PORTLAND, Ore. (KATU) — After coming under fire over a lawsuit alleging financial mismanagement, Sunstone Way — a nonprofit that manages more than 400 shelter beds in Multnomah County and Portland — will shut its doors by the end of June.
The announcement of the closure came after the nonprofit’s former finance director filed a $4.5 million lawsuit against Sunstone Way a month ago, alleging mismanagement and the wasting of public dollars by the organization’s top executives.
Sunstone currently holds shelter contracts with both the city of Portland and Multnomah County.
READ MORE | Portland homeless service provider Sunstone Way to close amid financial issues, lawsuit
It operates three shelters in the county with a total of 223 shelter units, which may include multiple beds per unit. Those county shelters are Market Street with 120 units, Delta Park Motel Shelter with 61 units and Rockwood Bridge Motel with 42 units. Market Street was already slated to shutter at the end of March because the building lease was set to expire.
The nonprofit operates roughly 169 shelter units for the city of Portland, which may include multiple beds per unit, at Weidler Village (38 units), SW Naito Village (35 units) and Centennial Neighborhood Overnight Shelter (96 beds).
The county’s Homeless Services Department has already announced that 10 shelters with a total of 675 units are on the chopping block amid a budget shortfall. Delta Park and Rockwood were not on that list, but county commissioners say they are looking at ways to potentially substitute some of the shelters set to close with the Sunstone facilities that are shutting down. It remains unclear whether those substitutions will result in the same number of units, as the outcome depends on cost per unit.
The city of Portland has not yet announced a plan for the shelters Sunstone Way operates under its contract.
"The news of Sunstone Way’s planned closure was shared with the City of Portland’s Shelter Services team yesterday afternoon. We will be evaluating options for continuity of service in the coming days and weeks but have no further updates at this time. We remain focused on finding ways to minimize the impacts of this change to staff and participants as a first priority," a spokesperson for Portland Shelter Services said in an email.
The nonprofit will close at the end of the fiscal year, meaning all invoice reimbursements under its city and county contracts will be finalized. The county auditor’s office is in the midst of a fiscal review of Sunstone as part of standard contract monitoring.
The nonprofit, formerly known as All Good Northwest, was flagged for unallowed expenses in 2022 after the county auditor’s office substantiated a hotline report made against the organization.
Despite the issue, the Joint Office of Homeless Services — now known as the Homeless Services Department — continued to work with the nonprofit, which rebranded as Sunstone in 2024.
Multnomah County Commissioner Shannon Singleton, who served as interim director of the Joint Office in 2022 when the county auditor’s office flagged the issue, said she does not regret the decision to approve additional contracts for Sunstone.
"As the joint office interim director, I don't regret that decision. I think that this program was serving some really folks in high need and that I don't think that when somebody makes one mistake, we should cut them off and say this no longer works. I do believe in giving people opportunity to improve. But should they not be able to improve, then absolutely we should stop that kind of contract," she said. "That's not just about fiscal monitoring. If people aren't meeting the outcomes, that also needs to be accountability."
Singleton did note that as a county commissioner, she will be looking at ways to increase the frequency of contract monitoring.
"I think that the way that fiscal monitoring works on county contracts is a process where every contract gets monitored, not every year, but through a rolling basis. And so, I think it is worth us looking at. Is that process actually functional? Do we need to do that more regularly?" she said.
County Commissioner Julia Brim-Edwards also called for increased scrutiny and contract monitoring. She said county executives, including the chair and leaders of the Homeless Services Department, should not have signed additional contracts with the nonprofit after the auditor flagged the issue in 2022.
"We've known since you know 2022 that Sunstone, at the time All Good Northwest, had expenses that weren't allowable that they were submitting. So, we also, there's due diligence that needs to happen on the county's part of making sure that we are protecting taxpayers' resources as well as ensuring that people who are in those shelters are not exited to the street," she said.
The union representing Sunstone Way Employees, AFSCME Local 1790, issued the following statement on the closure:
"AFSCME Local 1790 workers at Sunstone Way remain dedicated to our participants and the work that we do. Our clients deserve the highest standard in work quality and living conditions which only union labor can guarantee. Therefore, the union is actively advocating for these shelters to continue providing union jobs and services, regardless of who manages them."