NeighborWorks Umpqua, a Roseburg nonprofit agency that over the decades has helped thousands of low-income families with housing, economic assistance and other forms of aid, is facing some financial issues of its own.
The agency, which two weeks ago abruptly parted ways with its top two executive officers, has been losing money over the last few years, including a deficit of more than $1.8 million in 2019 alone.
NeighborWorks Umpqua was established 30 years ago under the name Umpqua Community Development Corp., and provides low-cost housing and social services to residents in Douglas, Coos, Curry, Jackson and Josephine counties. On Feb. 26, the agency sent out a notice saying that CEO Merten Bangemann-Johnson and chief operating officer Trisha Ingalls had left the nonprofit. The notice did not give a reason for the departure or mention the two executives by name.
A review of NeighborWorks Umpqua’s tax records obtained by The News-Review shows that the agency spent more money than it received in every year but one between 2015 and 2019.
Those tax records show the following:
- Between 2016 and 2019, NeighborWorks ran up deficits of $3.5 million.
- Total liabilities nearly tripled in four years, going from $6.1 million in 2015 to $17 million in 2019.
- Employee salaries, benefits and other compensation went from $2.4 million in 2018 to $3.9 million in 2019, a 62% increase. Total revenue went up 6% in that same time period.
NeighborWorks Umpqua has hired a recently retired CEO of a nonprofit in Northern California to be interim CEO, and brought back a former director of the agency until it finds a permanent CEO. NeighborWorks Umpqua is also looking for a chief financial officer; it has been without one since May.
Randall Mason, who is chairman of the board for NeighborWorks Umpqua, said in addition to retaining the two retired CEOs, the board is contracting with a financial consulting firm to oversee financial management until the new CFO is in place.
“The NWU board has put together a strong plan to not only continue current operations, but to ensure operations into the foreseeable future,” said Mason, who has been on the board since 2017.
Mason said that in 2015, the NeighborWorks Umpqua board embarked on an aggressive, five-year strategic plan to guide the agency into the future. Part of that plan called for the agency to “rapidly increase” the number of affordable housing units in the five counties it serves.
“To achieve the rapid addition of new housing units, NWU returned to the property development business in a big way,” Mason said.
The agency began to build and renovate properties which it could then make available as affordable housing, he said. But unlike developers who work at market rates, agencies like Neighborworks Umpqua that provide affordable housing cannot recoup their costs as quickly, Mason said.
“In this case, we have expenses such as land cost, labor, plans, permits, etc. that are all paid for ‘up front’ before the building is actually built, and the final ‘value’ of the building is actually realized, sometimes multiple years down the road,” he said.
Mason also said this same dynamic affects the agency’s bottom line, since all of the expenses come many years prior to actually receiving any income, including a developer fee that is payable only when the development is completed and occupied.
Put all that together and the result is what you see in the tax records: an increase in liabilities and expenditures and a lag in revenues and net worth, he said.
“We wind up having negative operating statements in the years prior to receiving and accounting for any real income,” said Mason, who is a senior relationship manager with Rogue Credit Union.
NeighborWorks Umpqua was established in 1991 as the Umpqua Community Development Corp. The organization’s primary mission was to develop affordable housing in Douglas County. In 1999, the agency added economic development to its mission and expanded its service area to include more of rural Oregon.
Over the years the agency expanded its geographic reach and scope of services. In addition to the main office in Roseburg, NeighborWorks Umpqua also has an office in North Bend.
The agency continues to get widespread community support, especially financially. In 2019, a total of eight large contributors gave the agency more than $3.6 million. Those contributors included Neighborhood Partnerships in Portland, which provided about $2.2 million, and the Ford Foundation in Roseburg, which gave $124,000.
NeighborWorks Umpqua had $54 million in total assets and $37 million in net assets in 2019, tax records show.
That same year the agency owned more than 600 affordable housing units, helped preserve 50 rental homes and helped another 49 new home buyers get their homes. The agency also helped repair 33 owner-occupied homes and kept 30 homes from being foreclosed on, according to its website.
Tax records show the agency owns more than a dozen properties in the counties it serves, include housing in Myrtle Creek, Canyonville, Coos Bay, North Bend and Roseburg.
NeighborWorks Umpqua’s newest apartment complex is the 68-unit Deer Creek Village, located east of downtown Roseburg. Renters should start moving in soon, providing housing to low-income veterans, individuals, and small families. Apartments range from studio to one and two-bedroom units, with rents ranging from $305 to $795 a month.
NeighborWorks Umpqua also recently got $4.1 million in low-cost loans and grants from the state to address affordable housing needs in Douglas and Coos counties.
The nonprofit is using $1.6 million of the funds towards the renovation of the Grand Apartments, a former hotel in downtown Roseburg. In addition to the building renovations, the agency will reserve 12 units for people who are unhoused.
NeighborWorks Umpqua is using the balance of the grant funds, about $2.5 million, toward the renovation and preservation of a 39-unit apartment complex in Coquille that provides affordable housing for lower-income seniors, working families and individuals with disabilities. The agency announced last summer that it will be investing a total of $7.8 million on the project.
NeighborWorks Umpqua also operates Heartwood ReSources, which sells recycled building materials out of a 15,000 square-foot warehouse located at 3495 Highway 99 South in Roseburg.
Mason said he is confident the community support, including the financial assistance from foundations and government agencies, will continue. He said within 48 hours of the announcement of a change in leadership, NeighborWorks Umpqua was contacted by the foundations and government agencies it gets funding from.
“It is important to note what they did not say,” Mason said. “They did not ask how they could get their investment/grant/loan back, but rather, they all said ‘what can we do to help?’”
The first order of business for NeighborWorks Umpqua is finding replacements for Bangemann-Johnson and Ingalls.
Bangemann-Johnson had been CEO for just less than six years. He brought Ingalls on board in 2018 as director of operations. She was promoted to COO after nine months, and had been with the agency just less than three years.
NeighborWorks Umpqua has hired an East Coast recruiting firm to do a national search for both a CEO and a CFO. The agency hopes to fill both positions within a few months.
In the interim, NeighborWorks Umpqua named John Fowler as its CEO. Fowler said he had just retired on Dec. 31 as CEO of People’s Self-Help Housing, a nonprofit agency in San Luis Obisbo, California. He had been there 10 years.
The board has also retained the services of Betty Tamm, who had been the executive director of NeighborWorks Umpqua — including when it was called Umpqua Community Development Corp. — for nearly 20 years before retiring in May 2015.
“The Board asked me to come in and help provide a bridge while they search for new leadership,” she said. “It is really short term as I have my own business and I enjoy being outdoors on beautiful spring days like this.”
Mason said Fowler and Tamm are “recognized leaders” in the community development and affordable housing arenas, and are reaching out to the various funding agencies, vendors and other business partners that work with NeighborWorks Umpqua.
“These individuals not only provide a strong interim leadership for our company, but are recognized within the industry as individuals that can produce,” Mason said. “With their guidance, we have developed a short and long-term plan to strengthen NWU and have provided that plan to our partners.”
He also said NeighborWorks Umpqua will continue to focus on its core mission, which is providing opportunities to help people better their lives.
As an example, he cited a tenant of one of the agency’s single-family residences that just requested to buy the home. Mason called the purchase a success story that involved providing affordable housing to the tenant and helping them learn about home ownership and good economic habits.
This person will now own their home and the proceeds from the sale will help NeighborWorks help more people, he said.
“These ‘little successes’ are the things that keep us on the board of directors, as well as our dedicated staff, working at this endeavor that we call community development and housing at NeighborWorks Umpqua,” Mason said.