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When Jonathan Cohen and his development partners tour their property at 203 N.W. Third Ave., they don’t see an old, dusty, abandoned building. They see a time capsule waiting to be opened.

“This building was built by the Seamen’s (Friend) Society, and their goal was kind of a YMCA of sorts for sailors,” said Cohen, the owner of Portland-based Imagine Energy. “So this was specifically intended to be like a safe haven for sailors from the vices of gambling and drinking and prostitution that otherwise plagued the area.”

That was in the 1880s, but Old Town Chinatown remains a gritty area. However, Cohen’s group, with its $3 million building renovation, isn’t looking to transform the neighborhood, but rather celebrate it.

“I don’t think anybody wants to turn this area into the Pearl District,” he said. “I don’t think anybody wants to turn it into an extension of downtown. We want it to be unique, and everybody that’s here that I’ve talked to loves the gritty nature and history of this area. It’s always been gritty, and we kind of want it to stay that way to an extent.”

The group plans to soon begin converting its building into a hotel-hostel hybrid called the Society Hotel. It will feature a lobby and café on the ground floor, with a room set aside for bunking backpackers, and 36 private rooms on the upper floors.

Development partner Matt Siegel, the owner of local design-build company Building Blocks LLC, the project’s general contractor, in spring 2013 encountered a kind of hotel-hostel business in Chicago. He liked the concept. With a penchant for historic preservation, he set his sights on Old Town Chinatown, where many underused buildings stand.

“It is the heart of the city – the original heart of the city,” Siegel said. “It’s still an amazing location as far as proximity to everything that travelers need … and it’s also the last remaining ungentrified space.”

Indeed, while the Pearl District and Northwest Portland – just blocks away – have attracted a lot of investment dollars, Old Town Chinatown has not. For years, city leaders have brainstormed ways to revitalize the area without displacing social service agencies and the homeless populations they serve.

A few successes – such as the renovation of the White Stag Building for the University of Oregon, and the rehabilitation of the Globe Hotel for the Oregon College of Oriental Medicine – stand out. But those projects haven’t catalyzed development on surrounding blocks.

That could change. Gerding Edlen has plans for a new mixed-use development near OCOM, and Mayor Charlie Hales recently announced his intention to redirect approximately $57 million in urban renewal money toward the neighborhood.

Meanwhile, Society Hotel development partner Jessie Burke – Cohen’s wife and the owner of Posies Bakery & Café in the Kenton neighborhood – sees opportunity.

“When we were looking at this property,” Burke recalled, “people were (saying), ‘Chinatown’s dead. There’s nothing going to happen here.’ And I was (saying), ‘That’s not how things work. If it’s at the bottom, things are going to get better.’ ”

The Kenton neighborhood is one example. It’s now considered by real estate agents as one of Portland’s up-and-coming neighborhoods, but when Burke and Cohen moved there in 2004 it was rough.

Burke decided to make some improvements. She rebooted an off-line business association, began campaigning for neighborhood improvement grants (more than $64,000 in the past four years), and started a local street fair. She opened Posies on North Denver Avenue in 2009.

Old Town Chinatown’s lack of activity doesn’t deter her.

“Kenton was the same way,” she said. “We had a lot of homelessness and drug use and dealing and prostitution, but once you get activity in the core area, then that type of character feels uncomfortable with everyone else around witnessing their activities. So I think the same is present here. We just need to work on the ratios.”

Burke joined the Old Town Chinatown Community Association, and is now working to create a subcommittee of businesses. Burke, whose mother is Chinese, grew up seeing the decline of Chinatown in Washington, D.C. As was the case there, she believes the older generations of Portland’s Chinese community have written Chinatown off.

Burke, 33, believes it’s up to her generation to reinvent a more culturally appropriate version. She looks at the presence of the Davis Street Tavern and the recent arrival of Airbnb as evidence of the area’s appetite for business.

She does, however, question how great it is for hospitality. She noted that three of the five development proposals being considered for the Grove Hotel nearby involve hostel concepts. The Society Hotel group – Cohen, Siegel, Burke and Gabe Genauer, owner of Groundswell Development in Portland – is concerned that such a project may not complement its own.

The group purchased its building this past October for $700,000, and is paying for improvements with a $700,000 loan from the Portland Development Commission, a commercial bank loan and historic tax credits.