PORTLAND, Ore. (KOIN) — Portland City Commissioner Jo Ann Hardesty is proposing transitioning the support duties of a neighborhood group to the City of Portland.
The move comes after Hardesty permanently cut funding to Southwest Neighborhoods Inc. (SWNI) last month following an audit that found money had been mismanaged.
“This was not a rash decision. I didn’t come in with my mind made up,” Hardesty told members in February. “What I did was review years of documentation, years of audits, years of non-accountability with how the dollars were utilized. … It was based on a lot of factual data that tracks a history of financial mismanagement.”
Hardesty is vying to the have the Office of Community and Civic Life, which she has been overseeing since January, to directly take up the reigns for supporting the 17 neighborhood associations in Southwest Portland previously under the auspices of SWNI.
Members of SWNI dispute the results of the audit, say they were not given a chance to publicly defend themselves or correct their mistakes, and are asking city council not to approve the change until an audit of the management of the Office of Community and Civic Life is completed.
As part of the proposal, the Office of Community and Civic Life would authorize the addition of two coordinator positions and a grant agreement with a nonprofit organization to provide liability insurance coverage and fiscal sponsorship for neighborhood associations and place-based community groups in Southwest Portland. SWNI previously had been the nonprofit to provide the insurance to those groups.
The nonprofit to receive the grant is yet-to-be determined but will be selected via an open, competitive process, according to the proposal.
Hardesty’s office said the proposal would not have a fiscal impact on the city’s budget due to it using the equivalent funds previously being relegated to SWNI.
Final vote for the proposal is slated for a March 10 council meeting, Hardesty said.
“This is an injustice to the organization who has served this city for 40 years.”
SWNI President Leslie Hammond
On Wednesday, the city council saw a number of public testimonies from SWNI members and supporters who raised concerns about the proposed transition, with many complaining the group was not given a chance to defend themselves before the funding was cut. Despite the negative audit results, officials with SWNI said they felt the audit was not impartial and leveled criticisms toward the Office of Civic Life and Engagement.
Richard Freimark, who represents the Bridlemile Neighborhood Association as well as SWNI, said much of the audit was about a theft that happened in the organization in the early 2000s that had been adjudicated in court in 2011.
“This was a misdirection out of current SWNI operations, it’s old news,” Freimark said. He said since 2011, SWNI has initiated new accounting practices, with the city’s approval, and has been in practice for over 10 years.
The scope of the audit ranged from the 2011-12 fiscal year through 2019-20 and was expanded to include the second quarter of fiscal year 2010-2011 and the first quarter of fiscal year 2020-21.
The audit did acknowledge SWNI’s financial loss from the theft from the the early 2000s as being more than $174,000, which they said was adjudicated in court.
However separate from the financial loss from the embezzlement, SWNI’s financial mismanagement resulted in a loss of more than $179,000 within the date range of the analysis, the audit said.
SWNI President Leslie Hammond said she disputes the findings of the audit and its allegation of fiscal mismanagement.
“This process has ruined our reputation,” Hammond said. “And yet I know for a fact we had a CPA on our board for two years, before last year, who went through all of our financials and they were in good shape. And we’ve had a retired auditor look at our last two years of financials and they’re in good shape.”
Though Hardesty chose to cut funding for the neighborhood group, Hammond said she doesn’t think it’s the commissioner’s fault for coming to that conclusion based on the available information, but thinks the audit is the result of faulty information coming out of Office of Community and Civic Life.
“This is an injustice to the organization who has served this city for 40 years,” she said.
Hammond pleaded that city council not approve the proposal as written, but instead “that you continue to let the people in Southwest Portland serve their neighborhoods and their businesses through SWNI, that we keep our neighborhood office, which is very important, in the neighborhood, and not have it sent down to city council.”
“You need to give SWNI a right to publicly explain its financial records and to debunk the 2020 forensic audit, which was biased, flawed, and not based, in large cases, on facts,” Hammond said.
The audit also stated that SWNI received a Paycheck Protection Program loan in 2020 which created a surplus of money for the organization, which Hammond acknowledged was “inappropriate.”
However she said they applied for the PPP funding after receiving two memos from the city saying they’re not sure what money would be available for coalitions and other community based groups.
“We applied for PPP funding, not knowing whether it would be a supplement or the total of sum of money we might have available to us, in fiscal 2021.”
Steve Mullinax, the neighborhood group’s first vice president, said Southwest Portland residents rely on SWNI for professionally provided services, including web hosting, monthly Southwest news, support for community events, meeting space, and insurance coverage, to name a few.
“Since July of last year, Portland has provided no funds to SWNI. We have continued to provide some services, though constrained by dwindling resources. This required, ultimately, laying off our entire staff with the exception of a part time bookkeeper,” Mullinax said.
SWNI’s Secretary, Janet Hawkins, requested that city council delay the decision until a management audit of the Office of Community and Civic Life is completed.
Hawkins said throughout the past year, the bureau had demonstrated in their engagement with SWNI “contentious communications and unsound administrative decisions.”
“Throughout last summer and fall, we had hoped that the Office of Civic Life would conduct the audit of SWNI in a fair, impartial manner. That at the conclusion of the audit, SWNI would’ve been provided the opportunity to publicly address the audit’s findings and work with the city to implement any identified corrective action. Unfortunately, this did not happen.”
“This is not a one-off. This was a very thorough, detailed financial audit of this particular organization.”
Portland Commissioner Jo Ann hardesty
The fate of Southwest Neighborhoods Inc.’s funding was previously thrown into question last summer when leaders of the group wouldn’t turn over boxes of financial documents that some members of the group believed could reveal financial mismanagement, according to the Associated Press.
Funding for the group was then withheld, following an unanimous city council vote in July 2020, until the documents were handed over and an outside audit was conducted.
The audit was critical of SWNI and found it to be a poor steward of taxpayer money. The audit, performed by independent third party auditor Marsh Minick P.C., found financial mismanagement, including conflicts of interest and misrepresentation. The audit found that, on average, roughly 7% of the $3.17 million in taxpayer funds the coalition has received since 2010 have been mismanaged or misspent. Hardesty made the decision on February 24 to not renew the city’s contract with the group.
A city grant was the main funder for the nonprofit, with a $307,000 2019 Portland grant accounting for 85% of SWNI’s budget.
The audit of SWNI went deeper than just the financial, with a negative workplace environment being cited as a concern, Hardesty said.
“The City of Portland has a strong core value about treating people with respect and dignity and the audit found that bullying and intimidation was a continuous effort with this particular board,” she said. “I, in no way, rushed this decision, I want you to know. I came in and I inherited a question around whether or not we would continue to fund SWNI.”
In addition, Hardesty said she tried to identify a Southwest Portland-based nonprofit that could effectively take over the work that SWNI had been doing, but that she found no qualified organizations “that wanted to touch this with a 10 foot pole. And they said that they did not want to, in fact, inherent what is now SWNI.”
In addition to 17 neighborhood associations in Southwest Portland, SWNI also supported some business associations and committees separate from those neighborhood associations. They have existed for four decades, according to a SWNI newsletter.
“SWNI has done so much for my neighborhood association since I’ve been involved with it for around 16 years,” said Michael Charles, who represents the Marshall Park Neighborhood Association, at a Feb. 24 meeting with SWNI members and Hardesty. “It sounds like you’ve decided to tear it all down rather than address the issues and problems and work with SWNI to try and solve them — I find that extremely disappointing.”
Hardesty assumed responsibility for the Office of Community and Civic Life on Jan. 6, 2021, following former commissioner Chloe Eudaly’s unsuccessful bid for re-election in November.
Associated Press contributed to this report.