I wrote a story about the Ritz-Carlton, Portland for Fast Company a few weeks ago.
Hotel rooms at the new Ritz-Carlton will start at $473; residences cost up to $8.9 million. But on the surrounding blocks, Portlanders camp in tents and doorways.
A gleaming, sail-like 35-story tower has emerged on the corner of Southwest Washington and 10th Avenue in downtown Portland, Oregon, over the past few years. It’s home to the Ritz-Carlton Hotel and Residences, a nearly $700 million development that broke ground in 2019 and is set to open in October.
The debut of a new Ritz-Carlton is usually a sign that a city has arrived, at least for luxury travelers, and this one hits all the marks. The 251-room hotel, where double rooms start at $473 a night, includes a 7,000-square-foot fitness center, an infinity pool, and food-cart-inspired eateries on the ground floor, a nod to the thriving food cart pod that the building displaced. There are also residential apartments—priced between $1.14 million and $8.9 million—with sweeping mountain views.
But just outside the hotel’s front entrance, a different reality sets in. On the surrounding blocks, Portlanders camp in tents and doorways, among the roughly 6,000 people who are experiencing homelessness in Multnomah County, which encompasses Portland and its eastside suburbs. Just two blocks away from the hotel is the county’s new Behavioral Health Resource Center, which offers showers, lockers, laundry, and basic first aid to unsheltered Portlanders, and often has a line down the block.
The city is also wrestling with a devastating fentanyl crisis—complicated by a lack of detox services that Measure 110, the statewide drug decriminalization law that voters passed in November 2020, was supposed to fund. (That law, which treats small possession of hard drugs like heroin and methamphetamines as violations on par with a traffic ticket, passed with wide support, but now a majority of Oregonians support repealing it, according to a poll conducted by Emerson College Polling.) In March, there were 11 overdoses in downtown Portland during one 12-hour period; three of those people died.
Critics call it tone deaf—or worse. “Right outside my window are 20 tents, and those are just the ones that I can see,” says Alison Miller, senior minister at the First Unitarian Church of Portland, which has a long history of providing day shelter to houseless families and will soon launch a shower program. The church is located nine blocks from the Ritz-Carlton. “And now [there are] these luxury apartments. These two extremes really force us to reckon with who is losing out and who is being supported in our city.”
The story of the Ritz-Carlton’s fraught relationship with the local community dates back to tax breaks folded into the Trump administration’s 2017 tax overhaul, creating the Opportunity Zone program. The idea behind Opportunity Zones was to encourage investors to build in impoverished or struggling areas by allowing them to defer and reduce taxes on capital gains that they reinvest into these developments. If they hold the new investment for a decade, they never have to pay taxes on those gains.
Since then, BPM has raised at least $63 million from outside investors through a Qualified Opportunity Fund, short of the fund’s $120 million goal, according to documents filed with the Securities and Exchange Commission in February 2023. A $50 million fund that BPM launched in 2020 had raised $200,000 at its last filing, in 2021. Though a luxury development in downtown Portland today seems like less of a slam dunk than it might have appeared back in 2018, BPM and the investors in these funds stand to receive significant tax benefits for the money they put into the Ritz-Carlton.
The Ritz-Carlton project, to some, exemplifies the fundamental flaws in the Opportunity Zone program. Too much untaxed capital, they say, has flowed into neighborhoods that were already doing relatively well (which downtown Portland was, pre-pandemic) and toward real estate developments that exacerbate affordable housing crises. And the only people really benefiting are already wealthy.
In his book Only the Rich Can Play, David Wessel, journalist and senior fellow at the Brookings Institution, also singles out the Ritz-Carlton as a misuse of tax benefit. “If you have a neighborhood on the cusp of gentrification and you want to accelerate that, [designating it as an Opportunity Zone] is not the wrong decision for a state to make,” he says today. “It just may not be the purpose of the program.”
Critics of Opportunity Zones say that they further the divide between rich and poor and deprive the government of much-needed revenue. “The taxes wealthy investors avoid through Opportunity Zones is money that could instead go to improve our schools, make college more affordable, expand affordable housing, or fund other ways of making Oregon more prosperous,” Juan Carlos Ordóñez, communications director of the Oregon Center for Public Policy, wrote in a recent op-ed in Oregon Capital Chronicle.
Bowen, for his part, sees the hotel playing a key role in the city’s rebirth. “You have the hotel, which has a huge impact in terms of employment, [hiring] 250 to 350 employees. These people are going to work in downtown Portland. They’re gonna spend money in Portland.”
And then there are the executive teams and people who will be working in the tower’s 165,000 square feet of office space, including the law firm Davis Wright Tremaine and private equity firm Banneker Partners. There are street-level retail shops (Packouz Jewelers, Rolex, and the food hall Flock). Room taxes—11.5% total for Portland and Multnomah County—will inject even more dollars into the city.
What makes all of this even harder for critics to stomach is Bowen’s refusal to include affordable housing in the project. Portland has been in a formal housing state of emergency since 2015. In 2017, as a way to fix this, the City Council passed an “Inclusionary Housing” policy mandating that any new building of more than 20 units make one-fifth of all units affordable for people making 80% of the region’s median income (about $90,000 for a family of four) or make 10% of units affordable for people making 60% of the median income. Since 2017, the policy has created roughly 1,000 permanently affordable rental units. It also allows developers to pay a fee in lieu of building these units, due at the issuance of building permits—with the money going toward an affordable housing fund.
Bowen signed an agreement in March 2021 with the Portland Housing Bureau pledging to make 26 of the 132 luxury condos in the Ritz-Carlton affordable. But earlier this year, according to Martha Calhoon, public information manager at the Portland Housing Bureau, project representatives informed the bureau that they would pay $7.76 million rather than go through with the affordable units. (Since Bowen and his representatives had originally signaled to the city they intended to provide the affordable units, what they are paying is not a fee but rather a penalty, Calhoon says. The fee-in-lieu payment is normally due at permit issuance. “What the developer of the Ritz Carlton project plans to pay is in fact a penalty,” she says.) This money will go toward affordable housing in the city, though not necessarily in downtown.
“Ritz-Carlton residences are not really designed for inclusionary housing,” says Bowen of the decision to eschew affordable units. “We came to an agreement with the city that we would pay a fee so that we didn’t have people [in the building] who really couldn’t afford it.” Speaking with the Portland Business Journal last year, he was even more blunt. “I still think it’s outrageous that we have to pay anything,” he said, noting that the project is already investing in the city through its Opportunity Zone status.
Today he further justifies the move away from inclusionary housing by explaining that the Ritz-Carlton residences are not your typical condos: “I mean, these weren’t even rentals—they’re not housing. They are residences that are managed. There’s nothing like this in Portland.” The city’s Inclusionary Housing policy, however, applies to both rental and condo developments—even ones that come with five-star hotel amenities like access to a pool, spa, and fitness center, as well as a valet, 24/7 parking garage, and concierge service.
Bowen has said that he’ll pay the $7.76 million—calculated at $27 per square foot—as the last 26 units are sold. “The developer plans to pay a portion of the penalty at the sale of each of the otherwise planned IH units,” Calhoon confirms. Additionally, the city will charge an interest rate of .833% per month, which will begin to accrue if the penalty isn’t paid by the time all the residential units are sold—or December 31, 2025, whichever comes first.
Terry Sprague, the CEO and founder of Luxe/Forbes Global Properties and listing broker for the Ritz, has so far sold 15% of the property’s 132 residential units. He is also bullish about the Ritz-Carlton’s positive impact. Sprague, who has been sober for 23 years, says he believes houseless advocates and business leaders are starting to coalesce around similar goals. “I think people on both sides are starting to agree. We all have the same mission: How do we help the homeless? How do we help people with drug addiction?”
He envisions the hotel changing the dynamics for downtown by infusing it with a “positive new energy” and new clientele. “When you get a neighborhood that comes alive, and people start living and actively moving into that city . . . unfortunately, homeless people and drug-addicted people don’t really want to be around other people. They’ve kind of had this city to their own,” he explains. “There is going to be a natural displacement, and we as a city need to figure out how we offer assistance and find healthy places to be displaced to.”
Miller at the First Unitarian Church has a challenge for the Ritz-Carlton and other businesses eyeing downtown Portland. “My hope is any corporation investing in the city for profit will also be investing in the well-being of the whole community,” she says. “It’s a problem when people who work in the hospitality industry can’t afford to live near enough to work. There’s an opportunity for [the Ritz-Carlton] to make a difference.”
The hotel’s developers, Miller adds, turned down the opportunity to create affordable housing. “So what are they saying yes to?”