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The winning proposal for redevelopment of the Grove Hotel calls for creation of a hotel-hostel hybrid of sorts.

The Portland Development Commission‘s advisory committee tasked with selecting a preferred developer for the Old Town Chinatown property has selected a joint proposal by Portland-based Naito Development and New York-based Eagle Point Hotel Partners. The two companies plan to renovate the long-vacant, century-old building to hold 52 rooms and 190 beds for rent.

The proposal isn’t much different from one that developer David Gold pursued in spring 2013. That deal fell apart because of the presence of the Right 2 Dream Too homeless camp across the street.

Eric Jacobson, senior project manager for the PDC, said economic conditions now favor a hospitality concept.

“One, the economy has really picked up and interest in Portland and Old Town Chinatown has really picked up,” he said. “And I think secondly, this lifestyle hotel/hostel concept is really taking off across the country. It’s apparent to us that there is a market demand for these real social places at a lower price point than a traditional hotel.”

The Naito/Eagle Point team (which also includes hotel operator Filament Hospitality) was one of five finalists vying for the property. Developers Aaron Jones and Don Mutal proposed a market-rate housing concept; Beam Development and Urban Development Partners suggested a mixed-use office model; and three others offered variations on the hostel idea.

Jacobson said all of the proposals were strong candidates, but added that the PDC chose a hospitality concept because of its ability to bring people to the streetscape.

“I think the key thing was really activation of the space,” he said. “The office use could be very positive, but on the other hand it wouldn’t be as activated at night and on weekends.”

He said PDC officials shared similar reservations about the housing concept, which called for 11 micro retail stores and 18 tiny market-rate apartments. He said the Naito/Eagle Point team’s hostel proposal trumped the others because of experience and financial capabilities.

The team is offering to pay $630,000 in cash for the property. A nonbinding memorandum of understanding and due diligence period of 60 to 90 days will likely follow a meeting with the developers next week.

One aspect of the Naito/Eagle Point proposal that will not be included in the final deal was a request to have first right of refusal to redevelop the lot where R2DToo resides, should the camp be relocated, and providing the PDC acquires the property. Discussions are ongoing.

“We’re really viewing these as two separate things in that we’re not going to make redevelopment of the Grove Hotel contingent upon anything having to do with the R2DToo property,” Jacobson said. “It’s a stand-alone property.”