State’s novel relief fund for Black Oregonians provided help to thousands even as it faced legal challenge: ‘It saved my life’

Alan Bell had spent five years building his New Orleans-style snowball cart into a successful business before the coronavirus pandemic upended his life.

His mother and stepfather, Faye and Burney Penny, both contracted COVID-19 last March. While his mother recovered, the family suffered a devastating loss when Bell’s 72-year-old stepfather succumbed to the virus. In the wake of his stepfather’s death, Bell temporarily shut down Hana’s PDX as he tried to figure out how to operate his foot cart while keeping himself, his wife and four children safe.

A partnership that Bell has with Joe Brown’s Carmel Corn was put on hold as well when the Lloyd Center temporarily closed in the early days of the pandemic, leaving him without any income. He applied to every grant program he could find but couldn’t secure more than a modest loan.

By the fall, Bell had racked up substantial debt as he struggled to keep up with his business and personal expenses. He said he was less than two months away from shutting down Hana’s PDX for good when he landed a grant from the Oregon Cares Fund, the state’s unique, $62 million coronavirus relief fund for Black Oregonians and businesses. The tens of thousands of dollars he received all but wiped out the debt he had accumulated.

“It kept my business alive,” Bell said. “It helped me manage the bills I was behind on, kept my family afloat and my business too. It saved my life, to be honest.”

A coalition of Black Oregonians from across the state came together last summer to petition state lawmakers to set aside federal coronavirus relief money for African Americans, a share of the population that has been historically marginalized in Oregon and across the country and been disproportionately affected by the pandemic.

Oregon appears to have been the only state that allocated federal coronavirus relief dollars to individuals and business owners of a specific race. The state’s unusual approach attracted a constitutional challenge, contesting whether the aid unfairly excluded others suffering during the pandemic.

The fund has been entangled in that legal battle since October, a fight that ultimately led them to suspend grants. The white owners of a logging company in eastern Oregon and the Mexican-American owner of a downtown Portland coffee shop contend that the state illegally shut them out.

The outcome of that litigation could determine whether the Oregon Cares Fund serves as an example for future efforts or becomes a fleeting experiment in social justice.

Legal observers, however, say the result of the court case probably won’t affect the money already paid out. And the fund’s organizers hail the program as a success despite the legal challenge because it provided relief to thousands who may have been unable to access that support through conventional programs.

Tyler TerMeer is the CEO of Cascade AIDS Project and a member of the Council of Trust, a group of 11 Black leaders from across the state who approved the grant applications. He said the fund provided a kind of help that’s usually inaccessible to Black Oregonians, even in normal times.

“This was a way of us coming together and supporting our community, not only to address what was happening during the pandemic,” TerMeer said, “but to create long lasting change, so these Black-owned businesses and Black people could continue to thrive.”

WHERE THE MONEY WENT

In total, fund organizers distributed $49.5 million across 31 Oregon counties:

  • 68% of the money went to nearly 15,600 Black individuals, plus more than 33,000 dependents.
  • 25% went to 488 Black-owned businesses.
  • 7% went to 103 Black-led nonprofits.

Numerous federal, state and local government entities set up other relief funds last year as well to aid businesses and individuals suffering from the pandemic.

But while many programs across Oregon were inundated with applications and managed to provide only small grants to a limited number of recipients, the Oregon Cares Fund handed out large grants to the vast majority of eligible applicants by specifically targeting support to Black Oregonians, who represent under 3% of the state’s population but are more than two times as likely as white Oregonians to contract COVID-19, according to the Oregon Health Authority.

The fund distributed an average of more than $34,000 per nonprofit, and nearly $26,000 per business. Five nonprofits and 11 businesses were awarded more than $100,000. Individuals received $1,000 grants, while families were given $3,000. More than $9 million is tied up in the legal case, while slightly more than $3 million went to administrative costs.

The Paycheck Protection Program, the federal government’s potentially forgivable loan program, is one of the few pandemic relief funds that could have offered businesses similarly large amounts of funding, but studies show that Black and other minority-owned businesses struggled to access those loans.

An analysis by American City Business Journals found that 65% of the program’s loan dollars last year went to majority-white neighborhoods, while 5% went to majority-Black neighborhoods. That followed trends seen before the pandemic. A separate analysis by the Business Journals found that Black businesses across the country received just 3% of loans distributed by the Small Business Administration’s 7(a) loan program in 2019.

The Oregon Cares Fund aimed to fill those gaps by providing large grants and giving businesses the flexibility to choose how they spent the money.

Eleshia Nath, the owner of Spoiled Sole Shoetique, an online women’s footwear company based in Portland, said she shut down her website last May after her sales plummeted and she was denied a loan by the Paycheck Protection Program. Nath, who was in the process of launching her own shoe line before the pandemic, said she lost her initial investment when a manufacturer she works with overseas shut down.

She was able to recoup those losses and begin once again moving forward with the new shoe line after receiving a significant grant from the Oregon Cares Fund in November.

“It changed a lot, it made it so I could move forward with a lot of things,” Nath said. “I haven’t seen or noticed other Black business owners designing high heels here in Portland, so I want to open that market.”

Some of the biggest grants went to large nonprofits and constructions companies. Dozens of restaurants, food trucks and caterers received funding as well, with eight receiving over $80,000. Nineteen churches and religious organizations received grants, including three that were awarded over $90,000.

Grants covered two months of lost revenue and provided funding to pay for pandemic-related expenses.

Grantees were reviewed by the fund’s Council of Trust and businesses were required to submit their registration numbers and financial documentation, but like the Paycheck Protection Program and other federal, state and local pandemic relief programs, the fund prioritized getting money out the door quickly instead of attempting to evaluate which people and organizations were most deserving.

As with the Paycheck Protection Program, then, some of the Oregon Cares Fund’s grants are sure to attract questions.

For example, Portland auto dismantler NW Metals received $90,550 from the fund. The business also received a $106,000 loan from the Paycheck Protection Program.

The company is facing a $77,419 state fine for violating environmental standards and other regulations following an investigation into a massive 2018 fire at its scrap yard.

NW Metals was still appealing the fine last year but the state had obtained a temporary restraining order to force the company to cease operating its metal shredder until it obtained an air quality permit. A phone number listed on the company’s business filings was not accepting voicemails.

“The goal of the Oregon Cares Fund for Black Relief and Resiliency was to provide financial relief as quickly as possible to Black Oregonians and Black-owned businesses and Black-led nonprofits that could show financial harm due to COVID,” coordinators of the fund said in a statement. “Very simply, we provided aid to those who needed it.”

THE FUND’S IMPACT

Kymberly Horner is the executive director of Portland Community Reinvestment Initiatives, a nonprofit that received $200,000 from the Oregon Cares Fund, the program’s largest grant.

Horner’s organization has worked for more than two decades to provide affordable homeownership programs and rental options to help Black Oregonians and other low-income families and individuals displaced by gentrification and discriminatory practices return to North and Northeast Portland.

However, the nonprofit found itself in a financially precarious situation last summer as its residents fell a combined $400,000 behind on rent and funding from donors dropped off.

While the organization received more than $500,000 from the Paycheck Protection Program, Horner still anticipated that she would have to make additional staffing cuts and shut down the organization’s resident service program, which offers support, such as counseling to first-time homebuyers, and has been providing food and other assistance to homebound residents throughout the pandemic.

The grant from the Oregon Cares Fund allowed the nonprofit to better navigate its operational costs and continue providing those crucial services.

“The Oregon Cares Fund was one of the first steps in really honoring what people have been talking about for the past couple of decades in terms of how policymakers and the community can correct past wrongs and make people whole again,” Horner said. “I believe this funding that was made available was a good show of faith that there is support to make sure that the most vulnerable population is taken care of during a pandemic.”

Horner’s organization was founded in the 1990s after an investigation by The Oregonian found that Dominion Capital had taken advantage of redlining by financial institutions in North and Northeast Portland by offering deceptive and risky loans to first-time home buyers, leaving many in danger of losing their homes.

But many other Black and immigrant families and businesses in North and Northeast Portland had been displaced long before then due to discriminatory development policies adopted by the city of Portland in the name of urban renewal, which led to the razing of hundreds of homes and businesses in and around the Albina neighborhood.

Life Change Church, which was founded in the 1960s, has remained in North Portland, even as the neighborhood has undergone widespread gentrification. However, several years ago, the church decided to open an auxiliary location in Gresham to better serve longtime churchgoers who had been displaced.

“The church plays a critical role in a gentrified neighborhood because there are still people that live there, there are still people that commute and are tied to what the neighborhood used to be,” said Mark Strong, the church’s lead pastor. “The church, not just our church, but churches in general are places of stability, places that the community can still gather and have an identity amongst each other.”

Strong recognized early in the pandemic that there would be an increased need for his church’s services. The church began putting together boxes of food, personal protective equipment and other supplies for those in need and worked with the Oregon Health Authority to offer drive-through coronavirus testing. They also started broadcasting services on local television to help congregants, especially those that are elderly or in nursing homes, stay connected to the community.

But at the same time, donations declined without in-person services, making it more difficult for the church to pay its bills. They secured a $109,889 loan through the Paycheck Protection Program before being handed another lifeline through a $177,369 grant from the Oregon Cares Fund.

“I think it’s a signal of goodwill to try to help a population that normally gets the short end of the stick,” Strong said. “I think it’s a good thing to try to empower and to help, to try to change some of the narratives that have gone on in Oregon toward African American people. My heart still hurts because I know there are a lot of other people who are suffering, people who aren’t African American who are hurting.”

LEGAL CHALLENGES

Back when Oregon lawmakers were considering seeding the fund last July, the legislative counsel’s office warned that setting aside funds for one race could be unconstitutional without strong data and evidence showing “past discrimination in the economic sphere.”

The U.S. Supreme Court has consistently required that race-conscious policies be subject to strict scrutiny, serve a compelling government interest and be narrowly tailored to be constitutional.

But a competing legal opinion from firm Schwabe, Williamson & Wyatt asserted that the fund – which was seeded with about 4.5% of the federal pandemic relief money Oregon received – was constitutional because Black Oregonians were suffering disproportionate harm from COVID-19, while receiving less aid than other groups from existing relief efforts. The firm is now defending The Contingent, the nonprofit tasked with administering the fund, against the pending lawsuits.

“The courts in our country have never been set up to do right by Black people,” said Nkenge Harmon Johnson, president of the Urban League of Portland and one of the people who lobbied for the fund. “We have had to show up with our best stuff to make it happen. It’s not like the Supreme Court in its wisdom said, ‘You know, it’s really a shame our schools are segregated,’ and sent their clerks out to find cases, so they could then decide to change the law. No, it was Black people, who had to get together, bit by bit, to put together the precedent to make justice happen.”

The Project on Fair Representation, led by conservative legal strategist Edward Blum, is funding the legal challenge to the fund brought by Great Northern Resources, the small logging company in John Day.

Maria Garcia, the owner of Revolución Coffee, is being represented by the Center for Individual Rights, a nonprofit that seeks to challenge “excessive government regulation and unconstitutional state action.”

Garcia defended her suit in an opinion piece in The Oregonian/OregonLive in December.

“My lawsuit is not against financial support for Black Oregonians,” Garcia wrote. “This lawsuit asks the state to open the opportunity to all Oregonians – including non-Black minority communities – to be able to receive much needed financial support.”

The state’s largest business groups and a collection of two dozen prominent Oregon Latinos have expressed support for the fund and condemned the lawsuits.

Barring a settlement, the Oregon Cares Fund could spend years in the courts as the novel program works its way through the judicial system. Ultimately, the Supreme Court may have to rule on whether Oregon’s unique approach passes constitutional muster.

To Johnson, though, the fund has already passed its test.

“The legacy of this fund is that Black people, Black families, Black business owners still have their heads above water because we were able to get them resources when they most needed them,” Johnson said. “The legacy of this fund is whenever we get on the other side of this state of emergency, we will still have Black-owned businesses in our state, we will still have Black families who are healthy, well and whole.”

Jamie Goldberg | [email protected] | @jamiebgoldberg