The nonprofit Southwest Neighborhoods Inc. received $66,300 from the federal Paycheck Protection Program this summer.

A review of whether the group needed the money was one of the most eye-catching details in an independent audit of SWNI, as it's called, released last week.

The city of Portland's Office of Community & Civic Life commissioned the audit this summer, after dissident SWNI board members raised questions about transparency and financial management at the nonprofit, which oversees 17 Southwest Portland neighborhood associations.

The PPP loans were distributed by the federal government earlier this year to preserve employment at COVID-19-damaged organizations by providing short-term funding for payroll and employee costs. SWNI asked for the money to fund payroll.

Auditors found Nov. 13 that SWNI had enough money and didn't need the federal bailout funds, much of which it gave away.

"SWNI mismanaged the decision making and oversight of the PPP money," the audit found. "The PPP loan created a surplus of money for SWNI, who had decided to establish a new grant program."

SWNI board president Leslie Hammond disagrees. "SWNI applied for the PPP money in April because we had not been given a contract and the city was two months late in providing a draft," Hammond tells WW. "And as it turned out, the city suspended our funding and the PPP money was available for use exactly as it was designed to be. We followed their rules about how to use the money appropriately."

The backdrop for the audit was Commissioner Chloe Eudaly's ill-fated efforts to reform the way the city's 95 neighborhood associations operate. As Eudaly struggled to make those groups more diverse and inclusive, long-simmering concerns about SWNI, first reported by Oregon Public Broadcasting, led Eudaly to recommend this summer that the City Council withhold city funding—about $300,000—that makes up 85% of SWNI's budget. (The council agreed to withhold funds, but the auditors found SWNI still had plenty of money.)

The fallout from the audit is playing into underlying tensions between departing members of the City Council, including Eudaly, who lost her bid for reelection Nov. 3.

Retiring City Commissioner Amanda Fritz, who disagreed with Eudaly's efforts to reform the Office of Community & Civic Life and neighborhood associations, wrote to SWNI executive director Sylvia Bogert earlier this month about ways to get the council to restore the nonprofit's funding. She used a personal email account.

On Nov. 16, a Eudaly staffer, Hannah Holloway, asked the city attorney, city auditor and human resources offices to consider investigating "misuse of a personal email account to conduct official city business."

Fritz says using her personal email for the communication was inadvertent: "I usually cc my work email when sending messages from home after hours (it takes several minutes to log on to the city server remotely) and forgot."