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The Grove Hotel, a project that Portland Development Commission officials pitched as pivotal to redeveloping Old Town-Chinatown, is on life support after the private developers refused to secure collateral for $900,000 in public loans.
David Gold, the lead partner in the plan to turn the Grove from a crumbling halfway house into a trendy, Asian-themed youth hostel, told the PDC in January that none of the investors was willing to provide additional collateral, in emails obtained by WW in a records request.
"Honestly, I am not sure what it will take to get the Grove project back on track," Gold wrote a PDC project manager on Jan. 18. "I am hesitant to say that the parties are moving on to other projects and aren't interested, but realistically, we are a little worn down by the process. To be so close […] and not execute is beyond frustrating."
The renovation agreement, struck in 2010, was heavily leveraged with public money. The PDC has already spent $3.7 million to buy and renovate the Grove Hotel, located at 421 W Burnside next to the Chinatown gate. The PDC agreed to sell it to Gold and his partners for $555,000, a loss of $3.15 million, while giving them a $2.64 million loan.
The city and the investors—including Ace Hotel owner Alex Calderwood and Wieden+Kennedy advertising executive John Jay—were supposed to close on the deal in January.
But emails show that on Jan. 7, the PDC asked the private investors for $900,000 worth of additional collateral, apparently because an appraiser had reduced the project's assessed value by $890,000. (The appraiser cited declining market rent estimates and fewer proposed hostel bed nights.)
That was a deal-breaker, Gold wrote on Jan. 8.
"None of my partners are willing to pledge additional collateral to the project," he wrote. "If this team, with PDC's support, cannot bring this transformational project to fruition, I question whether other entrepreneurs will even propose private ventures."
Gold had been threatening to pull out of the deal for months, saying he and fellow investors couldn't get a restaurant tenant unless the city evicted homeless camp Right 2 Dream Too, which sits across Northwest 4th Avenue from the Grove. The city has been fining the camp each month.
An email from November shows that Gold and his partners were courting several ground-floor tenants, including Portland Bike Tours, international-supply store Cargo, the Korean taco chain Koi Fusion, and a Portland location of New York's acclaimed Taiwanese restaurant Baohaus.
Gold now tells WW the project is "not currently financially viable."
PDC spokesman Shawn Uhlman remains optimistic about the Grove project. The proposed deal doesn't expire until June 30, and conversations with developers are ongoing.
"It is not dead," Uhlman says. "Everyone's still working hard to make something happen. It is certainly a challenging project."
WWeek 2015