City, Developer Closer to Convention Center, Hotel Deal

Early last year, VIP, operator of the Phoenix Hotel chain, acquired the former Ramada Inn property at Southeast 200 Commercial St. in Downtown Salem. It offered half of the land for a convention center with plans to develop a convention center hotel on the remaining half.

Negotiations got under was last fall, and now it appears enough money is on the table to convince city officials it won't be having to find money in a general fund that already facing a $6-million shortfall for the next budget cycle.

As talks now stand, VIP would pay $1.5 million up front to a reserve account to cover operating losses, and would then donate another $300,000 to the account over the next three years, and then $300,000 per year after that. The funds would be supplemented by $300,000 in hotel tax revenues annually.

Under the preliminary agreement, the city's urban renewal agency would use property taxes to build the convention center. VIP would build the hotel, operate both the hotel and the convention center, and retain exclusive rights to operate the restaurant. The Salem Convention and Visitor's Center would be under contract to market the conference center.

The project may still have to be approved by voters, however, unless VIP can provide a 100% guarantee that the city won't have to dig into the General Fund to keep the convention center afloat. One solution being discussed is an insurance policy. No decision has been made. Negotiations are ongoing. Dick Hayden, urban development administrator and a primary negotiator for the city, did not return phone calls seeking further comment.