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Oregon Reaches $4.4 Million Settlement With Environmental Nonprofit Ecotrust

<p>A millworker stacks lumber at the Cave Junction, Ore. Rough & Ready Sawmill in 2013, a few weeks before it closed. State and federal assistance allowed the mill to reopen for a brief time.</p>
A millworker stacks lumber at the Cave Junction, Ore. Rough & Ready Sawmill in 2013, a few weeks before it closed. State and federal assistance allowed the mill to reopen for a brief time.

A Portland-based environmental nonprofit reached a $4.4 million settlement Wednesday with the state of Oregon, after an investigation found it had falsely inflated costs of two developmental projects.

Ecotrust and its for-profit affiliate, Ecotrust Forest Management, struck the no-fault settlement, after a two-year Oregon Department of Justice investigation found the organization had submitted a tax credit application that improperly inflated and overstated the budgets of two developmental projects. The organization also failed to disclose intended use of funds relating to the state’s New Markets Tax Credit program (NMTC).

In Ecotrust’s application materials submitted to the NMTC program, it reported expenditures of $8 million to reopen the Rough & Ready sawmill in the Southern Oregon town of Cave Junction and an additional $7.5 million to complete the Desolation Creek forestland purchase.

The DOJ found the Rough & Ready project was inflated by $4 million and the Desolation Creek forest property was inflated by $900,000 causing the state to be overcharged by approximately $1.5 million and $350,000, respectively, in tax credits for the two projects. The investigation was opened following an report by The Oregonian/OregonLive on the financial dealings of Ecotrust and Rough & Ready.

Under the no-fault settlement terms, Ecotrust and Ecotrust Forest Management will make a payment of $4.4 million to the state.

In an emailed statement Oregon Attorney General Ellen Rosenblum said Oregon’s New Market Tax Credit program was meant to rehabilitate job opportunities in economically stressed communities and bring economic incentives to parts of the state that could use an economic boost.

“The program was not supposed to be used to pad the coffers of investors using the tax credits to buy property,” Rosenblum said. “But that’s what happened. After more than two years of painstaking review of every financial record, my office has achieved a very good result for the state.” 

The payment reimburses the state for tax benefits, fees and the state's legal expenses.

In an emailed statement, Ecotrust denied that it had operated with intent to improperly obtain tax credits from the state. Ecotrust said the decision to choose the no-fault settlement was made so the organization can return its attention to other priorities.
Copyright 2020 Oregon Public Broadcasting

Monica Samayoa is a reporter with OPB’s Science & Environment unit. Before OPB, Monica was an on-call general assignment reporter at KQED in San Francisco. She also helped produce The California Report and KQED Newsroom. Monica holds a bachelor's degree in Broadcast and Electronic Communication Arts from San Francisco State University.