ALL DUCT UP: Commissioner Randy Leonard, who fought the Rose Festival Parade tradition of reserving spaces with duct tape, now wants to save this space for the Rose Festival organization.

City commissioners are prepared to lease a prime piece of waterfront real estate for $1 a year to the Portland Rose Festival, an organization that owes taxpayers $98,000.

And the proposed deal comes just as those elected officials are asking city agencies to seek new revenue sources and slash their budgets by 2.5 to 5 percent.

As of January, the 102-year-old Rose Festival owed the city almost half of what Portland charged the nonprofit group last year for police services, parade permits and the use of both Portland International Raceway and Waterfront Park.

Yet the council wants to lease McCall’s Waterfront Cafe, a 4,000-square foot restaurant and bar with an expansive patio overlooking the Willamette River, for $1 a year to the Rose Festival.

Designed in the 1940s as a visitors’ center by noted Pacific Northwest architect John Yeon, the city-owned building is supposed to serve the public’s interest. Just what that means has been at the heart of a four-year search to fill the vacant cafe, a building of local historical significance, tucked inside what’s known as the “Willamette Greenway,” a public park.

“It should be a magnet instead of an embarrassment,” says Dan Yates, president of the nearby Portland Spirit river cruises. “If it had some proper management, it could be a revenue-generator for the city.”

Mayor Sam Adams and Commissioners Randy Leonard, Nick Fish and Dan Saltzman all support the proposed deal with the Rose Festival. Newly sworn-in Commissioner Amanda Fritz has no opinion yet.

The decision to forgo making money off McCall’s represents a sharp turn away from the city’s longstanding plans for the space.

In September 2005, the city put out a request for proposals hoping to find businesses that wanted to operate some sort of eatery. In addition to paying rent, the ideal business would give a cut of its profits to the city, according to the proposals request.

Among those interested were Bike Republic, a private company that wanted to provide food and bicycle services on the waterfront, and Museum of the City, a nonprofit group that wanted to create a Portland tribute. Bike Republic proposed spending $1,000 a month on rent.

More recently Derek Hanna, a wealthy Portland businessman, proposed renting the space to promote his SMART Tower, a futuristic skyscraper combining a restaurant, wind turbines and a parking garage. He wanted to pay Portland $150, 000 for at least three years.

But the request for proposals was officially canceled. On Jan. 12, Leonard met with Jeff Curtis, the Rose Festival’s executive director.

Curtis says McCall’s historic nature as well as its location next to the Rose Festival’s summer stomping grounds make the building a perfect place for the festival. The timing is also right, he says, since the Rose Festival is looking to sell its current headquarters on Southwest Hood Avenue, a building the group bought in 2001 for almost $900,000.

“The festival has helped the city for 102 years,” Curtis says, citing a 2002 study commissioned by the group that puts its annual contribution to area businesses at $60 million to $70 million. “I would suggest this is a wise decision for the city.”

Leonard says he’s asking for concessions from the Rose Festival in exchange for the $1-a-year rent. And while Leonard offered no specifics, he did say he wants the Rose Festival to “freshen up” its image to appeal to Portland’s “funky class.” (Even though Fish is Portland’s new Parks Bureau chief, the mayor made Leonard the point man on this issue.)

“It is the Eiffel Tower of Portland,” Leonard says of the Rose Festival. “It is the thing that makes Portland stand out. It is as integral as the St. Johns Bridge.” Losing it, Leonard says, “would be like losing Mount Hood.”

But Bike Republic’s Ken Nichols isn’t so sure. “My proposal was a better option for the people of Portland,” Nichols says. “I’d like to see the park used for something other than festivals.”