First Lady Inc.

Cylvia Hayes may be the most influential first lady in Oregon history.

Since Gov. John Kitzhaber took office in January 2011, Hayes, 47, has played a central role in his administration. She keeps a desk in the governor's office, attends senior staff meetings and communicates regularly with agency directors.

She travels on trade missions to Asia and Europe not just as the governor's

partner, but as an important player conferring with other leaders. The bio she provided to the National Governors Association highlights her role as a "policy adviser to Gov. John Kitzhaber on the issue of clean energy and economic development."

"We haven't seen anyone quite like her before in that position," says Charles Johnson, an Oregon historian and biographer of the late Gov. Bob Straub. "I don't remember others having an office in the Capitol or being involved in policy, except very informally."

Hayes does not draw a state paycheck. But Kitzhaber's general counsel, Liani Reeves, told WW in August that under Oregon law, Hayes is considered a public official. That means her actions as first lady and as an adviser to Kitzhaber are governed by state ethics laws.

Hayes also has continued her outside work as a private consultant on energy and economic issues. Like the spouses and partners of other elected officials, she is pursuing her own career.

Public records and dozens of interviews with people who have worked with Hayes paint a complex picture. Hayes emerges as a strong, high-profile leader who moves effortlessly between her position as a public official and the work she performs as a private consultant.

Her dual roles have created tension in Kitzhaber's office and have raised concerns that she may be violating provisions ORS Chapter 244, the state's government ethics law. The law prohibits public officials from engaging in conflicts of interest, from using their positions for private gain and from using public resources for personal benefit.

As a public official, records show, Hayes has pushed for economic and energy policies while accepting payments from private advocacy groups seeking to influence those same policies.

In addition, Hayes has regularly directed her state-paid assistant to do work for her private consulting business. And she has used her title as first lady

and as adviser to the governor at events when she was not representing the state but instead appearing as a paid consultant.

For example, Hayes last year spoke at a Maryland conference on sustainable economic development. She was billed as first lady of Oregon, even though she was appearing as part of a contract she had received from the conference's sponsor, a New York advocacy group called Demos.

Records show Hayes last year signed new consulting contracts worth at least $85,000 for work that overlapped with her work in the governor's office.

That's more than three times the income Hayes reported on the 2012 tax return, which she provided to WW.

"If she uses the title 'first lady' or 'adviser to the governor' when she's consulting for private companies, that's problematic," says former Oregon Supreme Court Justice William Riggs. "In effect, she's selling her special relationship with the governor to clients from whom she's getting a fee. It smells bad."

Hayes declined to be interviewed for this story. In response to WW's written questions, Hayes denied any wrongdoing.

She said questions about her consulting work are unfair and miss the point.

"I do it because I love it, and because I believe that I have a contribution to make to help build a clean economy and a more sustainable future for Oregon," Hayes said in a statement to WW about her consulting work. "It's the same reason, as first lady, I have championed building prosperity and expanding opportunity—I believe in it."

Kitzhaber also declined to be interviewed for this story. His spokeswoman, Rachel Wray, said Hayes' work as a consultant predates her work in Kitzhaber's office.

"In an abundance of caution, the governor's office established a proactive, rigorous review of her professional contracts to avoid any potential conflicts of interest," Wray said in a statement to WW.

Polls show Kitzhaber, 67, is likely to defeat his chief opponent, state Rep.

Dennis Richardson (R-Central Point) in the November election, and is headed for a fourth term as Oregon governor.

Kitzhaber has won praise for cutting state pension costs and increasing the number of Oregonians with health insurance. But he's struggled to implement his other big initiatives, leading to the $250 million Cover Oregon debacle, a lack of progress on school reforms, and an inability to deliver the Columbia River Crossing project. The governor's inability or

unwillingness to keep Hayes' potential conflicts of interest in check is another example of his management failures.

Hayes grew up poor in the Cascade foothills east of Seattle. In the story she often tells, her mother fled Oklahoma after leaving Hayes' father. Her family lived for a time in a shack in Carnation, Wash., without electricity or running water.

"We would bathe in Old Man Green's pond up the road," Hayes said in a speech at the University of Vermont in July.

Hayes left home at 16, worked as a dental assistant, machine operator and at a chicken plant before putting herself through the Evergreen State College in Olympia. She graduated in 1994 at age 26 and went on to earn a master's degree in sustainability from Evergreen three years later.

In the late 1990s, she relocated to Bend, and in 2002 she ran for office as a Democrat in a bid for the state House of Representatives. She lost to incumbent Rep. Ben Westlund (R-Bend).

She met Kitzhaber around the time he was finishing his second term as governor. Soon after Kitzhaber left office in 2003, hefiled for divorce from his wife, Sharon. Hayes and Kitzhaber soon became a couple.

Hayes worked in Oregon's booming sustainable energy industry, helping clients understand state laws and secure public funding. In 2006, Gov. Ted Kulongoski appointed her to a lead a renewable energy task force.

"She's great to work with and a tremendous leader," says Mike McArthur, executive director of the Association of Oregon Counties, who co-chaired the task force with Hayes.

One of her business deals created a big political problem for Kitzhaber in 2010, when he was running for governor after eight years out of politics and facing a strong challenge from Republican Chris Dudley.

In 2009, Hayes' firm competed for a consulting contract given out by the Oregon Department of Energy. Her firm came in last in the rankings. State officials, aware of her relationship with Kitzhaber, guaranteed her firm got some of the work anyway.

The deal triggered a criminal investigation by the Oregon Department of Justice in the middle of Kitzhaber's campaign against Dudley. Hayes was never accused of wrongdoing. But the investigation, which finished after Kitzhaber took office, found state officials had steered a $60,000 contract to Hayes' firm.

When Kitzhaber took office in January 2011, he told The Oregonian that Hayes would assume "the roles and responsibilities of the first lady," although they were not married. (In August, Kitzhaber and Hayes announced their engagement. Kitzhaber has been married twice; court records show Hayes has been married three times.)

Kitzhaber's staff—aware of the controversy about Hayes and her consulting work during the campaign—pushed for her to find work away from state government. In early 2011, she took a job with Rural Development Initiatives, a Eugene nonprofit. Craig Smith, the nonprofit's executive director, says Hayes left about six months later because of a lack of funding.

Hayes quickly moved beyond the traditional, often ceremonial role of first lady. In the 2011 legislative session, she pushed for the Cool Schools energy retrofit program, the centerpiece of Kitzhaber's economic agenda, and also lobbied the Legislature on poverty issues.

"Cylvia has had a long-standing passion not just for the environment, but for trying to make people's lives better through environmental policy," says Multnomah County Commissioner Jules Bailey, who as a state legislator and consultant has known Hayes for more than a decade. "She's brought that passion to her role as first lady."

In 2011, Kitzhaber named Hayes to a seven-member team charged with writing his 10-year energy plan, which his administration touted as a path toward Oregon's energy independence. Hayes also gave speeches as first lady and policy adviser about energy issues.

She also continued her consulting work.

"As soon as John was elected governor, I intentionally changed my business model to decrease the possibility of conflicts of interest," Hayes said in her statement to WW. "Since becoming first lady, I have chosen to work only for nonprofit clients, not for governmental entities or for-profit companies."

There are two problems with that assertion. First, under state ethics law, it makes no difference whether Hayes works for a nonprofit or for-profit client.

Second, it is not true.

State disclosure forms Hayes filed in 2012 show she signed a new contract with Waste to Energy Group, a for-profit California firm. The company hired Hayes in July 2011 to help secure a contract to convert methane from a Bend landfill into energy. (Kitzhaber's energy plan, which was still being written at that time, would later emphasize the importance of alternative fuels.)

In her statement to WW, Hayes also denied ever using publicly paid staff to assist her private consulting business.

That's also not true.

In a July 20, 2011, email obtained by WW under a public records request, Hayes directed her state-paid assistant, Mary Rowinski, to schedule time with Waste to Energy executives. Hayes' client wanted a meeting July 25, 2011. "Please add to Google calendar," Hayes wrote to Rowinski.

That was a small request. But state law is clear: Public officials cannot use taxpayer resources for their private business. Over time, according to people familiar with Hayes' schedule, she routinely directed Rowinski to book hotels and make plane reservations for her private consulting work.

Rowinski didn't respond to WW requests for an interview.

Prior to Kitzhaber's election in 2010, Hayes had typically worked on local issues and on relatively small contracts. Starting in 2009, records show, she helped Redmond Municipal Airport acquire business energy tax credits, for which she was paid $4,725. Between November 2010 and July 2011, she worked for the Portland engineering firm HDR Inc., helping with communications about planned watershed improvements in Bend. For that, HDR paid her $4,875.

In 2013, the size of Hayes' private consulting contracts increased. One new client was Resource Media, a Seattle nonprofit that promotes sustainability.

In March 2012, Resource Media reached out to Kitzhaber's office to promote an initiative called the Pacific Coast Collaborative Action Plan on Climate and Energy, a joint venture among California, Washington, Oregon, Alaska and British Columbia.

Sources say Hayes was directly involved in this initiative in her public role as adviser to the governor. In March 2013, she assumed a private role as well, signing a $20,611 consulting contract with Resource Media.

Resource Media president Scott Miller declined to be interviewed about Hayes. "Generally, we don't discuss our past work with clients and partners," Miller said in a statement.

Resource Media arranged for Hayes to speak at a May 3, 2013, conference on ocean acidification at the University of California, Irvine. The conference program called her a "clean economy expert and first lady of Oregon." There was no disclosure she was being paid by Resource Media.

Hayes provided the same bio for another Resource Media event. Sources say Rowinski booked Hayes' travel for the event, a June 5, 2013, panel called "A Focus on Coastal Communities: Local Responses to Global Challenges" at the Capitol Hill Ocean Week conference in Washington, D.C.

Energy Foundation is a San Francisco nonprofit that encourages governments to address climate change.

In her public role as a Kitzhaber adviser, Hayes worked with Energy Foundation. Along with the governor, she spoke at a Jan. 13, 2012, Energy Foundation event in Seattle called the West Coast Clean Economy alignment.

A year later, Hayes pitched Energy Foundation to hire her as a private consultant.

On Jan. 3, 2013, Hayes sent an email to Katie McCormack, the group's Western region program director.

"I would like to talk to you about the 2013 work and getting it funded," Hayes wrote to McCormack. "Do you have some time in the next week or so?"

In May 2013, Hayes signed a $40,000 contract with Energy Foundation.

Eric Heitz, Energy Foundation CEO and co-founder, said in a statement: "In 2013, we contracted with 3E Strategies [Hayes' consulting firm] to develop

communications about the benefits of a clean energy economy, arrange speaking engagements on the issue, and write and share a collection of clean energy success stories. [Hayes] is respected and effective, and we're proud of the work she did for us."

In April 2013, the Oregon Legislature was wrestling with cuts to the Public Employees Retirement System, possible tax increases and a contentious debate over the Columbia River Crossing project.

In the middle of this, Kitzhaber and Hayes flew to a conference called Global Well-being and Gross National Happiness Lab in the Himalayan nation of Bhutan.

Paid for by the German government, the trip was controversial. Critics said Kitzhaber should not have traveled while lawmakers were struggling with important issues.

What the public hasn't been told is that Hayes used the trip to help land another consulting contract.

In her public-official role as adviser to the governor, Hayes had been working with an organization called Demos, which promotes a new method of measuring economic output called the Genuine Progress Indicator.

In April 2012, Kitzhaber and Hayes attended a Portland State University session on the topic, and later that year appeared at a Demos conference in Maryland.

Lew Daly, director of policy and research for Demos, met with Hayes and Kitzhaber in Bhutan. Shortly afterward, Hayes landed a $25,000 contract with Demos.

Daly acknowledges he met with Hayes in Bhutan, but it had nothing to do with her hiring.

"In this case, Ms. Hayes was hired for her extensive experience as a consultant on issues of economic and environmental sustainability," Daly said in an email to WW. He added that prior to hiring Hayes, "Demos has not worked with partners of other elected officials."

While on contract to Demos, Hayes attended conferences and delivered speeches across the country. She was introduced not as a paid consultant to Demos but as Oregon's first lady. The work included a trip to Baltimore, where she moderated a Demos panel that featured Maryland Gov. Martin O'Malley and Columbia University professor Jeffrey Sachs.

By the summer of 2013, Hayes' private work was raising concerns inside Kitzhaber's office—which was delicate given that she was the governor's partner. During a speech she gave at PSU last April, Hayes acknowledged as much.

"A couple of years ago, I was having a tense conversation with a couple of John's—aka, the governor's—senior staff," Hayes told her audience. "We were having a conversation about how I would contribute to these issues while being in this awkward and bizarre role of first lady. I was feeling very thwarted by that. I was getting some pushback from the guys, and one of them said, 'You know, when you work for the governor…' And I said, 'I don't work for the governor, I work for the earth.'"

Oregon law requires public officials such as Hayes to declare real and potential conflicts of interest.

In August 2013, months after she signed her consulting deals and after pressure from Kitzhaber's staff, Hayes filed formal disclosures of potential conflicts of interest regarding her private contracts with Energy Foundation, Resource Media and Demos.

Kitzhaber's office released the disclosures to WW after a request under Oregon's public records law.

In response to the disclosures, then-Kitzhaber chief of staff Curtis Robinhold and general counsel Liani Reeves told Hayes in writing they were satisfied her contracts presented no actual conflicts of interest.

Robinhold and Reeves did warn Hayes against using public employees to schedule meetings for her business, and they reminded her not to use her public position for private gain.

How Hayes used or traded on her title is important.

Kitzhaber has faced far stricter guidelines from the Oregon Government Ethics Commission over the issue of paid speeches.

In December 2012, Kitzhaber sought advice from the commission about accepting speaking fees while serving as governor. "The commission would caution the governor against advertising the governor's current public position while obtaining or attempting to obtain paid speaking engagements," the commission advised Kitzhaber in January 2013.

Kitzhaber sought the advice before seeking speaking engagements. (Records show he's made one paid speech since then.) Hayes didn't declare her potential conflicts until after signing the contracts and using her first lady title in her consulting business.

Robinhold and Reeves told Hayes she could continue to use the first lady title only with her current clients. They also wrote her title "may not be used to market the work you are doing on behalf of the private company" and added "you may not do your outreach work as first lady."

Hayes continued to use the title with her clients.

For example, Hayes published an article in the September/October 2013 edition of the journal Aquaculture North America titled "Pacific Coast shellfish industry is canary in coal mine." In the article, she warned about ocean acidification, an issue she had been hired by Resource Media to publicize.

Hayes' bio for the article described her as CEO of 3E Strategies, "first lady of Oregon" and "policy advisor to the governor on the issues of clean energy and economic development."

The following month she penned an article for the Huffington Post, promoting the Pacific Coast Action Plan on Climate and Energy. That's the carbon-reduction effort by West Coast states and British Columbia, promoted by Resource Media.

In the Huffington Post article, Hayes identified herself as "first lady of Oregon; founder/CEO, 3EStrategies" and made no mention that she was paid by Resource Media.

Hayes also continued to mix her role as adviser to the governor and consultant to Demos.

In October 2013, Hayes circulated a draft pitch to state officials. She was seeking $100,000 in foundation funding for a project to be led by her and Demos, that would create an Oregon Genuine Progress Indicator. Matt Shelby, a spokesman for the state Department of Administrative Services, says the pitch did not get grant funding, but the state did hire a staff person to develop an Oregon GPI.

Patrick Hearn, who spent 16 years as director of the Oregon Government Ethics Commission, says if Hayes was given her private consulting contracts because of her role in the governor's office, that could violate state ethics laws.

"If you can say she would not have been able to gain those contracts but for her public role, it appears that would violate prohibitions against using your public position for financial gain," Hearn says.

Dick Simpson, a political science professor at the University of Illinois-Chicago and an expert on public corruption, says it doesn't matter what private interests hired Hayes, whether it was a nonprofit or for-profit corporation.

If her client was seeking to influence policy in areas where she was already working for the governor, Simpson says, it would put Hayes and Kitzhaber in a difficult position.

"That sounds like a conflict of interest," Simpson says. "Whether it violates the law, I don't know, but it's to be avoided."

Ultimately, it remains Kitzhaber's responsibility under state law to police the potential conflicts of interest in his office, including those of the first lady.

As Kitzhaber prepares for his final term as governor, he and Hayes have discussed her taking a larger role in his administration. A memo circulated among staff this year suggested she might have a full-time chief of staff and go on the state payroll.

In speeches, Hayes has made clear that she sees Kitzhaber and herself not only as life partners, but as partners in working on big problems such as climate change that Washington, D.C., won't address.

"Our federal government is off the rails," she said in an August 2013 speech in

Vermont. "This is one of the biggest reasons that John decided to run for governor and I decided to jump into this bizarre position of being first lady. John and I jumped in because we do believe we are at a point where incrementalism isn'€™t going to cut it anymore."

Dividends

The Oregon Business Council pays for the first lady's spokesperson.

Last year, a leading Oregon business group spent $35,000 to provide first lady Cylvia Hayes with a spokesperson, at the same time Gov. John Kitzhaber championed the group's agenda.

In 2013, Hayes asked the Oregon Business Council, which represents some of the state's biggest employers, for financial help to publicize her work on the Oregon Prosperity Initiative.

The OBC was working on a similar initiative, and its president, Duncan Wyse, said Hayes asked if the OBC would help. "She was seeking support for her work," Wyse says.

Last fall, Wyse's group earmarked a $35,000 grant from the Northwest Area Foundation to hire Therese Lang, a public relations consultant, to work as Hayes' spokeswoman. Lang no longer works for Hayes and didn't return WW's calls.

Hayes told WW she sees no conflict of interest in her pursuit of financial help from the OBC while Kitzhaber promoted the group's agenda, known as the Oregon Business Plan.

"[Gov. Kitzhaber] believes the Oregon Business Plan is the right direction for Oregon, as should be evident by every speech he's given over the past five years," Hayes tells WW in a statement. "Yes, I share a commitment to reducing poverty in Oregon with my fiance and with executives from some of the largest companies in Oregon. That's not a conflict. That's common sense, and maybe even common decency."

Since returning to office in 2010, Kitzhaber has relied on the OBC to help promote many of his top priorities.

The OBC's Wyse helped design Kitzhaber's 2011 education reforms. The group's business plan called for cutting benefits from the state's Public Employees Retirement System, and pushed for building the Columbia River Crossing project.

Kitzhaber makes no secret of his reliance on the OBC. Asked to explain his economic development policy, Kitzhaber recently told WW, "The Oregon Business Plan is my economic development plan."

Until now, neither OBC nor Kitzhaber has publicly disclosed the financial role OBC played in supporting Hayes' work in the governor's office.

The arrangement is unusual, and it's not clear whether it's legal.

The OBC allowed the state to avoid a cost and provide Hayes with greater visibility for her work.

State law prohibits any group with a "legislative or administrative" interest in a public official's work from giving a gift to that official of more than $50. And OBC paying for a public relations specialist for Hayes' work also raises questions about whether the governor's office used the arrangement to sidestep public hiring or contracting rules.

Todd Donovan, a political science professor at Western Washington University, says the appearance of an advocacy group hiring a spokesperson for Kitzhaber's initiative is troubling.

"The question there is, does it look like a quid pro quo?" Donovan says. "Even if it's not, it's a major problem for a business group to hire somebody who's effectively filling a spot on the governor's staff." NIGEL JAQUISS.

Willamette Week