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Pendleton airport hotel lease decision postponed

Antonio Sierra

East Oregonian

Published on August 28, 2018 12:01AM

Last changed on August 30, 2018 6:11PM


Makad Corp. will have to wait at least one more week to get approval for a 75-room hotel at the Pendleton airport.

Amidst several questions from the council about the lease language, Mayor John Turner told representatives from the Vancouver, Washington company that both sides needed to clarify some things in the lease and return at a future meeting.

Under the proposed lease that was considered on Tuesday, the city would provide in-kind civil and environmental engineering work, water and sewer connection fee waivers, and up to 50 percent permit fee reduction in incentives. Not including the waiver and discount, City Manager Robb Corbett estimates the incentive package is worth about $57,500.

The city would also have a stake in the hotel succeeding, and not just from a property tax and lodging room tax standpoint.

Instead of a traditional land lease, the city would collect a percentage of the hotel’s gross revenue starting in 2021, ranging from 0.25 percent during the first year to 2 percent starting in 2028.

Makad Corp. also verbally agreed to build a new longterm parking lot to replace the lot it would build on, although it wasn’t included in the lease paperwork that was made publicly available.

At the Tuesday meeting, City Councilor Dale Primmer said he was under the impression that the gross revenue deal would last through the length of the deal, but the lease states that Makad Corp, through its subsidiary Horse Valley LLC, would only have to use that method through 2046.

Primmer was also concerned about “front-loading” many of the incentives.

Company CEO Elie Makad said the city wouldn’t have to pay “a penny” until Makad Corp. gave them notice that they had financing in place and were ready to start construction.

Makad also seemed to grow annoyed with the questioning and suggested his company could solely focus on its other Pendleton project, a data center on Airport Road.

“If you don’t want this project, that’s OK,” he said. “It’s not a big deal for us.”

Makad later apologized to the council, saying that he assumed that they were already fully knowledgeable of the agreement.

Makad Corp. has yet to start construction on an Airport Road data center, which the company originally announced in 2015. Makad Corp. general counsel Allan Fulsher reiterated that the company has spent these past years trying to identify a power source and proper financing.

Makad Corp.’s history of development in Eastern Oregon is a mixed bag.

Although Makad developed the River Lodge and Grill in Boardman, its plans to build an ethanol plant and a fertilizer plant at the Port of Morrow in the early 2000s never got off the ground. Another port project — a 31-megawatt power plant — operated for a short time before it got wrapped up in a lawsuit with a partnering company. It was eventually shuttered and sold.

After a lengthy discussion from the council, Mayor Turner postponed a decision on the proposed hotel without a vote.

Due to quirk in the schedule, the city council will meet again next Tuesday for a regular meeting.

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Contact Antonio Sierra at asierra@eastoregonian.com or 541-966-0836.



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