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Can a hostel stimulate job creation in Portland’s technology sector? The Portland Development Commission thinks so.

The PDC Board of Commissioners will vote Wednesday whether to extend a $2.47 million loan to a group of developers looking to convert the former Grove Hotel in Old Town into an international youth hostel with ground-floor retail. And while the PDC recently changed its focus from real estate developer to job creator, officials believe a hostel could help attract international businesses.

鈥淭ravel is the first foray into Portland,鈥� said Steven Shain, a PDC development manager who is working on the project. 鈥淭his project is going to be targeted to the international crowd 鈥� the Asian market in particular because of the location. We think it can help bring business and jobs to the area. It’s an end to a much bigger means.鈥�

The development team is being led by Old Town property owners David Gold and Howard Davis, who own the remainder of the block the Grove Hotel sits on. The team also includes Wieden + Kennedy advertising executive John Jay; his wife, Janet Jay; and Alex Calderwood, owner of the Ace Hotel chain, who will help develop the brand of the Asian- and art-themed hostel.

The developers plan to acquire the property from the PDC for $765,000 and then spend about $3.4 million to transform the three-story former hotel built in 1907 into a hostel with 158 beds. A 60-seat, 2,000-square-foot restaurant/bar and seven other retail spaces 鈥� a total of 6,000 square feet 鈥� also are planned for the ground floor.

Two market feasibility reports 鈥� one conducted by the developers and another by Tungsten Partners 鈥� show that after a three-year stabilization period, the hostel would warrant between $34.61 and $38.24 per bed per night and would likely maintain between 56 and 70 percent occupancy. PDC officials believe the project would succeed.

According to a project report by the PDC’s board, 鈥淧ortland’s Central City is a destination of choice by the creative class due to its edgy, unpredictable character and compact, connected urban experience鈥� There is strong evidence that talented workers are increasingly concentrating in places that have a high quality of life and possess that hard-to-define 鈥榗ool’ factor.鈥�

Shain added that the area already lends itself well to youth in the tech sector 鈥� one of the PDC’s targeted sector industries where it is trying to create jobs 鈥� with businesses like the Someday Lounge, Backspace and Ground Kontrol. A hostel, he said, would complement existing enterprises.

In addition, Shain noted that Calderwood will seek to meld the area’s history with the youth culture. According to Ace officials, the hostel will follow the path of other Ace locations 鈥� in Southwest Portland, Seattle, Palm Springs and New York 鈥� by 鈥渞ejuvenating time-worn structures with fresh ideas, and a holistic approach to the burgeoning think-local movement.鈥�

According to Ace Hotel spokesman Ryan Bukstein, the hostel would feature a communal space where guests and local artists, musicians and writers could share their efforts with a local and international community.

The PDC will include workforce diversity requirements and green building requirements 鈥� the project will be Leadership in Energy and Environmental Design gold certified. Also, according to the disposition and development agreement, construction of the project must start by the end of January 2012, and be completed by the end of next year.

But the project team’s plan is even more ambitious: It wants the hostel ready and the retail spaces filled by Jan. 23, 2012, the Chinese New Year.

Shain added that the project possibly could create enough momentum to help revive another project in the neighborhood: a mixed-use development anchored by Seattle-based Asian grocer Uwajimaya.

鈥淭his may be catalytic enough to get the neighbors and everyone else going again on that project,鈥� Shain said. 鈥淭hat’s the hope.鈥�