Metro Council chief privately tries to woo county, city officials

by: TRIBUNE FILE PHOTO: CHRISTOPHER ONSTOTT - Metro President Tom Hughes has thrown his political weight behind the Headquarters Hotel project.Tom Hughes gained a reputation as an economic development dealmaker when he was mayor of Hillsboro. Among other projects, he is remembered for helping to recruit Genentech and SolarWorld to Hillsboro, and for the construction of the Hillsboro Civic Center, which is contributing to the revival of the historic downtown.

In fact, the plaza at the center is named after him.

Now Hughes is pushing another project as president of the Metro Council. He is helping to revive the plan to build a 600-room headquarters hotel next to the Oregon Convention Center in inner Northeast Portland. Last week, the council unanimously and enthusiastically endorsed the tentative financing and development plan for the $197.5 million project that was put together during the past 18 months.

“This is a project that will help the entire region, and the vote shows the council understands that,” says Hughes, who thinks it will bring additional national conventions to Portland.

The project is strongly supported by Portland’s two representatives on the council, Sam Chase and Bob Stacey. Chase, whose district includes the center, said at the meeting that he started out suspicious of the project but is convinced it is viable.

Roadblocks emerge

Despite Hughes’ track record, success is far from certain with the hotel plan. It faces obstacles that he did not have to deal with in Hillsboro.

One is the need to win the support of the Portland City Council and Multnomah County Commission. Neither has endorsed the project yet.

“In Hillsboro, we could do a lot of things by ourselves. With this project, there are lot of other elected officials involved. We’ve assured ourselves this is a viable project, but they have to do their due diligence, too,” Hughes says.

Another obstacle is organized and well-funded opposition from some Portland hotel owners worried about the competition. They have hired lobbyist Len Bergstein and political consultant Paige Richardson, who are orchestrating a campaign against the hotel plan.

“We are already having to answer the same questions over and over again,” Hughes says.

Finally, the deal also has to meet the needs of the private developer and Hyatt Hotels, which will own and operate the hotel.

“Government does not always understand the needs of the private sector, and private businesses do not always understand the public sector. We need to all be on the same page for this work,” Hughes says.

Support for Hughes

Hughes ran on a platform of creating jobs when he was elected Metro president in 2010. The campaign was unusual for the elected regional government, which is better known for land-use planning decisions and buying natural areas throughout the region. But the message resonated with voters who chose Hughes instead of Bob Stacey, a former director of the 1000 Friends of Oregon land-use watchdog organization.

Stacey was elected to the council in 2012. In a sign of the council’s unified agreement on the project, Stacy was among the project’s strongest supporters at last week’s meeting.

Councilors Kathryn Harrington and Carlotta Collette also were very supportive. They are the only members of the council who were serving when the project was last considered. They both said it addressed the problems that had crippled earlier efforts to get the project off the ground.

Metro owns and operates the Oregon Convention Center. A specialized hotel adjacent to the center has long been discussed. The only hotels within walking distance of the center are small and aging. Convention planners have long advised building a hotel with a guaranteed 500-room block and additional meeting rooms and restaurants. The project calls for a 600-room hotel with the amenities.

The Portland Development Commission and the Metro Council both considered such a project in the past. Their plans collapsed because the public subsidy requested for the extra rooms and features was considered too high. Metro would have owned the hotel under the plan that failed during the Great Recession.

Financing hurdles

In contrast, most of the cost of the current project would be paid by the developer, Mortenson Development. They have pledged $119.5 million. The 2013 Oregon Legislature approved $10 million from Oregon State Lottery funds. Metro and the PDC have committed $4 million each.

The final amount is the most controversial. It also is the one that needs the approval of the Portland City Council and Multnomah County Commission. They need to amend an existing Intergovernmental Agreement with Metro to dedicate the county room taxes collected at the new hotel to pay off a $60 million construction bond to be issued by Metro.

During last week’s hearing, Chase said the revenue won’t be available unless the hotel is built and can’t be spent on other government programs, like schools or social services. Opponents argued the hotel might not generate enough business to pay back the bond, and said the public will be at risk if it fails. In fact, under the current financing agreement, room taxes collected at other hotels would probably make up the difference.

The Portland City Council and Multnomah County Commission must consider such issues. Portland Mayor Charlie Hales already has talked about setting a floor for the room rates at the new hotel to prevent it from undercutting existing ones. Commissioner Steve Novick has asked whether only the taxes paid by convention-goers could be dedicated to the bond payments. The members of the Multnomah County Commission have yet to publicly express opinions on the plan.

“I’m feeling optimistic, but you never know. It could go down. But at least I’m learning from it,” Hughes says.

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