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$190 Million
That's the sale price on the new 600-room Hyatt hotel adjacent to the Oregon Convention Center, which sold a week before Christmas. On Dec. 18, Xenia Hotels, a publicly traded company headquartered in Orlando, Fla., announced it had bought the headquarters hotel from Hyatt.
$150 million
That's how much private cash Hyatt's partner, Mortenson Development, put into developing the hotel. The company earned a gross profit of $40 million. (Mortenson referred questions to Hyatt, which did not respond.)
$85.9 million
That's how much the public contributed to the project. That included $60 million from Metro, which owns the Convention Center; a $10 million Oregon Lottery grant; $4 million from Convention Center reserves; and land worth $11.9 million from Prosper Portland, the city's economic development agency.
$0
That's how much public investors got from the Hyatt's sale.
Government officials say that's fine. "Prosper Portland did not receive a share of any sale profits, nor was that an expectation," says agency spokesman Shawn Uhlman. "Providing property for the project was (and is) viewed as an investment in a project that produced hundreds of construction jobs, long-term hotel jobs, and will generate millions annually in taxes from visitors and guests."
Metro spokesman Jim Middaugh gives a similar response.
"Metro never had any ownership interest in the hotel," says Middaugh, who notes Metro's investment will be repaid by lodging taxes and accomplished the long-held goal of securing an anchor hotel for the Convention Center. "This public investment, largely paid by visitors, will support good Oregon jobs for years."
But Metro is now hurting for cash—last week, the regional government announced it would lay off more than 700 people because its venues are shuttered during the COVID-19 pandemic, depriving Metro of a central source of revenue. (The Hyatt closed its doors last week, and the Convention Center next door is now a homeless shelter.)
Middaugh says Metro has "very healthy reserves" in its lodging tax fund, more than enough to pay bond debt service, even with the COVID-19 crisis. Metro's general fund is not on the hook in any case, he adds.
The public entities' non-participation in the December sale, which has not been previously reported by Portland media, revives long-standing frustration about the public investment (The NW Labor Press first noted the sale).
Portland economist Joe Cortright decries the outcome: "We [the public] agreed to structure the deal so that the developers got all of the upside, and the public sector only has downside risk. The room tax money that's being used to repay the [Metro] bonds would have come even without subsidizing construction of this hotel, and could have been used for other public purposes."