Sun Sentinel Palm Beach Edition
Virus relief grants in limbo after Oregon feud
Black civic leaders in Oregon heard the alarm bells early in the pandemic.
Data and anecdotes around the country suggested that the coronavirus was disproportionately killing Black people. Locally, Black business owners had begun fretting about their livelihoods, as stay-at-home orders and various other measures were put into place. Many did not have valuable houses they could tap for capital, and requests for government assistance had gone nowhere.
After convening several virtual meetings, the civic leaders proposed a novel solution that state lawmakers approved in July. The state would earmark $62 million of its $1.4 billion in federal COVID-19 relief money to provide grants to Black residents, business owners and community organizations enduring pandemic-related hardships.
“It was finally being honest: This is who needs this support right now,” said Lew Frederick, a state senator who is Black.
But now millions of dollars in grants are on hold after one Mexican American and two white business owners sued the state, arguing that the fund for Black residents discriminated against them.
The dispute in Oregon is the latest legal skirmish in the nation’s decadeslong battle over affirmative action, and comes in a year in which the pandemic has starkly exposed the socioeconomic and health disparities that African Americans face. It has unfolded, too, against the backdrop of the Black Lives Matter movement.
In creating the Oregon Cares Fund, lawmakers took the rare step of explicitly naming a single racial group as the beneficiary, arguing that Black residents have been subjected to unique discrimination that put them at a disadvantage during the pandemic.
Over the decades, various remedies to address discrimination have been met with legal challenges.
Supreme Court rulings have established that racebased policies are constitutional only if they achieve a compelling governmental interest and are narrowly tailored to do so. The court has most notably allowed race to be used as a factor in college admissions to achieve student diversity. But the court in recent decades has also sided against one of the original rationales for affirmative action policies — to undo past discrimination and its lingering effect.
“You have to show that there’s this really close nexus between why you’re using race and the outcome you’re seeking,” said Melissa Murray, a professor of law at New York University. “And I think here it’s going to be a real question as to whether funding just Black businesses through this Cares fund is actually the only way that you could address the problems that Black Oregonians have experienced during this particular period.”
In Oregon, the stakes are dire.
Nearly $50 million worth of grants have been awarded, but a court has frozen $8.8 million, the remaining amount minus administrative costs, until the litigation is resolved, a process that could take years.
With the Dec. 31 deadline having passed for states to spend their CARES Act funds or return what remains to the federal government, the litigation could mean the money is lost for good. The fund’s administrators say they hope the Treasury Department grants them an extension for disbursing the money.
Oregon’s history of antiBlack racism has fueled much of the advocacy for the state’s fund. And while other racial groups have said they supported it, critics have argued that Black people are not the only ones who have faced discrimination in the state.
Some Black residents, who make up about 2% of the state’s population, said that argument was a distraction.
“As a state, as a country, it is unusual for us to provide adequate resources to Black people,” said Nkenge Harmon Johnson, president and chief executive of the Urban League of Portland.
But Edward Blum, a white conservative activist whose organization, Project on Fair Representation, is underwriting one of two lawsuits challenging the fund, said the opposition was about preventing racial exclusion.
“It is like, in the employment arena, going to apply for a job and seeing a sign on the employment office that reads, ‘No Asians need apply,’ ” said Blum, who has led efforts to challenge racebased admissions policies at universities, including a high-profile case against Harvard.
Walter Leja, a plaintiff in one of the lawsuits, said he might be on the verge of laying off employees from Dynamic Service Fire and Security, the small electrical services company he started in Salem in 2007, if he did not receive relief money soon. An earlier loan of about $20,000 from the federal Paycheck Protection Program, he said, was just enough to cover payroll for about two months.
Leja, who is 64 and white, said he could not say whether historic discrimination put Black business owners at a disadvantage. But a particular fund, he said, was not warranted.
“It’s discriminatory,” he said. “It’s locking up a bunch of funds that can only be used by Black businesses when there’s a ton of other businesses out there that need access to those funds. It’s not a white or Black thing. It’s an everybody thing.”
That lawsuit — a class-action case led by Leja and the white owner of a logging company, Great Northern Resources, based in the city of John Day — is one of two that challenges the fund. The other, underwritten by the Center for Individual Rights, a nonprofit law firm advocating limited government, involves a Mexican American owner of the Revolucion Coffee House, in Portland, who has claimed discrimination.
In Portland, Joy Mack said the pandemic rekindled the stress she felt when she opened the Jayah Rose Salon in 2008. She and her husband, an engineer, are both Black and middle class. But after visiting more than 10 lending institutions to try to get startup funding, she received only two loans, she said. One of the lenders kept asking for more financial information, so they eventually walked away from the relationship.
In trying to keep her hair salon afloat amid the pandemic, Mack, 45, said she applied for a forgivable federal government loan but was turned down because she had about $5,000 in tax debt. She got a $5,000 grant from the city and a $10,000 disaster loan from the federal government. She also has had to take out lines of credit.
Mack eventually received a grant from the Oregon Cares Fund. Although she would not say how much she received, she said it saved her from having to close down under the weight of tens of thousands of dollars of debt.
“Honestly,” she said, “that is what just helped us get over that COVID hump.”