Vancouver to spend $45,000 on hotel project consultant

Friday, July 11, 2003
By JEFFREY MIZE, Columbian staff writer

Vancouver, WA - Vancouver has decided to spend another $45,000 in sales tax proceeds on its downtown hotel project, at a time when there are conflicting opinions as to how these state dollars can be spent.

The Vancouver Public Facilities District board agreed Thursday to hire a Colorado company to help negotiate operating agreements with Hilton Hotels, which is deciding whether to manage the city-owned hotel and conference center.

To pay for the hotel consultant, the city will dip into its kitty of sales tax dollars funneled through the Washington Department of Revenue.

State Auditor Brian Sonntag in August 2000 said it was OK for a city or county to use the money for preliminary activities toward building a convention center or other project.

But James Pharris, a senior assistant attorney general, issued an "informal opinion" in late May saying the sales tax dollars only could be used to repay bonds issued for construction.

Despite Pharris' opinion, Vancouver has no plans to stop spending sales tax dollars on its $70 million project.

"We think we are on solid ground," said Steve Burdick, Vancouver's economic development manager.

Vancouver has received $1.44 million in sales tax dollars in the past two years and has spent about $600,000. State law allows the city to receive a 0.033 percent sales tax over 25 years to help pay for projects.

Almost 20 cities and counties in Washington have formed public facilities districts to receive the tax dollars, including Vancouver and Clark County.

Pharris is out of the office for medical reasons and could not be reached to elaborate on his May 28 opinion.

Jeff Even, an assistant attorney general, said he doesn't believe Pharris intended to rule out that sales tax dollars could be used for architectural design and other preconstruction costs.

Even said Pharris' opinion was for a different issue altogether, namely whether a local government could later add projects and continue receiving the tax dollars.

"It would be dangerous to draw too much from that because it's basically a passing comment," he said.

"Ultimately this is something that may get resolved in the courts," Even added. "Attorney general opinions get some deference from the courts, but ultimately judges make their own calls."

Shawn Newman, an Olympia attorney representing the Clark County Lodging Association and other project opponents, said he will file a lawsuit against the Washington Department of Revenue, probably some time next week.

The city has selected FaulknerUSA of Austin, Texas, to build the seven-story hotel with 226 rooms and 30,000 square feet of meeting space at the southwest corner of Columbia and Sixth streets.

Jeff Askins of Faulkner has been traveling to Vancouver virtually every other week to work with city officials and with the project's architect, Fletcher Farr Ayotte of Portland.

Askins said Thursday the project is coming together and he expects construction will begin in late November or early December. Vancouver must have construction under way by the end of 2003 or it will forfeit the sale tax dollars.

Even said he wasn't concerned about a threatened lawsuit from hotel managers.

"Our confidence level is the same as the city's," Askins said. "We're behind the city 100 percent on this."

Hilton is expected to announce by mid-August whether it will be part of the project.

The city has selected Hospitality Real Estate Counselors of Englewood, Colo., to help negotiate several agreements with Hilton, should the hotel giant commit to the project.

City officials say they do not have the necessary experience or expertise to negotiate the agreements without a consultant's assistance.

Negotiation fees paid to the consultant will be capped at $35,000, plus a maximum $10,000 for expenses. If the project does not proceed toward a projected bond sale in late September, the negotiation fees will be capped at $20,000.

Burdick said a management agreement with Hilton would last for 15 years.


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