April 13–GLENWOOD — While the developers of a proposed hotel and conference center in Glenwood are upbeat about their project, they face considerable hurdles, including persuading Lane County commissioners to pledge a $6 million subsidy.
The local development group, Glenwood H&CC LLC, announced the project April 2. The group said it has secured the money needed to build the 150-suite riverfront hotel behind the Ramsey Waite equipment dealership. They estimate the hotel would cost nearly $26 million.
Five days later, the Springfield City Council committed up to $2.5 million in public funds over the next decade to help build the adjacent conference center, estimated to cost $17.1 million. The council made the decision quickly and with no discussion.
Next, the developers are making the rounds to answer questions and build public support for the project, including the need for public funding for the conference center. They made a presentation before a Springfield Area Chamber of Commerce committee on Friday, and they will appear before a Travel Lane County committee on Monday.
The developers say the project would create 150 full-time jobs, bring in tax revenue, and provide a major kickstart to the decades-long dream of Springfield leaders to revitalize Glenwood. Other Glenwood property owners see the hotel project as an encouraging sign, as they prepare their own land for redevelopment.
But there’s a long row to hoe before the developers can meet their ambitious schedule of opening the hotel and conference center in two years, at the earliest. And one prominent local hotelier who passed on an offer to take part in the project has voiced skepticism about its feasibility.
If they win county support, the developers would need to sign a formal agreement with the county and the city spelling out details of their partnership. Springfield would need to annex into the city limits the 7.7-acre property in question. And the developer and the city would need to hammer out a master plan for the project.
Then there’s costly roadwork. City officials are moving forward to plans to transform Franklin Boulevard in Glenwood into a tree-lined thoroughfare that the developers say is vital to their project.
Foremost, however, the developers will need to win the promise of Lane County commissioners to put $6 million or so into helping build the conference center alongside the hotel.
Commissioners attended Monday’s meeting but agreed they had too many questions to make a decision then. They will meet April 22 to hear more about the project and discuss the funding request.
“We’re looking forward to the information that will be shared by the development group about the proposed hotel and conference center,” Commissioner Sid Leiken, whose district includes Glenwood, said Wednesday.
“I expect we’ll have some specific questions for them, and we’ll get a better understanding of what their potential needs would be, if any, from the county.”
Asked about his stance on the funding request, Leiken said he didn’t have a “strong opinion one way or another” until he hears more detail.
Board Chairman Pat Farr said he’s interested in the potential of the project. He is concerned that if Lane County committed money to the project, that might take away from other programs or events that now rely on that cash, or deprive the county of money it could spend on other economic development work.
“I’m going to have really wide open ears on April 22,” said Farr, who said he had heard virtually nothing about the project before last week’s meeting.
Public-private partnership
The developers said the hotel can’t be profitable without a conference center to draw people to stay in its suites. But they don’t want to pay for the conference center all on their own. Without a big government subsidy, the thing isn’t financially viable, they said.
They are initially seeking public funding of up to $8.5 million for the center — $2.5 million from the city and $6 million from the county. Under their plan, the developers would use that public cash to help pay down the debt they would take out to build the conference center.
Those figures were contained in the letter of intent that the Springfield City Council approved Monday and county commissioners will consider later this month. The developers later said that those figures were a “starting point for discussion purposes.”
“The numbers still have a ways to go and are based on a number of factors yet set into the proverbial bedrock,” Luke Lonstron, a member of the local development group, wrote in an email to The Register-Guard.
At this point, Springfield city officials said they plan to fund their obligation to the project solely using hotel-motel room tax revenue the city collects. City officials said they plan to use room tax reserves to make initial payments to the project, and then use room tax revenue generated by the new Glenwood hotel itself to finish making those payments.
The city expects to receive a total of about $1.1 million in room tax revenue this year. Sixty percent of those dollars go into the general fund to help pay for daily city operations; the remaining money is divided between covering costs for community events that draw visitors, helping pay for the city’s economic development program, and contributing to the local chamber of commerce and Springfield Museum.
The city forecasts that the new Glenwood hotel would generate $147,500 in room tax for the city its first year and increase to $324,400 during the final years of the city’s 10-year financial commitment. The city’s commitment of $2.5 million over 10 years would average $250,000 a year.
Room tax and/or lottery?
Little is known about the financial impact to Lane County at this point if commissioners agree to a funding commitment.
Two identified pots of money the commissioners could dip into to subsidize the new conference center are transient room taxes and video lottery revenues. Together, those are expected to total about $5.6 million this year.
The county uses annual hotel room taxes in many ways: making debt payments on the Lane and Florence events centers, and helping pay for operations at the Lane Events Center, Travel Lane County and the county parks division. The county also uses the room taxes to make grants to numerous private-sector projects and events that aim to draw visitors to Lane County.
The county uses lottery revenues for a variety of economic development projects.
County officials say they want to get direction from the commissioners before studying the financial impacts of any funding commitment to the Glenwood hotel and conference center.
“It’s too early in our process, because the board just heard about the project,” said Christine Moody, the county’s budget planning manager.
In a drafted but unsigned letter of agreement released by the county and Springfield last week, “The city and Lane County agree the Glenwood H&CC LLC’s proposed project will have a very high priority among the many proposed” projects for room tax and lottery revenue uses.
A $6 million commitment over 10 years would cost the county on average $600,000 a year.
Under the developers’ proposal, the city and county payments would be straight subsidies. The city and county would not acquire any ownership or other equity in the project in return for the payments.
Third time the charm?
The project would be the third attempt at a major redevelopment project in Glenwood in about the past decade.
In 2006, the city picked Apex Investment Group, an international development firm, to redevelop a 48-acre stretch of riverfront between Franklin Boulevard and the river. Apex later dropped out, saying market conditions were unfavorable.
The city had rejected another development proposal from a local group that included Greg Vik, president of a local construction company who is now a member of Glenwood H&CC LLC. Vik and his partner then proposed building a hotel with a 50,000-square-foot convention center in Glenwood, but that project never got off the ground.
Richard Boyles, president and co-founder of Springfield-based InnSight Hotel Management Group, which manages about a dozen hotels in Oregon and Washington, remains skeptical of the latest Glenwood project.
Boyles said Vik approached him a year or two ago about joining the project. Boyles passed on the venture.
Boyles questioned whether there is a enough conference business to make the project profitable. He also wondered whether conference bookers will be keen to hold events at that location when some attendees would have to stay elsewhere.
“Its time will come,” Boyles said of Glenwood. “But to lead that redevelopment with a hotel I didn’t feel would be a successful venture.”
Allen Lonstron, another member of the local development group, acknowledged that attendees would have to stay at other hotels in the area until Glenwood redevelops with more hotel rooms. But he said that’s typically the case with conference centers and doesn’t see it as a setback.
Boyles is “partly right because we don’t have enough (full-service) hotel rooms,” Lonstron said. “That’s not going to keep us from having business.”
Lonstron said the Eugene-Springfield area has fewer rooms and meeting space at full-service hotels, which include rooms, meeting space and in-house food service, than it did a decade ago.
The area has three full-service hotels: the Hilton Eugene, the Valley River Inn and the Holiday Inn Eugene/Springfield.
The Lane Events Center and Lane Community College have meeting space but no hotel rooms on site.
They’re not alone
The hotel and conference center proposal comes as developers increasingly focus on Glenwood.
Next door to the proposed hotel site, two developers are scheduled to begin construction on a $22 million affordable-housing development next year that also will receive government subsidies.
When completed, it would feature two or three buildings with 150 apartments, ground-floor commercial spaces and meeting rooms.
“This is an important opportunity for the community to further develop Glenwood while providing much needed affordable housing,” said Richard Herman, executive director of the nonprofit Cornerstone Community Housing, one of the partners in the project.
Along McVay Highway to the south, Eugene-based Wildish Land Co. is readying a former sand and gravel property for development. Earlier this month, the city established how close development on the 46 acres of land can occur to the Willamette River.
Company President Jim Wildish said there are no firm proposals for the development of his family’s property, but he was pleased to hear about the hotel and conference center project.
“We think that would help all of Glenwood,” he said.
At the Ponderosa Village mobile home park, a short distance from the project site, one resident understands that redevelopment may displace her eventually. She said that prospect used to upset her, but now she is more resigned.
“I know it will happen, but the question is when. … Who knows, right?
“You just go from day to day,” said the woman, who declined to provide her name.
“I’m going to have really wide open ears on April 22.”
