A developer wants to convert the Clover Island Inn to micro apartments, but it may face a significant roadblock.

The 150-room inn, restaurant and conference center was built in 1977 on land leased from the Port of Kennewick. The port has ambitions for its prized island property that include transforming it into an upscale visitor destination.

Portland-based Fortify Holdings is under contract to buy the inn, 435 N. Clover Island Drive, by March 31 and it is asking the port to consider selling the land. The current land lease has options through 2034.

It presented its case to the port commission on Jan. 11. The port agreed to take a deeper look at the opportunity to update the aging hotel. In its presentation, Fortify said its vision for the Clover Island Inn is a match for the port’s plan and represents a thoughtful investment in bringing new residential, retail and dining opportunities to the waterfront.

Fortify is led by Sean Keys, a real estate and development executive, and is based in Beaverton, a Portland suburb.

Terms of the deal were not disclosed. The inn last sold in 2001 when Clover Island Development Company paid $946,300 for the property. The Benton County Assessor values the building at $3.2 million for tax purposes, though sale amounts typically exceed tax valuations. The value of the land was not available.

It is unclear how the Clover Island Inn has performed during the pandemic and how that might influence its future as a residential rather than hospitality property. The hospitality industry has suffered significant losses due to steep declines in travel and tourism during the Covid-19 pandemic.

Visit Tri-Cities, the region’s tourism promotion agency, reported $344.7 million in visitor spending in 2020, down more than 35% from 2019. Figures for 2021 aren’t available yet.

Port officials have been protective of Clover Island, where it has its own headquarters and has made significant investments in the iconic lighthouse, marina facilities, shoreline habitat improvement and more.

The island is part of the larger waterfront district where the port is working to spark high-end redevelopment.

In 2021, the port teamed with the Kennewick Housing Authority on a proposal to U.S. Sen. Patty Murray, D-Washington, to develop low-income housing near Clover Island. The pitch led to widespread condemnation from neighbors. The proposal wasn’t on Murray’s final list of contenders for funding in the failed Build Back Better package and disappeared. 

Fortify said it plans to spend up to $20 million on major renovations to the interior and exterior. The plan includes interior renovations, including a new restaurant and bar, new pool area, new landscaping, new exterior elements, parking lot upgrades and signs.

Rooms will be refashioned with small kitchens, upgraded bathroom cabinetry, fixtures and tile and living areas.

The resulting project would have 180 to 200 permanent residents, an addition Fortify said reflects the port’s plans to increase commercial activity in the area. Permanent residents will boost demand for restaurants and other services in the neighborhood, it said.

Fortify specializes in apartment housing with 65 properties and 6,500 units in Washington, Oregon, Idaho, Nevada and California. It has already purchased several Tri-City lodging properties for conversion to micro apartments.

It notes it is a long-term investor and has never sold a building.