A high-profile project that combined the resources of Portland City Hall, Portland Public Schools and the Native American Youth and Family Center has collapsed.

When it was proposed more than four years ago, NAYA's Early Learning Academy was supposed to help address the chronic struggles of Portland's Native American students.

The academy, slated to be built next to 40 affordable new apartment units in the East Portland neighborhood of Lents, was to offer day care and schooling from infancy through kindergarten.

The city of Portland helped launch the project as part of a $5 million bailout for the school district. Portland Public Schools has now spent more than $175,000 on contractors preparing the design and plans. The school district is on the hook for another $360,000 to put in sidewalks, streets and streetlights, even if no school is ever built.

Now WW has learned NAYA has halted work on the early learning center because the nonprofit doesn't have the money to build it or the managers to make it happen.

"The Board of Directors of NAYA Family Center has made the difficult decision to temporarily withdraw from the project," writes interim executive director Tawna Sanchez in a May 23 letter to PPS.

Sanchez says the project is being suspended because of turnover in NAYA's leadership. Executive director Matt Morton left in January, and development director Oscar Arana left in February.

Sanchez says in her letter the project might resume once NAYA fills those positions, but she gives no estimate when that might be.

The new troubles for the project, located at the school district's shuttered Foster Elementary School in Lents, are likely to reignite questions whether the deal between PPS and NAYA ever made sense.

Nobody denied the need was real. Native students fare poorly in Portland Public Schools. By the end of high school, the achievement gap between white and Native American students is stark: Just 51 percent of Native Americans graduate on time from PPS high schools, compared to 77 percent of white kids. Trying to narrow that gap by focusing on early childhood education made sense.

But an apparent conflict of interest clouded the deal. While NAYA's then-executive director, Morton, served on the Portland School Board, the district entered into the risky multimillion-dollar project with his thinly financed nonprofit. Although Morton abstained from voting on the issue, the appearance of favoritism made critics uneasy ("Losing Ground," WW, Nov. 19, 2013).

"[I'm] shocked to hear that this is not going to happen," says Teresa McGuire of Restore Education Before Buildings, a watchdog group that raised questions about the project in 2013. "For the past several years, PPS has been a party to questionable decision-making. There is a business side of education, and no one at [headquarters] or on the board seems to be able to figure out how to hold vendors of these alternative-education programs accountable."

Getting the project off the ground also swallowed money from City Hall.

In 2012, then-Mayor Sam Adams offered PPS a $5 million bailout, with a string attached: The district would give a piece of the Foster site to NAYA.

NAYA then proceeded with what was supposed to be a two-part development. First, NAYA would develop 40 units of affordable housing on the site.

NAYA Generations—the housing portion of the $25 million project, so called because it includes space for seniors as well as families with foster kids—is on its way to completion. It was 34 percent finished at the end of May, according to the Portland Housing Bureau.

But when the school—or the PPS-NAYA Regional Early Learning Academy and Longhouse Community Center, as the project is formally known—came up for a School Board vote last year, some members balked at the cost of the project. At the time, the budget was $12.5 million—with $4.5 million in PPS funding for what amounted to six Head Start and kindergarten classrooms.

NAYA made support for its project a litmus test in last year's School Board election.

"The failure to support the project at this critical time has the potential to lay waste to hundreds of thousands of dollars spent in years of pre-development work," a NAYA press release in May 2015 read, questioning the leadership of School Board Chairman Tom Koehler and then-member Bobbie Regan, who had raised questions about the cost.

NAYA was supposed to contribute $3.1 million. But it's not clear why PPS believed NAYA could fund its share of the partnership.

NAYA's tax returns at the time showed a $1.3 million deficit. Its latest tax returns show it running just over $445,000 in the black.

In an interview with WW this spring, Sanchez, who is now the unopposed Democratic nominee for state representative in Oregon House District 43, insisted that the organization's finances wouldn't pose a problem.

"We are in shape to follow through with our financial commitments," Sanchez told WW on April 6. (This newspaper endorsed Sanchez after that interview.)

But by then, the project had already missed a March deadline for getting final School Board approval for construction costs. In explaining the delay, PPS contradicted Sanchez's assertions. "Funding sources were not fully identified," district spokeswoman Christine Miles says.

When asked to comment, Sanchez again cited changeover in "key leadership positions" at NAYA as the reason for withdrawing from the project, but she did not offer a date for resuming it.

"As a board member, I don't believe it was ever suggested to us this deal was falling through," says School Board member Mike Rosen. "My questions now would be: What will the gap in dollars and services be, and who is likely to be on the hook to fill them? It seems reasonable to expect the board would hear about issues like this before the press."

Project costs have risen in the middle of Portland's construction boom. The latest projections show a $13.7 million price tag (not including the cost of building the streets)—a nearly 10 percent increase since May 2015.

It's not clear how much money the district has spent attempting to get the project off the ground, but it's spent at least $175,000 on contractors. PPS planning director Sara King says the district does not track how much time staff spend on particular projects.

School Board Chairman Koehler says he was not aware of NAYA's budget woes last year, but adds that he ensured NAYA and PPS would split the costs of preparation to build the center, instead of writing "a blank check."

"As it soon as it became clear NAYA didn't have the funding, together we took the appropriate action," says Koehler, who still hopes the project can be revived by the nonprofit within the next four years. "If NAYA can get their financial house in order and it still makes sense from the PPS side, there's still the need."