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This page contains a single entry from the blog posted on December 11, 2007 3:55 AM. The previous post in this blog was The drumbeat gets louder. The next post in this blog is Buck-a-Hit Day is next Tuesday. Many more can be found on the main index page or by looking through the archives.

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Tuesday, December 11, 2007

Santa's upstairs neighbors are out of money

The downtown Portland Meier & Frank hotel project has defaulted on its construction loan and needs more public money to be completed. The city's low-interest loan on the project is slated to rise from $13.9 million to $16.9 million.

That's for now. Suddenly appearing "new historic tax credits" are supposed to "attract" another $1.6 million of new private money from sources not yet identified, in order to get the construction completed. Private investment for an over-budget luxury hotel as the area heads into a recession? Doesn't sound like such a sure thing to us. Not to mention how long it may take for a luxury hotel to ramp up with high-end guests in the current economic climate.

Ironically, while the project's financial troubles allegedly arise from a late change in plans -- to switch from a moderate-priced hotel to a boutique luxury hotel -- the new tax credits are supposed to be available because the hotel "falls within a low-income census tract." The rest of the explanation for the budget fiasco is truly aerial tram-like. Let's hope the final margin of error is not that bad.

Comments (18)

I noticed reading the article this was supposed to have been upscale Marriot, I was staying in one of these for a business event,in another metro downtown area and it was packed with shoppers from everywhere from the rural areas of the state to Canada and the Pacific Rim taking advantage of our devalued dollar a spin-off of the sub-prime real estate mess. I can see why if there is a recession coming they switched to cater to the very rich trust fund babies, vs the weekend splurgers. With house prices generally holding flat vs inflating at a record pace to catch up with the 125% mortgage home equity packages banks were peddling, and we will all pay for the home equity cash that bolstered the consumer economy of the last 10 years and held off a deeper recession than we experienced simply ain't there any more.

PDC obviously has no negotiation sense. Let's see... A national hotel developer, $130 million into the project, and now it needs a $3M low interest loan of public money??? Or what? The developer is going to give the project to the bank? Come on! Let the developer work it out itself, or at least lend the $3M at market rate interest.

If they don't get their way, they're going to pull their 10,000 jobs out of the hotel and move the operation to Hillsboro.

I suspect we are witnessing the last of the new development in P-town for at least a decade.

With all types of loans going into default exacerbating the credit crunch, there just isn't going to be the money available for condos or trams or streetcars.

Are you kidding? They'll borrow another billion under Sam Adams. Streetcars everywhere. A dozen new pork projects for Homer, Hoffman, etc. Nothing will stop these clowns except bankruptcy. It will come.

One of the best quotes in the story is:

"Rising oil prices meant Sage had to pay more to ship furniture from China. 'The price of oil just killed us...' "

Hmmm, I guess they just couldn't find any U.S.-built furniture was quite "up-scale" enough. Go figure!
One has to wonder: maybe Portland's condo-gurus also own some stock in the shipping-container business!

Also, when in doubt, budget-busters can always blame the escalating price of oil!

___ora et labora___

Wow!!!

"Ross Plambeck, a senior project coordinator at the PDC, says the city's extra investment would help Sage build a higher-valued hotel. In turn, that would bring the public benefit of a spruced up downtown and higher property taxes to the city."

Wow! again, we all benefit! It's almost like Christmas for the taxpayers thanks to the PDC "investments" in the pockets of the elites.

Funny though, how there's no such thing as a screw up and every cost over run is justifed and will bring a greater benefit.

Or are we just stupid?

"Rising oil prices meant Sage..."

This sure sounds similar to the "rising steel costs..." B.S. we were continually fed regarding the tram's cost increase.

Unfortunately, it'll never get better until we vote out wahoo's like Carl "the-Beaverton-Round-is-ahead-of-the-curve" Hosticka.

The most amazing thing about this story (IMHO) is that the cost overruns were kept to 10%, despite what is described as some relatively unforseen events. I agree that the developer should have to work it out, or else, the developer defaults, PDC forecloses on what must be a junior lien position, and voila, we have a nice PDC-owned hotel!

A Portland City Council solution to the budget gap is staring us right in the face: A fee should be charged to any panhandlers in the downtown area since an upscale hotel will only increase their revenue later.

Even better, the City should auction off pandhandling permits for exclusive rights to sp'ange on prime downtown corners.

Sage's decision to turn more upscale brought higher than expected costs, Geist said.

So the taxpayers should pay for that?

Sage spent $955,000 on design and architectural consultants. Their suggestions brought $200,000 in upgrades to the atrium. Without the changes, the atrium was "just stark, boring, uninviting, uncomfortable," Geist said, "In order for us to be successful, we had to fix them."

Oh. My. Gawd.

The Nines falls within a low-income census tract so it qualifies for federal aid.

Now THATS funny!

If the hotel wasn't this luxurious, how could it be expected to generate enough occupancy tax revenue to fund the operating expense gap at the Convention Center hotel?

Here's a solution---PDC can pick-up the ownership of the hotel, then Lifeflight it over to the East Side and plop-it-down adjacent to the Convention Center.

Voila! A public-owned/financed Convention Center Hotel with "budget over-runs 'to the 9s'"

OMG!

Notice that the developer made the decision to "upscale" the project before they asked the PDC for more money. That's confidence. They have that whole agency in their pocket.

"The construction headaches .... continued when Sage found lead paint on columns obscured by concrete."

Who would have thought? How could this have possibly been foreseen on a 98 year old building?

Read it and weep.

The PDC on a 4 - 0 unanimous vote yesterday, Decmber12, committed to pony up the additional $3 million as a very low interest loan.

Write in Lister for Mayor, Bogdanski for the council seat being vacated by Adams!

Can the PDC spend $3 million to build a 24/7 homeless shelter? If you build it, they will come.

Then we could get some of the panhandlers off the street (at least in the winter), and maybe Opie could focus on basic services for the rest of us.

We could even name it after Cesar Chavez.


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