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  #61  
Old Posted Mar 20, 2007, 3:17 PM
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Council to eye hotel
Plans not yet firm, but some already fear a ballooning budget
By Jim Redden
The Portland Tribune

Ownership has yet to be determined for a possible headquarters hotel on land owned by the Portland Development Commission across the street from the Oregon Convention Center.

Although Metro still is studying whether to build a publicly owned hotel across the street from the Oregon Convention Center, the City Council will soon be asked to authorize the Portland Development Commission to contribute $11.85 million worth of land and $4 million in urban renewal funds to the project.

On Wednesday the PDC board of directors voted to ask the council to authorize the contributions by amending the Oregon Convention Center Urban Renewal Plan, which governs the urban renewal district around the center. The Portland Planning Commission is scheduled to consider the amendment Thursday, after which it would be submitted to the council for approval in May.

PDC project manager Fred Wearn said council authorization was necessary to allow Metro to complete its analysis of the project and is not legally binding on the city. Wearn said if Metro agrees to build such a hotel, both the PDC board and the council will need to formally approve the agency’s contribution again.

“We would go back to both the PDC (board)and City Council before spending capital dollars or releasing the land,” Wearn said.

At least one critic of the potential project believes the council should withhold any commitment until the details of the project are known, however.

“This is a rush to judgment before all the information is available,” said Len Bergstein, a political consultant retained by a number of Portland-area hotel owners and operators.

Bergstein compares the authorization request to the early phases of the Portland Aerial Tram, whose budget grew from around $15 million to more than $58 million after the council first authorized it. Last week Mayor Tom Potter announced he was commissioning an outside audit of that project to understand why the costs increased so much.

“Metro hasn’t completed its financial analysis yet. Why not wait until the details are known?” Bergstein asked.

The project under consideration is known within the convention industry as a “headquarters hotel.” It would include 600 rooms and such special features as extra suites and meeting rooms that can be configured for groups of different sizes. The Portland Oregon Visitors Association argues that such a hotel would bring more than a dozen additional conventions to town, pumping millions of dollars into the regional economy.

The PDC – the city’s urban renewal agency – has long supported the construction of a headquarters hotel on two blocks it owns along Northeast Martin Luther King Jr. Boulevard across the street from the center.

It had considered contributing the land and up to $4 million in urban renewal funds to a privately owned hotel until late last year, when internal studies showed that the project would require more than $80 million in public support. Total costs were estimated at more than $150 million.

At the direction of the City Council, the PDC then asked Metro to consider building the hotel as a public project. The elected Metro Council voted to consider the project in February and appropriated $250,000 to the Metropolitan Exposition Recreation Commission – which operates the convention center – for more study.

MERC is recruiting consultants to prepare an economic analysis and potential financing package for the Metro Council to consider this summer. Options to be considered include using lodging taxes generated by the hotel to finance construction bonds issued by Metro.

“The council won’t proceed unless a financial package is in place that will protect the public,” said Ken Ray, Metro’s senior public-affairs coordinator.

Bergstein’s clients argue that a 600-room hotel is financially risky. They favor the construction of a smaller, privately owned hotel on the same site, although they say the PDC may still need to donate the land and urban renewal funds to make it happen.

jimredden@portlandtribune.com
http://www.portlandtribune.com/news/...34212234434800
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  #62  
Old Posted Mar 20, 2007, 3:33 PM
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Quote:
Plans not yet firm, but some already fear a ballooning budget
As they should
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  #63  
Old Posted Apr 10, 2007, 11:41 PM
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In Lloyd District, let's aim high
MY VIEW • The convention center area is all some visitors see

By Christopher LoNigro
Apr 6, 2007

There are thousands of people every week flowing in and out of the Oregon Convention Center area like the tide … from the Barbershop Quartet international convention to the Portland International Auto Show.

While in town, the majority of these conventioneers never leave the Lloyd District. They stay scattered about in various hotels spending free time at the Lloyd Center shopping or catching a movie.

The adventurous head downtown to see and experience what Portland has to offer, but ultimately, they are here for a convention, not vacation. In addition to the conventiongoers, many travelers experience the Lloyd District via MAX before entering the central city.

The overall perception from Portlanders and visitors alike is that the Lloyd District, specifically the immediate area around the convention center, lacks an identity or a sense of place. It is an urban collage of surface parking lots, hotels with hidden entrances, seemingly abandoned buildings, gravel-filled lots and fast-food joints creating a pedestrian experience that is truly unfriendly.

The Portland Development Commission, Metro and the city of Portland have initiated immense infrastructure improvements in the district, but a predominant element is still missing.

Metro has taken the understandably controversial first steps toward building a 600-room hotel across the street from the convention center.

However, the questions should go beyond the financing of the proposed headquarters hotel. The questions should be how to organize the Lloyd District while welcoming the rest of the world to the city of Portland and the state of Oregon.

All of the proposed urban projects for the area – including the headquarters hotel, the east-side streetcar, the award-winning Lloyd Crossing and the Oregon Convention Center Blocks – could and should be revolutionary.

By creating a sustainable and vibrant district through implementation of these projects, visitors would receive a remarkable first experience of Portland.

The headquarters hotel will become the catalyst project igniting all other projects on the many underutilized properties in the district. It will provide a focal point between the Lloyd Center and the Rose Quarter, organizing and connecting the various elements of the district.

One of the key elements is the Martin Luther King Jr. Boulevard-Grand Avenue corridor, which will be transformed by the addition of a better pedestrian environment, new local restaurants and retailers featuring local wares.

For the hotel to be truly successful, the Lloyd District landowners must improve their partnerships and make the countless planning studies come to fruition. They must be willing to replace the many underutilized properties with the proposed urban projects.

All of these projects, including the hotel, are contingent upon one another’s success.

The issue is not solely about financing the construction and operation of the hotel, but rather the economic and development potential it should provide. Metro, the Portland Oregon Visitors Association and other various organizations must fulfill their promises of attracting bigger and more diverse conventions.

If they aim higher and succeed beyond expectations, the headquarters hotel will be successful on its own.

Ultimately, this success will help the overall hospitality industry grow, create jobs and enhance the regional economy.

Portland has a tremendous amount to offer with immense potential for residents and visitors alike. Whether people are here for a convention, vacation, business or as residents, that potential needs to be exposed at Portland’s front door.

Chris LoNigro is a designer at DiLoreto Architecture and has been active in developmental planning within the Lloyd District, where he lives.
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  #64  
Old Posted Apr 11, 2007, 1:56 AM
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I agree, completely, with this guy....
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  #65  
Old Posted Apr 11, 2007, 6:54 AM
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"All of the proposed urban projects for the area – including the headquarters hotel, the east-side streetcar, the award-winning Lloyd Crossing and the Oregon Convention Center Blocks – could and should be revolutionary." excerpt from Christopher LoNigro's article

Yes, but he's not volunteering much in terms of suggestions of how to do this. Uncertainty about what will make convention activity gel with areas outside of the Rose Quarter/Oregon Convention Center Blocks has been the stumbling block for years.

"The overall perception from Portlanders and visitors alike is that the Lloyd District, specifically the immediate area around the convention center, lacks an identity or a sense of place. It is an urban collage of surface parking lots, hotels with hidden entrances, seemingly abandoned buildings, gravel-filled lots and fast-food joints creating a pedestrian experience that is truly unfriendly.

The Portland Development Commission, Metro and the city of Portland have initiated immense infrastructure improvements in the district, but a predominant element is still missing." Christopher LoNigro

He goes on from there and mentions the proposed convention hotel as a first step. Really helpful would be to offer some realistic suggestions of how to counter "a pedestrian experience that is truly unfriendly.". MLK, Burnside, Weidler are all very high volume auto streets. Needed, are ideas in addition to the streetcar that would help the area to be more pedestrian friendly. All successful ideas would probably depend upon a reduction in auto traffic volume where it's presently in proximity to pedestrians. And we know how popular that idea is. So far, a lot seems to be riding on hopes for the couplet and the eastside streetcar.

Really examining what "pedestrian friendly" means for this area is very important. Right off the top of my head, to me, this means pedestrian specific connectivity. between the convention center blocks and the outlying areas they want to benefit from convention business. Right now, there really isn't any. Riding the MAX is fine, but walking from the convention center anywhere is for the hardy. More clearly defined pedestrian routes equipped with more easily accomplished crossings over the busy thoroughfares could really help.

I think business in general will continue to be slow to gamble on this convention hotel. Downtown has stressed out about it for years. All those conventioneers having a fine time at the all bases covered hotel...what's to get them over the river to downtown to spend money?

Also, the convention business is a very competitive, high risk industry. It's big money, all upwardly mobile cities want them, but it's highly dependent on transportation, i.e. flying. Once you got the machine running, if the conventions aren't coming in, its big trouble.
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  #66  
Old Posted Apr 11, 2007, 5:45 PM
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At issue, for me, seems to be the lack of perception by planners. By which I mean to say is that there isn't exactly what I would say a very high demand for any additional ammenities in the area (beyond Urbanists envinced in posts here). The whole district seems geared towards a more "suburban" and middle-class environment (contrasting with the more elitist Pearl District).

I simply don't believe that any additional city spending can significantly alter this area. Personally, rather than trying to form an "entertainment district" as envisioned by the Convention Center blocks (which would fall flat, especially considering we already have one) or a massively subsidized green district (I just don't think Portland has that kind of money) I would prefer to see a neighborhood of mid-rises for families. Honestly, I think it would work better than the existing plans which over-reach and assume too much that something can be created wholly out of nothing.
The city needn't spend excessive amounts of money, but rather just investing it wisely (rather like reducing property tax rates for apartments that offer housing to persons of a middle-income) a great deal more can be done to alter the area.

Let's face it, the Lloyd District won't be another Pearl. The property is divided between dozens of landowners, pre-existing business (much of which isn't stagnating as was the Pre-Pearl), and is home to a frequently noisy urban youth culture. We need a different plan; one that caters to reality rather than fantasy.

Thank you for reading my brief but long-winded response.
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  #67  
Old Posted Aug 23, 2007, 3:24 AM
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Reports drive home point: PDX requires a HQ hotel
Metro expects to make development decision on Sept. 27
Portland Business Journal - August 17, 2007
by Wendy Culverwell
Business Journal staff writer

Proponents of building a convention headquarters hotel have new evidence to back their objective. Two recent reports attribute the Oregon Convention Center's checkered performance to the lack of such a hotel.

A study by KPMG LLP attributes the drop in large convention business on growing competition for big events from other cities and the absence of a headquarters hotel.

"OCC event activity during calendar year 2006 supports findings that the lack of a headquarters hotel is negatively impacting the facility's ability to attract certain groups associated with relatively higher spending, and consequently, the economic and fiscal impacts to the region are similarly impacted," the authors note.

Meanwhile, Strategic Advisory Group, a consultant to the Portland Oregon Visitors Association, updated its own report on the subject at the end of July. Hotel issues eclipsed other reasons the center lost business, according to Strategic.

Other reasons included rental rates, organizers' needs for larger facilities and the center being unavailable for specific dates.

While the Oregon Convention Center itself is capable of housing most large meetings, Portland simply lacks the overnight accommodations of its competitors, including Long Beach, Calif.; Phoenix, Ariz.; Austin, Texas; Seattle; Salt Lake City; San Diego; Denver; and San Francisco, to name a handful.

Portland has about 1,000 total rooms within six blocks of the convention center. Its next-nearest rival, Long Beach, has nearly 2,000 rooms. San Francisco leads the class with nearly 9,000 rooms within a similar distance.

Not surprising, the headquarters hotel subject is far from dead. Discussions about building a headquarters hotel at the Oregon Convention Center promise to heat up substantially in the coming weeks.

The Portland Development Commission studied the idea and even selected a development partner to get it built, but eventually turned the matter over to Metro earlier this year.

A fresh round of studies has been completed and a series of meetings over the next month will culminate on Sept. 27, when the Metro Council is set to decide how or if it wants to proceed with development of a 600-room, privately managed, publicly owned hotel.

The connection between convention center success and a headquarters hotel is undeniable, said Jeff Blosser, executive director of the Oregon Convention Center.

"This is an industry and a business. You've got to listen to your clients and stay ahead," he said.

Jeff Miller, president and CEO of POVA, said he'll be there, advocating for a hotel at the convention center, every step of the way.

While the 2006 numbers were disappointing, Miller said it reflects a cycle. POVA already has booked a number of lucrative events for the convention center over the next few years.

But increasingly, meeting planners want headquarters hotels, he said.

"Those larger, more lucrative events are looking for the headquarters hotel packages. We get a lot of them. We lose a lot of them," he said.

wculverwell@bizjournals.com | 503-219-3415
http://portland.bizjournals.com/port...ml?t=printable
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  #68  
Old Posted Sep 3, 2007, 3:39 AM
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This struck me as a slightly convoluted editorial. Isn't the time for "delving deeper" over? Finally? The cartoon that accompanied this was very funny btw.

Don't give up on the hotel
The Metro regional government should go deeper in exploring two alternatives, one public and one private
Sunday, September 02, 2007

F or nearly 20 years, the city of Portland has known it would need a headquarters hotel to attract big conventions.

We still need it. In the intervening decades, the competition for this lucrative business has only intensified. Lacking such a hotel, Portland loses conventions even to Spokane now, including three big ones recently, involving 14,432 room nights.

That hurts.

Austin, Boston, Denver, Houston, Indianapolis, Sacramento, very soon San Antonio, and even Vancouver boast convention center hotels. But Portland? No. Which to many national convention planners means:

"No go."

Such planners are a quirky lot. In sizing up Portland, though, most have a minimal requirement we can't meet -- a block of 500 rooms, adjacent to the Oregon Convention Center.

Not across a bridge, or a half-mile away, but right there. Exhibitors, organizers and a hard core of delegates need to be able to take their weary frames back and forth quickly to the solace of their minibars.

And we hope they're weary from the serious business of having fun. A study showed such delegates spend, on average, $300 a day. That gives a tremendous boost to our economy. If you have a right-sized hotel -- not too large but also not too small -- bringing conventions to town also helps "induce" demand in other hotels.

On Sept. 27, the Metro regional government will make a momentous decision: Should it press forward with the hotel, planned since 1989? Or should it walk away?

Metro has been meticulous in examining the potentially $150 million project. Not content to take any projections at face value, Metro has restudied existing studies. And more hard numbers about feasibility and financing must still be pinned down before the final call.

Based on what we know so far, though, it appears Metro should pursue two options simultaneously. It should revisit the idea of a smaller hotel that would be privately owned, but ramp up to 600 or more rooms quickly in two phases. True, last time the private model was investigated, it required a gigantic public subsidy, which made it a nonstarter. The long lead time in the convention business also works against the idea, since competitors can offer already-built rooms.

But the hotel market is so strong there's a chance that prospects for private ownership have improved. Meanwhile, Metro should aggressively pursue the more realistic alternative of public ownership. Under that scenario, Metro would issue revenue bonds to build a four-star hotel with a private operator.

Metro needs to put the public ownership model through its paces, ascertaining exactly what has happened with it all over the country and exploring every possible worst-case scenario.

True, every city's situation is different. But in Vancouver, a 226-bed convention center hotel opened two years ago that is publicly owned and privately operated -- by Hilton, no less. And it's helping to rejuvenate Vancouver's downtown.

Although some competing hoteliers are still grumbling, they are also benefiting from overflow convention business. "Everybody's boat is floating higher," says Pat McDonnell, Vancouver city manager.

Risky as it may sound to go forward in Portland, abandoning the hotel carries risk, too. It would have serious repercussions for the region, effectively demoting the Oregon Convention Center into a second-fiddle operation. (No offense to the 8,100 square dancers who came here in 2005.)

Without a hotel, the convention center will still attract local and regional meetings. People, expecting to spring for a sandwich, will drive in from Beaverton for the day. The big bucks for the economy will go elsewhere, though, along with the big national conventions.

The Metro Council has been properly skeptical in its approach to this project. Done wrong, a 600-room publicly owned hotel could be a disaster. Done right, it would be an economic development engine for the region and the state.

Pressure from some area hoteliers is intense, so the easiest decision, by far, would be for Metro to walk away. But the right thing to do is delve deeper. Build the best base of knowledge in the country about convention center hotels. Test the model thoroughly. And, if it holds up, build the hotel.
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  #69  
Old Posted Sep 14, 2007, 6:17 PM
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Q&A: A conversation with Gregg Mindt

The lodging lobbyist stands alone as a critic of the HQ Hotel
POSTED: 06:00 AM PDT Friday, September 14, 2007
BY LIBBY TUCKER

After decades of talk about building a headquarters hotel for the Oregon Convention Center, Portland took a step toward action Wednesday.

The Metropolitan Exposition and Recreation Commission, which manages the Oregon Convention Center for Metro, voted unanimously to support a publicly owned and privately financed hotel.

Developers, labor representatives and city officials lined up to praise the proposal and the commission’s progress.

But Gregg Mindt, a lobbyist for the hotel industry, criticized the project, even as he voiced his support for MERC’s resolution to further study a headquarters hotel’s financial feasibility. The hotel industry says a publicly owned headquarters hotel would unfairly compete for visitors with private hotels.

They want Metro to guarantee hotel tax money will not be used to finance the hotel’s construction or its operations. And they want a greater portion of hotel tax dollars to go toward tourism and marketing efforts by the Portland Oregon Visitors Association.

DJC: You in the past have been against the headquarters hotel proposal. But today you supported MERC’s resolution. Why?

Gregg Mindt: Originally the Tri-County Lodging Association was opposed to any publicly owned facility and the discussion (was) at a 400-room level. But clearly the data and the information shows that a 600-room is the number that gets the room block that best serves the convention center. And most data is showing that a privately owned hotel is difficult to achieve in this kind of environment for a headquarters hotel.

We still have concerns for a headquarters hotel, but we really want to be at the table to see if it’s the right thing for the convention center, the city and the region before we say absolutely not. We want to be in the dialogue rather than say no.

All the data has shown there will be an impact on the industry in the short term. We’re trying to say, How can we minimize that impact on the market and how do we get this broader discussion?

DJC: Was it the additional research that changed your mind? Or has it been the discussion?

Mindt: I think it’s been the discussion. Probably half a dozen hotel folks were involved in PDC’s technical advisory committee, which I was included in. And it was really reviewing a lot of the data last year and eventually that was kicked over to Metro.

The issue is we understand the importance of the hotel on the facility, but we’re concerned about the impact that hotel would have. It would be the second-largest hotel in the city. You can’t put a 600-room hotel in Portland and not have it affect all the other hotels.

DJC: Wasn’t one of MERC’s recommendations to pursue a marketing strategy?

Mindt: It’s starting to enter conversation now. It really hasn’t been in any meaningful way over the last couple of years. There’s been no talk about more dollars for marketing.

And not just to the convention center but for the leisure segment as well. So if we can market an expanded convention center with the headquarters hotel, we can market to the leisure traveler as well. The conversation starts to shift a bit, so the attention’s not purely on the hotel itself.

DJC: So it’s more if you can do something that benefits all the hotel industry and not this particular hotel, then you’re on board?

Mindt: Yeah, it’s kind of that rising tide theory. How do we benefit everybody?

POVA just doesn’t have the resources to do more. And it’s very complex, because you’ve got Metro that owns the convention center, but the city of Portland receives the lion’s share of the hotel tax that goes into the general fund. And very little goes into marketing or POVA.

In most cities, the convention center money is given away as a loss leader. And so what it is here is a very complex structure set up to have hotel tax money paid through the visitor development fund paying for the cost of the OCC to get groups to come here. So we’re already starting off at a competitive disadvantage.

DJC: The concern that you voiced was how this would be financed, through additional hotel taxes, and if that will benefit every hotel.

Mindt: When these financials come through, they’ll begin to say, We need more money to cover debt service or as a backstop. We’re saying no new taxes on the lodging industry to support that. The lodging industry won’t stomach that. We’re already doing our fair share for this facility and for lots of facilities in this area.

The other piece that’s always lost on these discussions is the hotel industry offers room rebates that go back to event planners for these events to come here. POVA will come to a hotel and say they’d like $10 or $15 per room to subsidize the cost of the event. It’s complex competitive issues.

They said, If we build the convention center, all the development will follow. It didn’t happen.

They said, Let’s build the Rose Quarter. Development didn’t follow. Now they’re saying, If you build the headquarters hotel, all the development will follow. And that’s partially true, but it’s not completely true.

Everybody has this euphoric approach that this hotel is going to solve all of our problems. And it’s still based on POVA’s ability to sell and compete against other markets and to deliver.

DJC: How should Metro proceed with this issue now that it’s being presented to them?

Mindt: At the joint MERC-Metro meeting, there was a lot of discussion about financial models. I think there was a lot of disappointment that we weren’t further along in that discussion. Now they’re saying, We need more time; we need to have $600,000 of investment to further study this to get some real numbers to look at.

There’s some disappointment from the lodging industry. A year ago the cost was $250,000 per key. That number continues to go up. I don’t know what that is now; it’s certainly more than $250,000, which is significant.

DJC: But you’re supporting it without exactly knowing the cost?

Mindt: Until we have answers based on some of our concerns, we’re not willing to support it. When we have some more clarity, then we’ll have a discussion of do we support it or not.

Our conversations with city commissioners have not been positive in getting general fund money that is hotel tax-based back into the industry. It’s been a very lukewarm discussion of that.

Let’s have a bigger discussion of how to make the whole industry grow and prosper. Right now POVA gets roughly $2.5 million in hotel tax money for marketing. We’re saying more marketing will work.

DJC: I know there likely will be a funding gap. It will be difficult to come up with the money for this project solely based on public funds. Is the hotel industry willing to pay into the construction or upfront costs of the headquarters hotel in order to receive that guarantee to put taxes back into marketing?

Mindt: No, we wouldn’t.
http://www.djcoregon.com/articleDeta...s-unions-and-c
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  #70  
Old Posted Sep 20, 2007, 3:57 PM
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Hotel vote is finally near, but wait -- there's a gap
Convention Center - After 18 years, Metro is to decide on a facility, but now it seems more public aid is needed
Thursday, September 20, 2007
RYAN FRANK
The Oregonian

For the Oregon Convention Center to survive, tourism boosters say, it needs a companion 600-room, $244 million hotel owned by taxpayers. To run the hotel, it turns out, the project also would need about $7.8 million in annual public aid.

Bill Stringer, Metro's chief financial officer, said recent projections by financial consultants pointed to that annual gap -- the most definitive estimate of its kind in the long-debated project.

Portland's regional government, Stringer told the Metro council, would have to find a way to supplement the hotel's annual revenue to cover twice-a-year mortgage payments for the first eight years.

The question threatens to delay the Metro council's decision on the project, despite its intentions of making a final decision after 18 years of deliberation.

Today, the council will debate the financing gap in its final public hearing before a Sept. 27 vote on the hotel's fate. A "no" vote would kill the hotel. But a more likely "yes" vote would provide an additional $600,000 and about six months to firm up all financial figures.

Metro council members are likely to approve more work, but David Bragdon, Metro council president, is less than gung-ho.

"I'm very cautious about getting into an enterprise activity that's normally provided by the private sector," Bragdon said. "I don't want my legacy to be a white elephant."

The decision before Metro -- which owns the convention center -- is not an easy one. Politicians have wrestled with it since 1989.

Opponents, including other hoteliers, argue a publicly subsidized hotel would flood the market and drive down rates across the board. They prefer a privately owned hotel with less taxpayer help.

Supporters say the hotel would attract more and larger conventions, helping spur the economy through spending at restaurants and art galleries. Consultants estimate the hotel would attract eight new conventions a year. Without a hotel, consultants say, Portland would lose about 15 percent of existing conventions to cities with similar hotels.

Bragdon thought he'd be almost done with the hotel decision by now. The hang-up, he said, is the annual financing gap.

Without an extra $7.8 million a year, Stringer wrote to the Metro council, "Metro does not have the financial ability to adequately finance the project without putting Metro's general fund and existing programs at undue risk."

Under the current proposal, Metro would sell bonds to raise money for the hotel's construction. A publicly owned hotel is cheaper to finance, supporters say, because governments can borrow money at lower interest rates.

The construction is estimated to cost $168 million. The total project cost -- including interest, reserves and fees -- is forecast at $244 million. The bonds would be paid back over 30 years or so with the hotel's revenue. (All figures are estimates until the hotel's builders provide a guaranteed price.)

Metro's problem is that the hotel revenue isn't expected to be enough for the first eight years. Things look OK after that because revenue is expected to grow.

The annual mortgage payment averages about $14.6 million. If projections hold up, the hotel has just enough revenue to cover the mortgage. But bond investors want to see a cushion in case revenue falls short.

For example, one "shock scenario" developed by PiperJaffray, Metro's bond underwriter, projected revenue would drop 41 percent in a recession that's less severe than the one following the Sept. 11, 2001, terrorist attacks. Without the cushion, taxpayers would be more likely to cover the additional shortfall.

That's why Stringer and bond investors want the cushion.

The exact amount of the cushion depends on questions that haven't been answered -- among them, would Metro put up its general fund as a backstop?

A Standard & Poor's report issued this week shows similar hotels elsewhere -- Austin, Texas, Baltimore, Denver and San Antonio -- needed an extra 40 percent to 90 percent of the mortgage payment to make the bonds work.

The hotel is expected to generate $13.5 million in net operating income. If Metro backs the bonds, it would need $21.3 million annually to service the debt and provide a cushion, leaving the $7.8 million gap.

Metro is looking at a few options.

The most likely ones revolve around hotel-motel taxes, said Daniel B. Cooper, Metro's attorney.

Portland's hotel guests pay a 12.5 percent room tax, which helps pay for tourism marketing and debt that built the convention center, among other things.

Under one proposal, the hotel would keep all of the room taxes it generates and add a 2 percent surcharge for its own coffers. Those steps would generate $3.4 million a year.

Under another idea, the city and Multnomah County would refinance bonds that built the convention center. Those bonds are paid back through existing hotel room tax revenue. A refinance would reduce the bond payments and free up about $2.9 million in annual tax revenue for the convention center hotel.

Together, the two measures would still leave a $1.5 million shortfall.

Bragdon mentioned two options: state lottery funds, or a fee on property owners near the hotel, also known as a business improvement district.

With a yes vote next week, Bragdon and Metro would spend the next few months seeking political support to pull together the financing package.

Ryan Frank: 503-221-8519; ryanfrank@news.oregonian.com

http://www.oregonlive.com/news/orego...510.xml&coll=7
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  #71  
Old Posted Sep 20, 2007, 3:59 PM
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^it appears that every month they wait another mil gets attached to the project. Just think how much more affordable this would have been if done in conjuction with the OCC expansion. They need to either shit or get off the pot!
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  #72  
Old Posted Sep 21, 2007, 7:33 AM
zilfondel zilfondel is offline
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luckily, according to industry sources, materials costs are supposed to drop (first time in a decade!), so perhaps inflation will catch up to construction estimates.
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  #73  
Old Posted Sep 25, 2007, 12:38 AM
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I am somewhat surprised that Adams would touch this with a ten foot pole.

Too bad he wasn't mayor when the Fire Station 1 move got nixed.

City could fill money gap on HQ Hotel

Sam Adams says Metro may get a public bailout if it lacks partners for the project

POSTED: 06:00 AM PDT Monday, September 24, 2007
BY LIBBY TUCKER

Portland City Council could help Metro float a convention center hotel, Commissioner Sam Adams told Metro Council last week. Metro faces a multimillion dollar funding gap if it develops the $185 million publicly financed and privately operated hotel.

“If (a partnership) doesn’t impact operations,” Adams said Thursday, “there’s potential for support” from the City Council for financing a headquarters hotel.

Metro Council this week will vote on studying a range of financing options and setting a firm cost estimate for the project. A no vote on the $600,000 six-month study would likely once and for all kill the project, which various public agencies have considered building for nearly 20 years.

If the study is approved, Metro will seek to partner with other public agencies, including the city of Portland, Port of Portland and others to fill the financing hole. Metro Council will meet again in six months to decide if it will give the project a final go-ahead.

“This is not a vote that locks Metro into building a hotel,” Metro Councilor Rod Park said.

Preliminary cost estimates by Starwood Hotels and Resorts, which would operate the proposed hotel, place construction costs and operating costs near $244 million. But uncertainty in the bond markets and rising construction costs could push price estimates higher. To lessen the risk for investors, Metro says it needs several million dollars as a funding backstop.

A Metro bond sale would likely cover construction of the 600-room hotel, to be built adjacent to the Oregon Convention Center on land owned by the Portland Development Commission.

And a room tax on visitors would largely pay for the hotel’s operating costs, the Metropolitan Exposition and Recreation Commission says.

But the study completed by Metro consultants was “deeply flawed,” Joe Cortright, an economist with Impresa Consulting, told Metro Council, and should not be used as a basis for Metro’s decision.

The Metro study estimates an increase in hotel nights that “is not supported in the data,” Cortright said. The study also did not include a competitive analysis of other cities vying with Portland for conventions and the capacity of future private hotels in the city, he said.

“A publicly funded hotel,” Cortright said, “... pushes off into the distance private investment.”

Taxpayers, critics say, could be left holding the bag if the region fails to meet projected demand for hotel rooms or its goals for recruiting eight large conventions a year.

But bond holders, not the public, would ultimately be responsible for a failed hotel, said Matt Raine, an executive with Starwood.
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  #74  
Old Posted Sep 26, 2007, 4:09 PM
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Hotel plan banking on boom in visitors
Convention Center - A consultant says higher room rates and demand will offset costs; opponents are skeptical
Wednesday, September 26, 2007
RYAN FRANK
The Oregonian

The case for Portland's Convention Center hotel is built on the assumption that a growing number of visitors will come to Portland and pay rising room rates to stay here.

Metro, Portland's regional government, will vote Thursday on the fate of a proposed-600-room Westin hotel that would be government-owned. The decision will be made in part on a forecast by consultant HVS International that projects a 16 percent spurt in national, state and regional convention visitors. The consultant expects the new visitors will pay room rates that, on average, increase 4 percent annually, four times the rate of the previous 11 years.

If HVS is right, the hotel would cover its yearly mortgage payments with a little help from taxpayers. If the consultant is off, as opponents believe, taxpayers may be forced to help cover a bigger share of the debt payments.

The post-Sept. 11 recession dragged down the travel industry in recent years, driving down average room rates. The downturn prompted Omaha, Neb., and Overland Park, Kan., to dip into reserves to cover debt payments on similar hotels.

But Thomas Hazinski, HVS' managing director, says business is better at convention center hotels and the travel industry in general is headed for a continued upturn that will propel Portland's proposed Westin.

The hotel's opponents say HVS paints a picture that's too rosy to justify the risk of a government-owned hotel. While a list of tourism boosters back the hotel, at least three Portland hoteliers warn it could swamp the market and drive down rates for everyone. The two sides have set up a heated political battle.

"These estimates are so seriously flawed that they should not be relied upon," Joe Cortright, a Portland economist who isn't working for either side, wrote Metro about HVS' forecasts for new demand.

Hazinski says his projections are conservative and based on reams of research for similar hotels elsewhere. The critics, Hazinski says, "should really know better. I stand by our projections."

Conventions go elsewhere

The hotel's public benefit -- and the reason for Metro's involvement -- is to spur the economy. New visitors would boost spending on meals, museums visits and wine country trips.

The hotel's success rests mostly on the idea that if Portland builds the Westin, more people will come to town.

Convention planners have passed over Portland because they like to have a block of 500 rooms next door, industry experts say.

Surveys by the Portland Oregon Visitors Association show that about 82 conventions skipped the city in 2005 and 2006, in part, because it lacked such a hotel. About 28 percent of those said they didn't come exclusively because Portland lacked the hotel.

Based on those figures, Hazinski estimates, Portland would get about 20 percent of the lost business. "We have to make a reasonable assumption," Hazinski said. "I thought 20 percent was a pretty safe number."

Hazinski says those new conventions -- plus new leisure and business travelers and visitors for smaller meetings and group gatherings -- would drive growing demand for hotel rooms.

Forecast calls for growth

For the hotel to meet its goals to boost the economy, HVS forecasts:

The city will score a 10 percent increase in the number of regional, state and national conventions and 24,000 new convention visitors, a 16 percent increase.

Room rates at the Westin must average 4 percent growth annually, from $118 in 2006 to $161 in 2014. That compares with a 1 percent average annual growth rate from 1996 to 2006 for high-end Portland hotels.

Cortright notes that HVS expects room rates to increase like clockwork in future years without a decline. "It's hard to buy that," he said.

On an average night, about 424 of the hotel's 600 rooms would be rented. That's a 71 percent occupancy rate, a little higher than the 69 percent rate for top-flight hotels between 1996 and 2006.

Hotel room demand across Portland from conventions, meetings and groups -- a significant driver of overall demand -- would jump 14 percent in the hotel's first year.

The Lloyd District will finally turn around in time to serve new convention visitors. City leaders have worked since the 1980s to revitalize the area, but the top restaurant remains a Red Robin.

HVS cautioned the hotel would "not be expected to perform as well if the neighborhood does not transform into an area that will generate strong appeal to the general public." Hazinski said the hotel would need all planned projects in the area -- a condo tower, an office building and the streetcar extension -- done by 2014.

If the hotel meets those projections, the regional government will still have to fill an annual financing gap for the hotel's first eight years or so, says Bill Stringer, Metro's chief financial officer.

Stringer said Metro must find $7.8 million annually to provide a financing cushion to satisfy bond investors in case HVS' forecasts fall short.

That figure jumps to $10.7 million if the Metro Council won't offer its full credit as a backstop.

Ryan Frank: 503-221-8519; ryanfrank@news.oregonian.com
http://www.oregonlive.com/business/o...210.xml&coll=7
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  #75  
Old Posted Sep 26, 2007, 6:52 PM
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I don't really have an opinion one way or the other about this hotel project but the deal structure sounds ominously like that used for the River Park Square project in Spokane. I'm sure most here aren't familiar but in a nutshell, it was a downtown renewal project that involved a public/private partnership for the parking garage aspect that went wrong in every way possible and cost everyone involved a good deal of time and money (much of it apparently due to overly optomistic consultant reports about garage usage and revenue). In the end, the project is actually a good thing for Spokane (in my opinion) but it took a lot to get there. If this deal goes forward, here's hoping it goes more smoothly.

http://seattlepi.nwsource.com/local/...spokane28.html

City officials moved to put a long-running civic nightmare behind them yesterday, approving settlement of the last lawsuit filed over the River Park Square mall.
...
That ends nearly all litigation over the downtown shopping mall, a project that has consumed local government for five years and destroyed the political careers of three mayors.
...
The deal means the city will have paid $32.6 million over the past year to settle fraud claims by bond investors while collecting $11.2 million in settlements from former co-defendants.

River Park Square, which opened in 1999, is a $110 million shopping mall and entertainment complex built with public and private money to help revitalize the downtown core.
...
Numerous lawsuits were filed. City officials estimate that $20 million was spent on attorneys fees over the past five years.
...
The parking garage, also built with public and private money, was supposed to be backed by city parking-meter revenues. When those revenues fell short, the council refused to spend the meter money, resulting in lawsuits in state court. Meanwhile, investors who bought about $31 million in garage construction bonds sued in federal court, alleging fraud and misrepresentation.
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  #76  
Old Posted Sep 28, 2007, 1:22 AM
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A blurb from Ch.8 news said one possibility is the Oregon Native American Tribes operating a Casino Hotel next to the convention center. Though, this is probably a long shot.
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  #77  
Old Posted Sep 28, 2007, 1:41 AM
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I think a Confederation of all the Tribes in Oregon going into this project would probably eliminate fighting between the tribes but the present Governor is on the record of no casino in Portland... He probably should meet with the Washington Gov to discuss "any positive" benefits Washington is experiencing by allowing casino's in their cities.....those Washington casino's are probably sitting on tribal lands, though. Although a precedent has been set by the Oregon Governor by allowing a casino to be built and operated on non-tribal land in Cascade Locks.
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  #78  
Old Posted Sep 28, 2007, 5:00 PM
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Snowden352 Snowden352 is offline
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I am an open critic of this project, but after reading this article I find myself cheered:


Thursday, September 27, 2007 - 4:33 PM PDT
Metro delays hotel decision
Portland Business Journal

The Metro Council on Thursday delayed a decision on whether to build a headquarters hotel.

Rather, it voted to authorize the creation of a financing plan for the potential development of a 600-room publicly owned, privately operated headquarters hotel near the Oregon Convention Center.

The seven-member council unanimously agreed to ask hotel supporters to commit to the project and indicated it wants a financial plan that will prevent tax dollars from ever supporting the multimillion dollar project.

The council unanimously approved plans to solicit political and financial support from other public agencies as well as private supporters. It also directed its underwriter and financial counselors, Piper Jaffray and Seattle Northwest Securities, to create financing plans, one of which must include hold-harmless language protecting Metro taxpayers from being forced to bail out the hotel if it fails to meet revenue expectations.

Supporters want the hotel to complete the convention center, which consultants say loses business because meeting and convention organizers want large blocks of hotel rooms available on site or nearby. With no private developer willing to build such a hotel on its own, Metro is being asked to construct a publicly-owned, privately operated hotel.

The hotel would be built with financial support from partners as well as proceeds from bonds. Bonds would be repaid with revenues generated by the hotel. But the Metro Council indicated it wants assurances that bonds will never be paid with tax revenues, even if hotel revenues fall short.

One way to hold taxpayers harmless is to not pledge the full faith and credit of Metro's tax base to the bonds.

Without that kind of government guarantee, the hotel revenue bonds would be riskier and carry higher interest rates. The developer could be required to insure against a default. Higher interest rates and added insurance requirements would raise the cost to construct the hotel.

Councilman Robert Liberty said he will only support a financial plan that includes language holding taxpayers harmless for an inherently risky project.

"It's clear to me that we're in a highly competitive convention business and a lot of capacity is being added around the country," he said, referring to hotel-building activities in cities that compete for convention business.

Liberty said the risk that the hotel won't meet financial expectations should fall on those who most benefit from its construction.

The headquarters hotel returns to the Metro agenda in early November, when the council will consider terms of a development agreement

In the interim, councilors want hotel supporters to commit their political and financial support.

"The success of the plan depends on commitments from partners we don't have yet," said Councilman Carl Hosticka.

All contents of this site © American City Business Journals Inc. All rights reserved.
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  #79  
Old Posted Oct 28, 2007, 6:18 AM
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from the Oregonian:

HQ Hotel: Talks near done
Posted by Ryan Frank October 25, 2007 14:36PM

The politics of Portland's proposed convention center hotel may become a tad bit clearer next Thursday when City Hall and Multnomah County weigh in on the idea.

Officials from Metro, Portland's regional government, will finish talks with city and county leaders by Wednesday. Reed Wagner, the Metro council's staff manager, says Metro is asking all 10 city and county elected leaders to agree in writing to support the hotel and be part of future talks about its financing. Metro has started to pass around a draft letter that it hopes the electeds will sign.

Metro, which owns the Oregon Convention Center, is considering floating public bonds to build the 600-room hotel. But first, it must plug a gap in the hotel's budget. Metro must find $7.8 million to $10.7 million annually to fill the gap over the first eight years. The money is a necessary cushion in case hotel demand falls short of projections. (Ashforth Pacific of Portland and Garfield Traub of Dallas, Texas, would be the developers.)

Wagner said Metro is looking for majority support from both City Hall and Multnomah County. If they get it, Metro may move ahead with more studies to get more firm construction cost estimates and fill the financing gap. If they don't find the support, the hotel -- and 18 years of talks -- may officially die.

Michael Jordan, Metro's chief operating officer, will make his recommendation to the Metro council on Thursday. The council is scheduled to vote Nov. 8.
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  #80  
Old Posted Oct 30, 2007, 3:32 PM
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Rumors add intrigue to headquarters hotel vote
Sources Say

The Portland Tribune, Oct 30, 2007 (1 Reader comment)
New Seasons Market

Is it a real offer or a last-minute effort to muddy the waters?

Just as the Metro Council is gearing up to vote on whether to spend $150 million to build a publicly owned 600-room headquarters hotel across the street from the Oregon Convention Center, one or more private hotel operators are rumored to be preparing offers to build their own projects on the site with far less government dough.

Lobbyist Len Bergstein, who represents some hotel owners opposed to the public project, confirms that the Red Lion Hotel chain is among those expected soon to contact the Metro Council with a potential offer.

One concept would promise to build a 300- to 400-room hotel with the possibility of expanding in the future in exchange for only the land, which is owned by the Portland Development Commission.

The elected Metro Council is expected to receive a report Thursday on whether other local governments would support such a hotel, and one week later would vote on whether to proceed.

– Tribune staff
http://www.portlandtribune.com/news/...69272198498400
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