After holding a workshop to discuss it, the Pendleton City Council is set to approve a 50-year lease with Makad Corp. for a 74-room hotel at the Eastern Oregon Regional Airport at a meeting Tuesday.

In lieu of a standard land lease contract, Makad, a Vancouver, Washington-based company that is also planning a data center on the Airport Road extension, will pay Pendleton up to 2 percent of the hotel’s gross revenue.

The lease will also include an incentive package that includes in-kind civil and environmental engineering work, water and sewer connection fee waivers, and up to 50 percent permit fee reduction. Not including the waiver and discount, City Manager Robb Corbett is estimating the incentive package will cost $57,500 to the city.

Since the hotel will be built on top of the airport’s current parking lot, Makad has also agreed to pay for a new lot adjacent to the hotel.

City officials have trumpeted Makad’s previous experience in developing the River Lodge and Grill, a Boardman hotel built more than a decade ago that’s still operating today.

But Makad has also been involved in a few failed projects at the Port of Morrow, including manure and ethanol plants that were never built and a power plant that was the subject of a lawsuit when a partnering company accused Makad Corp. of failing to pay back its loans.

Pendleton agreed to lease land on Airport Road to Makad in 2015 with a similar incentive package and a $300,000 sewer line extension.

The start date of the lease has been pushed back multiple times since then and construction has yet to start on the data center, but Allan Fulsher, general counsel for Makad wrote that the company is still working on “one of the largest developments in Pendleton history.”

According to Fulsher, Makad is challenged by a lack of infrastructure in Pendleton, particularly a dependable source of electricity, and is looking for a “creative solution.” Additionally, Fulsher wrote the company is spending time identifying end users for the data center and debt and equity financing.

“The amount of time from original announcement until the present is not unusual for private developments of this scope, especially where significant barriers are present,” he said.

When asked whether Pendletonians could be confident that the hotel project would get off the ground given the lack of construction on the data center, Fulsher said the two projects were unrelated.

“The only connection between the two projects is that we anticipate that future travelers to Pendleton related to the construction and operation of the data center will find the hotel to be a convenient place to stay,” he wrote. “Neither of the two projects is dependent upon the other in any way.”

As Makad moves toward getting city approval for the project, Fulsher wrote that there are a number of reasons the company wants to build a new hotel in Pendleton.

“Horse Valley LLC (a Makad, Corp. subsidiary) is most attracted by the anticipated business growth at the airport and the industrial park,” he wrote. “This includes the burgeoning unmanned aviation industry center at the airport. The hospitality project is intended to cater to business and recreational travelers that will find the airport location to be convenient.”

The council will meet at 7 p.m. at the council chambers in city hall, 500 S.W. Dorion Ave.

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Contact Antonio Sierra at asierra@eastoregonian.com or 541-966-0836.