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A May 2013 rendering of a proposed Hyatt Regency hotel at the Oregon Convention Center.

(Metro)

The Metro Council voted unanimously Thursday to move ahead with a deal to subsidize a Hyatt Regency hotel at the Oregon Convention Center, an effort to lure larger out-of-town events and the tourism dollars they bring.



Metro spent more than a year negotiating a deal with Mortenson Co. of Minneapolis. The deal they reached: the $212 million hotel project would be backed by $60 million in Metro-issued revenue bonds, backed by hotel taxes the hotel expects to generate.



The project would also get $18 million in grants and loans from Metro, the Portland Development Commission and state lottery funds.



Metro says the hotel would help bring five to 10 new conventions and $120 million each year in tourism spending.



Opponents of the project -- mainly a coalition of competing hoteliers, including Provenance Group and the owners of the downtown Hilton -- say the subsidy could allow the hotel to undercut competitors during periods when tourism is weak. And if the Hyatt doesn't meet its own projections, taxes collected at other hotels could help cover the gap.



The Portland City Council and the Multnomah County commissioners also previously signed off on an agreement to let the lodging taxes be reallocated from other tourism development efforts.



"This has stood the test of everyone who has scrutinized the finances," said Metro President Tom Hughes.



The project still faces a legal challenge from the opponents coalition in Clackamas County, where the spokeswoman for the group who filed the lawsuit resides. That suit claims Metro doesn't have the authority to help finance the project without voter approval. The group has also tried to send the proposal to voters, but a Multnomah County judge rejected the effort in a case that is on appeal.



Following Thursday's vote, the group also repeated a threat to ask voters to impose a tax "all hotels receiving large public subsidies."



"One way or another, the public will have the final say on this risky sweetheart deal, and if it does go forward we will ensure that the public has the opportunity to require that the public receives a direct benefit from the subsidy arrangement Metro has authorized," the group said in a statement sent by spokesman Sandeep Kaushik.



Metro has asked a Multnomah County judge to review its proposal in an effort to reassure bond investors that the project won't be halted by litigation.



Mortenson still has some work to do before it can start construction. The agreement approved Thursday is contingent on Hyatt Corp. formally agreeing to buy the hotel upon completion, and Mortenson still needs to buy a piece of land from the Portland Development Commission and secure that agency's $4 million loan.



It's also depending on the PDC to build a parking garage to serve the hotel and the Lloyd District generally, but the agency said last week talks on that proposal hadn't begun. The PDC would own and operate the garage, and the hotel and its guests would pay to use it.



-- Elliot Njus