GlobeSt.com UPDATE: More Federal Money Sought for Meier & Frank Redo

PORTLAND-Mayor Vera Katz is set to formalize the city's effort to obtain additional federal money for Sage Hospitality's $100-million acquisition/conversion plan of the Meier & Frank Building. The project calls for conversion of the upper 10 floors of the 15-story, 650,000-sf historic structure into a high-end hotel. May Department Stores Co., which owns all but one-sixteenth of the white terra cotta-clad building, would use revenue from the sale of the upper floors to renovate and compress its Meier & Frank department store into the five lower floors. The latest chunk of federal money would be in the form of a Section 108 loan from the US Dept. of Housing and Urban Development. In addition to the hotel conversion, the money would also help fund a seismic upgrade. In May, Denver-based Sage was granted $72.5 million in New Market Tax Credits that, when sold, will net Sage about $20 million. At that time, Sage Hospitality EVP Ken Geist told GlobeSt.com there are "probably a hundred" deal breakers that could kill the deal and said it would be early next year before he can be sure the project can work. (For the previous story, click here)One of the unresolved issues is the one-sixteenth ownership May doesn't own, sources familiar with the situation tell GlobeSt.com. The sliver of ownership is in the hands of the Oregon Episcopal School and descendants of the original land owners. Negotiations for the purchase are ongoing. Currently, Meier & Frank pays $20,000 per year to lease the piece it doesn't own, but that amount was set in 1925. The lease expires in 2025.If everything does work out, the upper floors of the building will become a 325-room Renaissance hotel. Renaissance is a high-end brand of Marriott. The Meier & Frank building would be the first Renaissance-branded hotel in the Portland market.