Karma on Block 216

I see that the shiny new Ritz Tower in downtown Portland is going into foreclosure. The holder of the mortgage, Ready Capital, is owed a little over a half billion dollars, and the project, brain child of developer Walt Bowen, is out of cash. According to published reports, they've reportedly sold only 10 or 11 of the 132 condo units; the Ritz Carlton Hotel portion of the tower is averaging only $188 a night for its swanky rooms; and of the five floors of office space (ha! office space!), they've leased only roughly one floor.

Perhaps the most interesting angle to the sordid tale is how many Portlanders are applauding. They hate that building and everything it stands for. There used to be an amazing collection of food carts on the block when it was a vacant lot. That was displaced and didn't really resurface anywhere else.

I'm applauding, too, because that project was a poster child for abuse of the "opportunity zone" giveaways in the federal tax code, as revamped by Orange Caligula and Moscow Mitch in 2017. Those tax rules were supposed to help low-income communities get back on their feet. A 35-story bunker of overpriced schlock like the Ritz Tower is not what those legal provisions were supposed to produce.

There's more not to like. At one point the promoters were promising the city that some of the housing units would be "affordable." But in the end, that was a fake-out, too.

Whether you find this business failure gratifying or not, it's certainly not surprising. They were asking something like $2800 a square foot for some of the condos, and for that kind of jack, or just a little more, you could live in a place like the Dakota on Central Park West in New York City. Nobody is interested in that style of life around here, anyway. Certainly not 132 households' worth. Even before the riots and the fentanyl ruined downtown, the Ritz Tower was a delusion.

They say that the ground-floor food court in the tower, called Flock, is up and operating. But as noted here, that's being financed by the city development agency, "Prosper Portland," with a sweet loan that the operator could never get from a bank. And as I recall, part of the plan for repaying that loan was that money would be coming from the building's owner – an owner that we now know is out of cash. I wouldn't be surprised if that loan, $3 million, runs into trouble before it's repaid. 

If I'm ever down that way, I may try the food hall. But that's a big if. It could be another boarded-up storefront by the time I have reason to be in the neighborhood.