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On paper, plans to turn an old factory into a 16-bed mental health and drug treatment center with 80 units of recovery housing look like an answer to Portland’s prayers.
Real estate developer Vanessa Sturgeon spent months pitching the idea to city and county officials, offering to turn an industrial-chic Slabtown office building she owns into a desperately needed crisis center, with 50 units of permanent housing and 30 for temporary occupancy.
Sturgeon, whose family built the Fox Tower, offered to foot half the bill for the complex. Otherwise it would just sit empty, like so many other office buildings in Portland. She had already spent $6.8 million on the purchase and another $18 million on reconstruction.
She needed another $22.5 million to reconfigure the 85,000-square-foot structure for housing and rehab, so she pitched the state, county, city and other private funders to join her in the project. She sought $7 million from Multnomah County, $6.8 million from the Portland Housing Bureau, and $9.5 million from the state.
“We went to Multnomah County and asked, ‘What is your biggest need?’” Sturgeon told WW last December as she embarked on pitch meetings for the building.
To her amazement, the city and county passed, and the state never got back to her, she says. Now instead of becoming a haven for homeless people with addiction and mental health issues, the Premier Gear Building is going back to the bank because Sturgeon can’t keep making interest payments on it. The city and county dinged her deal in part because her rehab partner, Jackson House, takes private insurance, and officials worried that the new center wouldn’t serve the people most in need, Sturgeon says.
“I’m not surprised by any of this,” Sturgeon says. “I’m just disappointed.”
Yet the rejection is a puzzling one from a city and county that are desperate for both treatment beds and housing. There is just one “crisis assessment and treatment center” (a term of art in the business) in Multnomah County right now. It’s located on Northeast Martin Luther King Jr. Boulevard and has 16 beds but no housing. Meanwhile, the public is clamoring for office spaces to be converted to bedrooms. In a recent survey by the Oregon Values and Beliefs Center, 77% of Portlanders said they supported public subsidy for office-to-housing conversions.
Stranger still is the fact that Sturgeon’s building may have been a bargain. It’s already been earthquake-proofed with massive steel struts, and it has plenty of windows—a prerequisite for turning offices into housing. Building out the 80 units inside would cost $215,000 each, Sturgeon says. The average price for affordable units in Portland is $490,000, according to city estimates.
Helmi Hisserich, director of the Portland Housing Bureau, said her agency was intrigued by Sturgeon’s plan, which she says is “a new vision for health care and housing.” But it didn’t have the crucial requirements for a $6 million grant from her agency, including a partner with experience in housing the homeless, which is different from owning office buildings full of white-collar workers.
“Fundamentally, the vision was great,” Hisserich says. “But vision and execution are different.”
Sturgeon’s project is the latest private venture to run into skepticism from Portland’s public sector. In summer 2023, Wevolve, a for-profit behavioral health clinic, set up an outpatient center to treat drug abuse and mental health disorders. After a complaint from a nonprofit competitor, Multnomah County put out a fraud alert on Wevolve (“Sobering Claims,” WW, May 29) and emptied the facility. But the county had never confirmed the substance of the complaint, and a subsequent investigation by the Oregon Health Authority cleared Wevolve of any wrongdoing.
Seen in that light, the failure of the Premier Gear project looks like another example of the city and county failing to accommodate a private sector approach to mental health, drug addiction and homelessness, no matter how badly needed. From another angle, however, one could argue the government is protecting vulnerable people from an inexperienced operator who might endanger them while looking to monetize a troubled asset.
One thing’s for sure: Sturgeon’s project was a unicorn that didn’t fit into the government’s funding slots. The housing bureau, for one, doesn’t handle health care, and there is no facility anywhere in Multnomah County that looks quite like what Sturgeon was proposing.
“Sometimes the public sector overlooks new ideas that don’t fit in the box,” Hisserich says.
The story of the Premier Gear Building begins in 1923, when it was built on Northwest 17th Avenue to cast machine parts for gears that raised many of the bridges along the Willamette River. The company is still making gears in Canby, but it sold its building to an LLC controlled by Sturgeon for $6.8 million in 2017, when tech companies were moving to Portland from San Francisco and Seattle in search of lower rent.
Sturgeon’s company, TMT Development, is best known for building and operating the 27-story Fox Tower and the 30-story Park Avenue West Tower. Sturgeon’s grandfather, Tom Moyer, founded the company in 1992.
Sturgeon renovated the Premier Gear Building, turning it into tech-bro heaven with exposed wooden beams, polished concrete, vast windows and a roof deck. The renovation was completed in April 2020, just as COVID-19 prompted a work-from-home boom that decimated the office market.
Sturgeon pivoted, aiming to do something good with an empty building. She knows something about social services, having served on the executive committee of the Joint Office of Homeless Services for four years. She has been on the board of New Avenues for Youth for 18 years, serving as board chair for six.
Sturgeon shot high, designing a facility based on what advocates say homeless people need but rarely get: a center that treats mental health disorders and addiction, and then provides housing as they progress with treatment, instead of ending up back on the street.
To handle treatment at the center, Sturgeon partnered with Jackson House, a for-profit company that runs drug treatment and mental health centers in California.
“Cities spent thousands of dollars to solve a person’s crisis and then discharge them back into that crisis,” says Jim Sechrist, who runs Jackson House’s operations in the Northwest and worked with Sturgeon on her project. “Our whole goal was to serve folks who didn’t have a place to go after discharge.”
The project generated enthusiasm at the city and county, at least at first.
“This is precisely the kind of idea we’re looking for,” Jillian Schoene, chief of staff to City Commissioner Carmen Rubio, told WW in December. At the time, Rubio oversaw the Housing Bureau. “Commissioner Rubio has directed me to start looking for funding sources.”
Tabitha Jensen, an adviser to County Chair Jessica Vega Pederson, was equally enthusiastic. “I deeply vetted Jackson House’s proposal over the last 6+ months while working in the chair’s office and believe this is a viable service model,” Jensen wrote in a text message to Sturgeon and others. The one-stop model for treatment and housing “is urgently needed in our community.”
Hisserich says the Housing Bureau took great pains to fund Sturgeon’s proposal. It convened a panel to review it on May 28. That group, which included several executives from the Housing Bureau and Home Forward, and one from Central City Concern, passed on the proposal.
It got a second chance after Hisserich took another look and saw that the price per unit of housing was far below what the Housing Bureau usually paid. She visited the space and then convened another panel, this time including people from Multnomah County. Bill Pickel, an expert on supportive housing from California, also joined.
But this panel, too, turned down the project.
In an Aug. 31 email to Sturgeon, obtained by WW, Hisserich explained why the Housing Bureau couldn’t greenlight it. The funding was “speculative,” Hisserich said. And Sturgeon hadn’t secured permanent supportive housing vouchers, as most affordable housing developers do. Her partnerships weren’t secured by memorandums of understanding, and billing commercial insurance didn’t “align” with the “target population,” which is homeless people.
Sturgeon responded to all the points. The only “speculative” funding came from the city, county and state. She didn’t want to seek vouchers until she knew how many beds would be purchased by hospitals for discharged patients in need of transitional housing. And she had agreements with partners.
It was for naught. Both the city and county stayed out.
Sturgeon wonders what would have happened if she’d had a well-known Portland nonprofit as a partner instead of for-profit Jackson House. She tried to get Central City Concern on board, but they told her they had too many projects going already, she says.
A Central City Concern spokeswoman declined to comment on the matter, beyond saying that they had some preliminary meetings.
So instead of a much-needed crisis center, with housing attached, a state that ranks near the bottom in terms of mental health and drug treatment will get yet another empty building. Neighbors in the area are already complaining about homeless people congregating around it.