The city of Portland has finally reached an agreement with owners of the downtown Ritz Carlton building that will add nearly $8 million in funding for the city’s affordable housing projects.
The city and Ready Capital signed an amended agreement March 20 ensuring the city will see $7.76 million plus interest to use for affordable housing in Portland. The agreement releases Ready Capital—the owner of the Ritz Carlton building—from the requirements of the city’s Inclusionary Housing (IH) program, which began in 2017 to accelerate the building of affordable units, but ensures the money goes toward other affordable housing projects.
The 35-story downtown structure—called Block 216—that houses the Ritz Carlton began construction in 2019, displacing a block of food carts in favor of the luxury hotel and condos. The project faced pushback from Portland residents who argued the project symbolized the rise of developer-friendly policies and the decline of housing affordability.
But it nearly went into foreclosure in 2025 after it failed to sufficiently lease office space or sell its condos. The building has a total of 132 condominiums and 251 hotel rooms. One of the stipulations of the original project, signed in 2021, was that Block 216 developers would build 26 affordable units, as required by the city’s IH program. That program required buildings with 20 units or more to build 10 percent of the projects’ total units at prices affordable for people making 60 percent of the area median income, or 20 percent of its units at 80 percent of the area median income.
By 2023, the developers reversed course, instead opting to pay a fee-in-lieu of building those units. Based on the square footage of the project, the total amount they would pay was nearly $7.8 million, due by December 31, 2025.
Block 216 carried a $503 million construction loan it could not pay due to lack of business and the impacts of COVID-19. But rather than foreclose on the property, the lender, Ready Capital acquired the building in July 2025.
When the Ready Capital transaction took place, legal questions surfaced over how exactly the city would collect the funds. Now, the agreement guarantees the city will see the money it is owed, albeit not necessarily in one chunk.
An amendment to Ready Capital’s contract with the city now allows it to sell 12 units in the Ritz Carlton without paying anything. Then it is required to deposit $125,000 for each of the next 44 housing units sold into an escrow account at an independent financial institution that both parties agree on. That money will be held as repayment toward the total $7.8 million owed. For each unit after that, it will deposit $150,000 into the escrow account.
A 10 percent annual fee will also accrue monthly, but any amount deposited into the escrow account will not accrue interest. In other words, the total amount due will depend on how quickly Ready Capital makes deposits, and how much subsequent interest accrues.
But the agreement isn’t as simple as paying off an old debt to the city. As outlined in the contract, the city and Ready Capital intend to negotiate a funding agreement by August 31 that would allow Ready Capital to use the money from the escrow account to invest in other affordable housing projects. Still, the Portland Housing Bureau (PHB) maintains the right to invest the funds at its own discretion.
If the funding agreement is not reached, the city can collect on the full amount on December 31.
“PHB will not comment on legal strategy, including its remedies under the covenant or enforcement options,” PHB spokesperson Gabriel Mathews said.
The city of Portland has been laser focused on affordable housing development, but developers have been slow to meet the need. A 2045 Housing Needs Analysis released in late 2023 and a statewide executive order suggested Portland should aim to build 55,000 new housing units by 2032.