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When talks break down for a project the Portland Development Commission wants to see through, the agency can make a statement via a money allocation.

Even though the PDC has proposed cutting its budget for the 2011-12 fiscal year by $67 million to $144 million, it has included $3.2 million for development of a large hotel near the Oregon Convention Center – a project sidelined in 2009. And while PDC staffers know the project doesn’t have momentum, they want local leaders and business professionals to know that the agency’s commitment will dissipate in 2013.

For nearly two decades, discussions have taken place of a headquarters hotel that could have significant implications for three municipalities. Metro operates the convention center and would likely see revenues increase; the city and Multnomah County would benefit from greater property tax and lodging tax income.

Talk became action in 2005, when an evaluation committee recommended the proposal for a 600-room Westin Hotel being pitched by the development team of Garfield Traub Development and Ashforth Pacific. The Westin was the preferred project until September 2009, when leaders of all three municipalities issued a joint statement ending predevelopment efforts and calling the project a victim of the recession.

Then the line item appeared in the PDC’s proposed budget earlier this month.

According to spokesman Shawn Uhlman, PDC officials increased the allocation from zero in 2010-11 to $3.2 million to remind stakeholders that the department has money set aside in the Convention Center urban renewal area to help develop a hotel. But the URA sunsets in 2013, and the agency can’t allocate money after that time, he said.

“This project has always been an express priority for us, and with the district ending in 2013 we need to commit the dollars,” Uhlman said. “If the discussions can go forward and the project can get moving, we wanted to make sure that the money is allocated and the funding is there.

“If it doesn’t go forward it will get dispersed to other projects being proposed in the region.”

The urgency caught the attention of Metro Council President Tom Hughes. Since taking office in January, Hughes has examined the convention center in an attempt to discover how to make it more attractive.

“Tom is really interested in the question: What can we do with the resources we have and the current economic climate to expand room capacity near the convention center in order to attract large conventions?” said Andy Shaw, Hughes’ chief of staff. “If a hotel is the answer, that’s great; but the discussions so far have been around expanding capacity (and) not the hotel specifically.”

Both Uhlman and Shaw confirmed that Hughes and PDC officials have discussed the hotel over the last month. Shaw mentioned that Hughes also had a conversation with Multnomah County Chairman Jeff Cogen on the prospect of adding room capacity near the convention center.

“Everyone is just assessing where things stand, and we will go forward from there,” Shaw said. “There’s no set time frame or plan of action with how or if this project will move forward. But what we all do know is that no matter what ends up happening, the project will need the help of the private sector to go anywhere.”

According to Kia Selley, a project manager with the PDC, the previous headquarters hotel site, located slightly east of the convention center, is still being considered. But staffers also are looking at a couple of other sites, she said, and it’s too early to start narrowing the list.

The fate of a new hotel may not be known, but the convention center’s need for larger events is. In a study conducted for Metro last month, Florida-based Crossroads Consulting Services discovered that in the last fiscal year the convention center lost more money – $8.3 million – than any other Metro-run facility. The Oregon Zoo lost $5.6 million, the Portland Center for the Performing Arts lost $2.8 million and the Portland Metropolitan Exposition Center made $867,000.