Kitzhaber's Staff Aided Financially Troubled Former Client of First Lady Cylvia Hayes

The owner of the Pronghorn Golf Course in Bend was in deep financial trouble.

It was November 2011, and the golf course had been slammed by the recession that had battered Bend. The course's developer, California-based Hix Rubenstein, faced foreclosure on a $58 million bank loan and a $1.8 million loan from the state of Oregon.

The company's owner, Tom Hix, needed help in a hurry. If the state went through with its foreclosure, that could jeopardize his efforts to keep his golf course afloat.

So Hix turned to his former business consultant who was in a position to help bail him out: First Lady Cylvia Hayes.

Emails released to WW under the state's public records law show Gov. John Kitzhaber's office went to extraordinary lengths to intervene in the Hix case and to delay a scheduled foreclosure sale of Hayes' former client's property.

The state loan came from the Oregon Department of Energy, and officials there tell WW they cannot remember another example of Kitzhaber's office getting so deeply involved in the case of a troubled loan.

In the end, the intervention of Kitzhaber's office only delayed the foreclosure. But the efforts came at a key time in Hix's efforts to rescue his golf course. An email obtained by WW shows Hix sending Hayes a note of gratitude, along with Kitzhaber chief of staff Curtis Robinhold and business adviser Scott Nelson, for the governor's office efforts to delay the foreclosure.

"Curtis, Scott & Cylvia, I wanted to personally thank you for your help and cooperation with our situation with [the Oregon Department of Energy]," Hix wrote on Dec. 1, 2011.

The records show Hayes' influence in the governor's office on behalf of her private consulting clients ran deeper than has been previously known. Emails show Hayes was kept up to date on Hix's pressure on the governor's office to delay foreclosure.

The records also raise new questions about why Kitzhaber required so little oversight of the intersection of Hayes' personal business and her role as a public official. 

As WW has already reported, Hayes used her position as first lady and policy adviser to Kitzhaber to land private consulting deals with advocacy groups seeking Kitzhaber's support. 

Records show Hayes traded on her title, making speeches billed as first lady without disclosing she was being paid by her private clients. Records also show Hayes used state employees to book her travel and help administer her private consulting business.

Hayes declined to answer written questions about her involvement in the Hix foreclosure in 2011.

"My work for Hix Rubenstein ended well before John was elected, and I have no ongoing relationship with the company,” Hayes said in a statement to WW. She would not specify the date she last worked for the company.

Hayes denies she has engaged in conflicts of interest or any other wrongdoing.

"I comply with the very good advice given to me by the Governor's Office, which is designed and intended to protect the office and meet all applicable laws," Hayes said in her statement.

Hayes' long relationship with Hix's company is a matter of public record—and state documents show it continued at least through Kitzahber's 2010 campaign for governor. She listed Hix's company as a client in 2011 state disclosure forms and she still lists them as a client on the web site of her company, 3E Strategies, along with a testimonial from a Hix company executive.

"Our company enlisted the services of 3EStrategies to guide sustainable design on a number of our developments. Their breadth of understanding of sustainability, energy and green building concepts and solutions has been of great benefit to us,” wrote Neal Aronson, Hix Rubenstein Development Companies. "Their strong ability to guide innovating thinking in business models and strategies has been invaluable."

In September 2005, records show, Hix's company borrowed $1.8 million from the Oregon Department of Energy to install solar panels on a maintenance building at its Bend golf resort. The company made payments for years, paying its debt down to $1.2 million but after it defaulted in 2010, the Department of Energy offered a variety of settlement options but Hix could not pay.

The Department of Energy then scheduled a foreclosure sale for Dec. 1, 2011.

On Nov. 18, 2011, less than two weeks before the sale, records show, Hix called Kitzhaber's then-Chief of Staff, Curtis Robinhold.

On the following day, a Saturday, he followed up, copying Hayes on an email to Robinhold.

"I have attached the letter and additional supporting information," Hix wrote in his email to Robinhold. "After you've reviewed the attachments, please let me know your availability for a call."

But Robinhold apparently did not respond, and the tone of Hix's next communication contained a note of desperation.

"We are a week away from the scheduled foreclosure sale which will have dramatic impacts on the project and its employees," Hix wrote on Nov. 23, 2011. "This is an extremely urgent issue and I would appreciate any assistance you can offer."

Robinhold asked Nelson, a senior Kitzhaber staffer, to look into the matter. Meanwhile, Hix and his colleagues kept pressure on the state.

"As an employer of 190 Oregonians and contributor to the state economy, I am stunned by the cavalier, dismissive and inflexible attitude taken by this agency," Reece Fulgham, a Hix official, wrote to Nelson in a Nov. 30 email at 9:21 in the evening, less than a day before the scheduled foreclosure sale. "I would appreciate anything you could do on our behalf and, assuming it's not a laughable request, would appreciate the opportunity to speak to Governor Kitzhaber."

The next morning, Nelson, the Kitzhaber staff adviser, pushed the Department of Energy for a delay on the foreclosure.

"Is there any downside (as a matter of risk and protection of our rights) to an extension?" Nelson asked the Department of Energy loan officer in an email sent Dec. 1, 2011, at 5:36 am.

The agency caved in and rescheduled the foreclosure auction for 14 days later.

Then-Department of Energy director Bob Repine didn't like his agency being pushed around.

"It appears we have agreed to extend the sheriff sale," Repine wrote to Nelson at 8:43 am on Dec. 1, 2011. "This last minute effort by the owners using statements such as 'state not being responsible' are very concerning to me since, in my opinion, we have gone well out of our way to work with this group for over 2 years with little response from their side until the twelve (sic) hour of the sale."

Repine declined to comment. Robinhold is in Asia and could not be reached for comment. Nelson didn't respond to WW's requests for an interview.

If Repine was frustrated, Hix was thrilled with the Department of Energy's giving him a two-week extension on the foreclosure.

"Their agreement to extend the date of the sale is extremely helpful. I just wanted the three of you to know that I appreciate your efforts," he wrote to Hayes, Robinhold and Nelson on Dec. 1. "Hopefully, this extension will allow us the opportunity to re-cap[italize] the company and resolve the ODOE situation once and for all."

Emails show that Hix engaged in frantic negotiations over the next two weeks with two potential buyers, so the delay gave his company opportunities to better its financial position it otherwise would not have had. Plenty of businesses come to the governor's office seeking help of various kinds but few can trade on a long-time business relationship with a first lady who also advises the governor.          

Neither current Department of Energy director Michael Kaplan nor other agency officials could point to another example of the governor's office intervening with the agency on behalf of a borrower.

"It's really hard to say," Kaplan told WW.

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