January 18, 2012  3:17 PM

Convention center hotel discussion shifts to private sector, smaller incentives

Metro appears ready to resume talking about accommodations near the Oregon Convention Center, but this time focusing primarily on letting the private sector lead development of a so-called headquarters hotel.

At a joint work session of the Metro Council and the Metro Exposition and Recreation Commission on Tuesday, councilors and commissioners seemed to agree that the focus for the agency, which owns the 22-year-old convention center, should be on facilitating development of about 400 hotel rooms somewhere near the center.

Past discussions have centered on publicly financing a headquarters hotel, which are large and expensive projects that are often financed by governments.

The new plan would involve smaller subsidies rather than outright financing – perhaps as small as providing publicly-owned land to a hotel company or companies, in exchange for guarantees of room availability for larger conventions.

Why the change? Political realities, for certain – the plug was pulled on the original project in 2009 because of questions about its economic and political feasibility. But Metro policy advisor Cheryl Twete said a strengthening hotel market nationwide has prompted hoteliers to look at Portland.

"We are being courted by a couple of the biggest hotel corporations, who are keenly interested in getting into this market," Twete said at Tuesday's work session.

Metro attorney Dan Cooper, who has been part of Metro's staff team on the project, said the main focus now is working with Portland and Multnomah County to develop a strategy and to cut the best deal with the private sector.

"How do we induce the private market to build a sufficient number of rooms near the convention center so we have the room block capacity that's attractive to the kinds of groups we're losing?" Cooper told the council and commission.

Scope of the problem

The catalyst for Tuesday's conversation about the hotel was an economic impact report on Metro's visitor venues, which include the Oregon Zoo, the Oregon Convention Center, the Expo Center and the Portland Center for the Performing Arts. The study, by Crossroads Consulting, found that the convention center brought $450 million in spending in the Portland region in 2011, supporting 4,260 jobs with an average wage of about $40,000 a year.

The report also showed that the convention center had an operating deficit of $10 million, but led to $15.4 million in tax revenue being collected by various local governments.

When the 2010 study was released last February, convention center officials said 22 convention operators passed over Portland specifically because there wasn't a large hotel near the Lloyd District venue.

MERC chair Judie Hammerstad said that number went up in 2011.

"We had 30 lost events," she said. "These are events that wanted to come and couldn't come because they listed the lack of a convention center hotel."

MERC member Elisa Dozono offered a first-hand perspective, saying she tried to recruit the American Pacific Bar Association to hold its annual convention in Portland.  The event draws 1,200 to 1,800 attorneys; it requires a 400-room block for bidding, Dozono said.

"It's not a big convention, but it's too big for a single hotel here in Portland," Dozono said. When she said the convention went to Kansas City, Metro councilors and MERC commissioners groaned.

The Lloyd District has 1,700 hotel rooms.

Political realities

The convention center hotel project has been a political hot potato for years, receiving the most attention when Portland Mayor Sam Adams, then-Multnomah County Chair Ted Wheeler and then-Metro Council President David Bragdon tried to launch an ambitious project for what would be one of Oregon's largest hotels near the center. Since that proposal collapsed, attempts to restart the conversation have sputtered.

Metro Council President Tom Hughes was in office less than two months last year when he tried to restart the conversation. Publicly, that went nowhere.

See also: Hughes: Time to restart convention center hotel discussion (Feb. 24, 2011)

But there hasn't been consensus about how to proceed. Adams holds the most cash – the Oregon Convention Center Urban Renewal Area has some money left to spend before it expires in 2013, and $4 million is forecast to be spent on the convention center hotel, according to the Portland Development Commission. Within Metro, there's concern that without some incentives, such as land or urban renewal money, new hotel capacity could be built in downtown Portland or the Pearl District. That wouldn't do much to help to the convention recruitment effort, and wouldn't come with any sort of guarantee of room availability.

"There will be a lot of hotels built in the region, and then we'll lose the interest and support for doing more," said Metro Councilor Rex Burkholder. "If we want it here and we want it the right size, we've got to act and we've got to be open for business."

Set among all of this is the ticking clock at Portland City Hall. With three city council seats up for election this year, the political will to wrap up a convention center hotel project could be drastically different in 2013. At the work session, Councilor Barbara Roberts was particularly adamant about that concern.

Burkholder, whose district includes the convention center, said that's no reason to stall the conversation.

"What I'd say is to have a strong business case," Burkholder said. "We have the year of 2012 to think about what might be done, and actually start it. We have a year that we don't want to lose."

Note: This version has been updated to include information about the Portland Development Commission's forecast expenditures on the convention center hotel project.

Metro news editor Nick Christensen can be reached at nick.christensen@oregonmetro.gov or 503-813-7583. Follow Metro on Twitter @oregonmetro.

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