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In June, one of Multnomah County's largest nonprofit social-service providers asked the county for a $850,000 bailout to meet what it described as "a critical cash need."
It's unusual for a 50-year-old agency that helps the county care for children and seniors to admit it's struggling to pay its bills.
But what is really raising eyebrows around the county is that the nonprofit, called Impact NW, had recently chosen a familiar face as its next executive director: former County Chairman Jeff Cogen.
Just three years ago, four members of the current County Commission forced Cogen's resignation.
Now his new job depends on Multnomah County, by far the organization's largest source of funding, and the Portland Children's Levy, a property tax-funded city program that is run by his wife.
Cogen, 54, says Impact NW's relationship with the county will continue to be strong. He adds that he and his wife have ensured that the potential conflict of interest will not affect either organization.
"When I was in elected office, I made a big mistake, and I've paid the consequences," Cogen says. "But I'm still passionate about helping people, and I have had to re-create myself and find a way to do the same kind of work in a different way."
Cogen's career is now in its fourth act.
After working briefly as a lawyer, he ran the Portland Pretzel Company for six years. He then moved into politics in 1999, winning a seat on the county board in 2007 and moving up to chairman in 2010.
Cogen's future looked bright until an anonymous email landed in county commissioners' inboxes in July 2013, detailing his relationship with a subordinate named Sonia Manhas, a rising star in the county health department.
Questions about whether they'd conducted their affair on county time and whether it had benefited Manhas' career led to Cogen's resignation.
Cogen then worked for a signature-gathering firm and for a charter school before joining Impact NW, a nonprofit with an annual budget of $13.5 million. Impact NW's 400 employees provide social services to low-income children, families, seniors and adults with disabilities.
Longtime director Susan Stoltenberg, one of Cogen's strongest backers when commissioners called for his resignation, hired Cogen in January 2015 to prepare him to succeed her. He took over from Stoltenberg, who led Impact NW for 13 years, on July 1, right after Impact went to county officials with its financial problems.
The county is Impact NW's largest funder and paid the nonprofit $3.98 million in the 2015-16 fiscal year. A recent audit identified Impact's heavy reliance on county funding as a risk.
Another of Impact NW's large funders is the Children's Levy, which was created in 2002 by Cogen's mentor—and boss at the time—City Commissioner Dan Saltzman.
Lisa Pellegrino, who is married to Cogen, has served as executive director of the levy—which raises more than $10 million a year from property taxes—since 2004.
The levy has long been a major supporter of Impact NW, although that funding declined from $901,000 in 2012 to $479,000 for 2015—before jumping 40 percent for 2016.
That increase appears unrelated to Cogen's hiring. A buoyant economy last year provided the Children's Levy with an $8.1 million windfall, documents show, and the organization distributed that money to groups, including Impact NW, whose funding had previously been cut.
Pellegrino had no role in that decision, says Mary Gay Broderick, a spokeswoman for the Children's Levy. When Cogen joined Impact NW, Saltzman ordered Pellegrino to recuse herself from anything to do with the nonprofit.
Cogen says that approach will continue.
"Lisa made an affirmative effort to separate herself because of the potential conflict of interest," Cogen says. "We have been and will be very careful about that."
In spite of the strong support from the county and the Children's Levy, Impact NW is in some financial jeopardy.
The nonprofit has regularly reported operating losses—its tax returns show it has done so in four of the past five years—but those losses ballooned to $775,000 last year.
Last month, Stoltenberg, who was then still executive director, approached county officials with what she termed in a June 17 email "a critical cash need that threatens our very existence as your partner."
She asked the county for an $850,000 cash advance.
Stoltenberg tells WW the cash crunch arose because the agency grew too rapidly—but she also blamed the county's slow payment system, saying Impact NW is effectively floating loans to taxpayers sometimes for up to 60 days. "If what we're asking for is a bailout, it's bailing out a boat that the county put a hole in," Stoltenberg says. "Theirs is a faulty business model."
County officials rejected the bailout request and accused Impact NW of withholding information from the county in an April financial review.
"The explanation of Impact NW's current financial situation indicates that many of the challenges you are facing would have been known two months ago," county CFO Mark Campbell wrote in a June 29 letter to Stoltenberg. "The county will not make an advance payment."
Stoltenberg rejects Campbell's accusation. "There's no basis to the idea we're hiding anything," she says.
On July 1, Stoltenberg turned her $156,000-a-year job over to Cogen.
He says with layoffs and a larger bank line of credit, Impact NW will survive without the requested advance. "We've cut expenses significantly," says Cogen.
Multnomah County spokesman Dave Austin says commissioners are focused on the well-being of Impact NW's clients, not its personnel.
"The county's chief concern is that services to people in need aren't interrupted," Austin says. "If a contractor's cash problems become a barrier to providing services, we would look for other options. It's not about them, it's about the people we serve."
County officials will now temporarily pay Impact NW's invoices immediately rather than 10 days later, but made it clear the nonprofit needs to shape up.
"How long will we do this?" read the county's response to Impact NW's request. "Answer: this fiscal year only."
Willamette Week