Oregon Convention Center hotel to be 40% subsidized

by Shelby Sebens | Northwest Watchdog

With as much money as Oregon taxpayers could be putting into a convention center hotel in Portland, perhaps they should get some free night stays.

Do the math on the Oregon Convention Center Hotel. If all goes as planned, taxpayers will be on the hook for nearly 40 percent of the proposed $198 million, 600-room convention center hotel, a Hyatt. Let’s break that down:

$60 million: Metro, the regional government for Portland metro, will back $60 million in bonds to be paid for by the hotel owners with proceeds from hotel taxes on the rooms. Yes, you read that right. The plan is to give the taxes paid on the rooms back to the hotel so they can pay down the debt for building the hotel. And if they don’t book enough rooms and that tax money doesn’t come through? Taxpayers will be on the hook.

$4 million: Funds from Portland Development Commission, Portland’s urban renewal and economic development commission

$4 million: Funding from Metro

$10 million: State lottery funds

GOV’T HOTEL: Taxpayers could be on the hook for about 40 percent of the Oregon Convention Center hotel

The rest would be paid for by the hotel developer.

Although the plans are in the works and some of the money is already committed, the debate about this is far from over. Both the Portland City Council and the Multnomah Board of County Commissioners have to OK the tax diversion and Portland Commissioner Steve Novick has already chimed in that less tax money should be used to pay for the hotel.   The Portland City Club will host a debate on this Sept. 6 with speakers for and against the proposed hotel project.

It’s a debate worth having. For decades, local government in the Portland area has tried but failed to get an upscale hotel adjacent to the Oregon Convention Center in the Rose Quarter district, which was built in 1987 and expanded in 2003. Officials said the hotel is needed to bring more conventions to the center, which has lost attendance since a $116-million expansion in 2003.

But clearly the market isn’t strong enough for Hyatt to go it alone.

And critics point to an over-saturated market in which more and more cities have built and expanded convention centers, but have not seen the return on the investment. From Steve Buckstein, Cascade Policy Institute senior analyst:

Other cities have tried this strategy, and it hasn’t worked. Subsidized convention hotels elsewhere have had disappointing results. Not only have they not increased convention business significantly, but they haven’t made their occupancy projections, either. Now those cities are saddled with money-losing convention centers and money-losing hotels.

Contact Shelby Sebens at [email protected]

Northwest Watchdog is a project of the Franklin Center for Government & Public Integrity