91ÊÓƵ

Despite building a wildly successful business spanning nine hotels, 24 breweries and numerous restaurants, brewpubs, movie theaters and spas at 52 locations, brothers Mike and Brian McMenamin – the co-founders of Portland-based McMenamins Inc. – are not immune to skepticism.

When the brothers began to seek money for a $26 million project to turn an 83-year-old ex-middle school in Bothell, Wash., into an elaborate mixed-use hotel with 73 rooms, investors balked. It didn’t fit the standard investment rubric.

“We’re just not conventional,” said Brian, the company’s 56-year-old vice president and secretary. “We’re not condos. We’re not apartments. We’re a mix of a lot of different things.”

Brian, Mike and Chief Financial Officer Larry Dortmund discussed McMenamins’ financial planning in the basement level of the Kennedy School’s Boiler Room Bar. The century-old Northeast Portland building was converted into a hotel and event venue in 1997.

“We should have had videos with some of the different meetings we had with different investment groups,” said Mike, 62. “It was like different languages. It was very frustrating … So when this new law came along it was like, ‘Come on. Let’s do it ourselves.’ ”

The U.S. Securities and Exchange Commission loosened real estate investment guidelines late last year, and now McMenamins is launching an $8 million crowdfunding campaign to help finance its Bothell project. The effort could provide the means to revitalize an iconic asset in a city on the cusp of change, and bear out a financial tool for McMenamins to use in the Portland area.

In Bothell, a Seattle suburb, McMenamins is targeting five large buildings on nearly six acres along Bothell Way Northeast, slightly north of Washington State Route 522. The centerpiece is the W.A. Anderson Building, a former middle school built in the 1930s and due to become a hotel. The adjacent buildings will house a brewery, a first-run movie theater, restaurants, small bars, event spaces, a spa, a community garden and a soaking pool.

Bothell City Manager Bob Stowe said the city acquired the property in 2009 as part of a $150 million redevelopment campaign. The goal is to leverage $600 million in private capital over the next 25 years. The city has already broken ground on more than $95 million worth of infrastructure improvements, which Stowe said has cultivated a development pipeline worth more than $250 million.

For the Anderson school, the city reached out to McMenamins as part of a request for proposals process.

“We reached out thinking this would fit right within their wheelhouse in terms of preserving a historic structure, and being able to offer the type of services and development opportunities that are very much in line with our community vision to reimagine downtown Bothell,” Stowe said. “… The question I get asked, or that is asked the most, is: ‘When will McMenamins open?’ ”

McMenamins entered into a purchase and sale agreement for the site in 2010. The company has negotiated a $17 million loan from HomeStreet Bank and is investing $1 million of its own money.

Dortmund said McMenamins has been working on the equity piece of the financing puzzle for the past year and a half. The company typically doesn’t seek investments from outsiders, preferring to build slowly in phases; however, the size and speed of the Bothell project required some extra oomph.

“We’ve talked to a multitude of individuals and investment-type firms and brokers and whatnot, and we just haven’t seemed to hit the right chord with who we’ve talked to,” he said. “They just don’t quite understand what we do. The project doesn’t fit with what their investment guidelines are.”

So, McMenamins hopes to raise the remaining $8 million it needs in equity through crowdfunding. The opportunity is open only to accredited investors – those who make more than $200,000 a year or have a net worth of at least $1 million. The minimum buy-in is $250,000.

The pitch for the Anderson school is at . The property will be owned by Anderson School Properties LLC, which will then lease to McMenamins. It’s hoping to secure necessary funding by the end of June so that construction can start by the end of summer. Ankrom Moisan Architects is the project’s designer; the general contractor is a joint venture between Andersen Construction and Pacific Crest Construction.

In the Portland region, the McMenamin brothers are hoping to use crowdfunding to redevelop a 46-acre pig farm across from their Edgefield facility – a century-old former poor farm they converted into a resort hotel replete with bars, spas and a golf course. The company hopes to have a purchase and sale agreement negotiated with Multnomah County within the next couple of months.

Another project that could benefit from crowdfunding is one to convert a 91-year-old ex-Masonic lodge on North Commercial Street into a boutique hotel.

McMenamins has a knack for revitalizing historic properties. Interiors are carefully crafted by blending historic photographs with period paintings, present-day posters for upcoming concerts, and outlandish, custom-made features like stained-glass windows and railings made of plumbing pipes. Mike McMenamin said the secret of success lies in creating community resources.

“What can you provide to the community at no charge so you can become a community center to a degree?” he said. “We want the community to own it. That’s the whole idea.”

For instance, in Bothell a former indoor community swimming pool will be opened up to the sky and reshaped into a lagoon-like soaking pool with 90-degree waters.

As for the property’s past, the company hasn’t yet worked out the details of how it will revive its storied history. That, the brothers say, is an intensive process that comes to life as the project unfolds.

“The fun part is you don’t really know where it’s going to go until you get in there and start blasting away,” Mike said.

His brother nodded.

“It starts talking to you,” Brian said.