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The Portland Development Commission has amended its development agreement with Mortenson Development for a planned parking garage to serve the new hotel near the Oregon Convention Center.

The project to build the 442-stall parking garage is now expected to cost approximately $32.2 million, up from an earlier estimate of about $25.9 million.

The garage is considered a key support project for the 600-room Hyatt Regency hotel, and will not only provide needed parking, but also serve as a steady source of revenue for the PDC. The agency estimates the garage will generate $1.85 million annually.

Construction of the hotel is expected to commence once financing is in place in June 2017. The garage project will follow.

The PDC pointed to several reasons for the 24 percent cost increase.

• Additional foundation superstructure adds $1.6 million to the building’s cost. The superstructure changes are necessary to support future development of an office building atop the parking garage, according to a PDC staff report.

Overall, the PDC is spending $3 million so that an office building can be built on the parking garage.

The design also allows TriMet to operate a ground-floor police precinct without disruption of its operations.

• TriMet’s design specifications were responsible for an estimated $2.1 million cost increase. The transit agency has asked for 19,000 square feet of commercial space and 47 secured parking spaces.

The change requires deeper excavation and more shoring than first anticipated, PDC project manager Eric Jacobson said.

The agency had earlier indicated it would need only 14,000 to 15,000 square feet. The cost increase will be passed on to TriMet.

• Changes to gain the Portland Design Commission’s approval will add $2.3 million in development costs. These changes include adding ground-floor retail space and bicycle parking, and modifying exterior design and materials.
• Costs are projected to increase by $320,000 because of the state’s 1.5 Percent for Green Technology in Public Buildings program. PDC staff had not initially realized the garage would be subject to the program.

鈥淲e hadn’t budgeted for that in part because we don’t build and own too many buildings,鈥� Jacobson said.

Mortenson Development is expected to deliver the hotel in mid-2019, and then the garage. Mortenson Construction is the general contractor. Both companies are part of M.A. Mortenson Co. of Minneapolis.

The parking garage would add to the PDC’s portfolio an asset that could generate revenues for other programs. Currently, the PDC owns two parking structures: Station Place Garage at Union Station and parking at the Strand condominiums in Southwest Portland, near the Willamette River.

The PDC’s board approved an amended development agreement by a unanimous vote Dec. 14.