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Cultural nonprofits won't receive pandemic relief funds from the Oregon Cultural Trust due to a bureaucratic issue.

Editor's note: A update on this story has been published. Find the updated story here.

A bureaucratic impasse is keeping cultural nonprofits across Washington County from receiving more than $2 million in federal coronavirus relief funding.

Last week, the Oregon Cultural Trust (OCT), a state agency that supports cultural arts organizations, announced it would be distributing nearly $26 million in grants to cultural organizations from the state's distribution of funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The funds were allocated to support cultural organizations such as theaters and museums that have been suffering from the impacts of the pandemic but haven't been eligible for other relief funds.

None of the 621 organizations who were designated to receive funds were in Washington County, however. Thirty-three Washington County cultural nonprofits applied to receive the funds during late August, with 23 being deemed eligible for grants.

But Washington County, the entity responsible for passing the money on to recipients, decided in mid-September not to distribute the grants.

County officials say they never received clarity from the state about who would be liable if organizations that received funds had actually been ineligible to receive them or if they misspent the money.

"It's a heartbreaking situation, and it's not a result that we are happy about," said Lisa Tattersall, manager of Washington County Cooperative Library Services.

WCCLS houses the Cultural Coalition of Washington County, the 12-member re-granting board of OCT in Washington County. Members of the coalition are appointed by the Washington County Board of Commissioners.

Tattersall said the Oregon Department of Justice, the agency charged with creating contracts for entities receiving federal funds through OCT, did not provide the county with a contract outlining the terms of how the funds could be spent by recipients and who would be liable to repay funds if a federal audit showed they were misspent.

Tattersall said the county still did not have a contract when the Board of Commissioners held its Sept. 15 meeting and needed to decide whether to accept funds OCT planned to provide to Washington County organizations.

Initially, the funds needed to be distributed by Sept. 15, but OCT extended that date to Sept. 30, Tattersall said.

Without a contract to review, the county wasn't willing to accept liability if the organizations, which were selected by OCT, ended up being ineligible for or misspent the funds, Tattersall said.

"It was basically our hair-on-fire priority for me for the last four to six weeks was to try to nail this down with the OCT and determine how exactly from a legal and financial perspective they were structuring this," Tattersall said.

One of the Washington County organizations that was selected to receive OCT funds was the Hillsboro Downtown Partnership.

Elisa Joy Payne, director of the partnership, said she applied to receive as much as two-thirds of the organization's budget through the OCT program to make up revenue lost as a result of the pandemic.

The Hillsboro Downtown Partnership, which serves as an economic development organization and promotes downtown Hillsboro businesses through events, hasn't received any other pandemic-related funding, Payne said. That's partly because the organization doesn't do any humanitarian work related to the pandemic, she said.

Without the OCT funds, the partnership might have to temporarily shut down until another funding source has been identified, Payne said. She added that she also risks losing funding for her position.

"I've been checking every day for this email about the funding, and then to open it up and see everyone is getting it but Washington County is pretty disheartening," Payne said. "It's super frustrating because we're struggling."

When the county learned of the grant program, officials tried to determine if DOJ attorneys could, on behalf of OCT, structure the contracts so that the county wouldn't be liable for misspent funds, Tattersall said. Conversations with DOJ attorneys indicated the state would keep the county as a subcontractor for the funds, making the county liable to recoup misspent funds, Tattersall said.

"The state was basically telling us, 'We think these (organizations) are eligible, but you're taking on the liability in case they're not, and you'll have to pay the feds back,'" Tattersall said. "We do want organizations to get the support and help that they need, but we also need to be responsible stewards of the taxpayer dollars that we have. The deadline was extremely tight."

Brian Rogers, director of OCT, agreed that the deadline to distribute the funds was tight, adding that the DOJ is currently charged with finalizing a substantial number of contracts related to federal pandemic relief funding.

"It's not that anybody in the process was holding back information from the county. It just wasn't finalized," Rogers said.

He said the contracts for the program were finalized soon after the county Board of Commissioners decided not to receive the funds.

There are six counties in the state, including Washington County, in which the county government serves as the fiscal sponsor for funds distributed by OCT, taking on legal liabilities. Other counties include Lake, Morrow, Crook, Klamath and Benton counties, Rogers said.

Each of those other counties opted to receive the funds from the program, despite the tight timeframe for seeing a finalized contract, Rogers said.

"My concern is the organizations there, and there are some great organizations in Washington County," Rogers said.

He added OCT would try to figure out a way to distribute the funds to Washington County organizations directly before the Sept. 30 deadline. OCT officials were not immediately available by phone Monday, Sept. 28, to say whether such a plan had been created.

Tattersall said the county also feared many of the small organizations that would have received the funds wouldn't have the legal bandwidth to ensure they were spending the funds in accordance with the many federal stipulations.

"I think we were trying to keep an eye out for the little organizations," Tattersall said.

At their Sept. 15 meeting, commissioners expressed concern for the organizations that were counting on OCT funds. Multiple commissioners said they didn't want to appear as though the county didn't want them to receive the funds.

"Leaving money on the table, money that could go to our community or community members or to organizations in our community, that's certainly not something any of us desire," said board Chair Kathryn Harrington. "But the situation just keeps getting more and more complicated."

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