Resources, the Denver company that will transform the top nine floors of the 665,000-square-foot Meier & Frank building into a Marriott Renaissance hotel, signed its development agreement in March after months of meetings with city officials.
“But we continue to work on the May Company development agreement,” said Don Mazziotti, PDC executive director. “It’s not complete, and we’re very anxious to get it before the commission.”
Mazziotti acknowledged that he’s worried that a delay could jeopardize timing on the construction project. “It has to be carefully coordinated so as not to interrupt the Christmas season. If that were to happen, there could be a cascading effect, which pushes the project into the next year, which is not desirable.”
Ken Geist, executive vice president of Sage, sounded less concerned. “We’re on the agenda for PDC approval May 11, and the plan is to have PDC get May’s agreement finished this week, then go to the board on May 11 — and away we go.”
Geist said he’d talked to May officials on Monday, “and they thought they’d wrap (the development agreement) up this week.”
May spokeswoman Sharon Bateman said she could not confirm where discussions on the agreement stand.
Plans call for May to sell the top nine floors to Sage and use the $30 million proceeds to pay for remodeling the first five floors into an updated, more upscale department store.
Demolition of the top nine floors could start in September, with reconstruction beginning February 2006; completion of both the store and the hotel is slated for the fall of 2007.
May said it intends to keep the store open for business while remodeling proceeds.
A pending merger of May with Federated Department Stores, expected to be complete in the third quarter of this year, should not hamper the project, May’s Bateman said following Federated’s Feb. 28 announcement that it was buying May in a $17 billion cash and stock-purchase transaction.
Industry watchers expect Federated, owner of Macy’s and Bloomingdales, to add some pizazz to May stores.
The Meier & Frank project is the culmination of years of negotiations with May to restore the venerable but fading flagship, a national historic landmark that is considered key to downtown Portland’s vitality.
With the construction launch so close, Mazziotti admitted he’s fretting that any delay could cause problems with escalating costs for construction materials.
If something happens to sideline the project, he said, “my opinion would be that it would probably effect a greater loss in downtown retail and the hotel marketplace than it would ever supplant or displace.”
Sage’s portion of the project qualified for $72.5 million in New Market tax credits, from a federal program that allows developers to entice investors with favorable tax treatment. The PDC is loaning $13.9 million to Sage to fund a portion of the hotel project.
All of the construction budgets for Sage, Geist said, included consideration for inflation.
“We’re in good shape; we just have to get our approval and get going here,” he said.
The new hotel, he said, should not divert attention from a planned headquarters hotel adjacent to the Oregon Convention Center. Some area hoteliers have said they’re afraid adding 330 rooms in the Marriott Renaissance hotel will hurt Portland’s already saturated hotel market, as well as damage efforts to get the convention center hotel built.
A recent report on the Portland hotel market indicated that it is well on its way to recovery after several down years.