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The financial hole in the headquarters hotel project has narrowed to $2 million, but it won’t be filled with public money.

Teri Dresler, Metro’s director of visitor venues, said in a news release that the gap between public and private funding for a minimum 600-room, $197.5 million Hyatt hotel serving the Oregon Convention Center has narrowed to $2 million. In July, the Oregon Legislature dedicated $10 million in lottery money to the project. While hotel planners called it a major coup, the amount was less than the $12 million they had hoped to receive.

Dresler said that if the private sector doesn’t come through with the difference, the scope of the project would have to be scaled back.

“The public investment is maxed out,” Dresler said in the news release. “We made a promise in the beginning to our guiding principles, and we will hold to those, and that is this investment will be minimal and low-risk.”

In addition to the lottery money, the financing plan for the hotel includes a $4 million grant from Metro, a $4 million loan from the Portland Development Commission and $60 million in Metro-issued bonds that would be repaid with room taxes. The remaining $119.5 million would come from the developers – a joint venture between Hyatt Hotels Corp., Mortenson Development and Star Terra LLC/Schlesinger Cos.

In a conversation with the Daily Journal of Commerce, Dresler declined to elaborate specifically on what portions of the project might need to be scaled back as negotiations have not focused on that level of detail. She did say a reduction in scope would not impact the project commitment to provide a minimum block of 500 of the 600 rooms.

Metro has been in negotiations with the developer since last September, and an intergovernmental agreement is close at hand. Dresler said city, Multnomah County and Metro officials met Wednesday to look over the deal.

“I think they in essence have agreement on the terms, and are finalizing documents and sending them to their respective attorneys for their final look at the language,” she said.

Once the three governmental bodies give their approval, Metro will begin drafting a development agreement with Mortenson, which Dresler hopes to have completed by late fall.

Metro will make details of the financing plan available during an Aug. 1 open house, which is scheduled to take place from 5 to 7 p.m. in Ballroom 256 at the Oregon Convention Center.

The Metro Council has scheduled a public hearing on the proposal for Aug. 8; a vote is scheduled for Aug. 15.