Sunstone Way, a major Multnomah County shelter contractor, set to close Market Street site March 31

A prominent Portland-area shelter operator faces legal claims as a county-run facility it manages prepares to shut down

Sunstone Way, a nonprofit that operates multiple homeless shelters under public contracts in Multnomah County and the City of Portland, is preparing to end operations at its Market Street Shelter on March 31, 2026. The closure comes amid a widening dispute over the organization’s financial management, including a whistleblower lawsuit filed by a former finance executive and prior findings of overbilling tied to public reimbursements.

The Market Street Shelter is listed in county materials as a congregate adult shelter operated under contract with the Multnomah County Homeless Services Department. County budget documents for the current fiscal cycle identify Market Street as a funded shelter program operated by Sunstone Way, with multi-million-dollar spending planned for shelter operations and related services.

Sunstone Way has grown quickly since the pandemic era, when it was established under an earlier name and took on shelter responsibilities across the region. The organization has operated a mix of shelter models, including a former motel converted to shelter use and village-style shelter sites. In July 2025, the City of Portland announced that operations at the Multnomah Safe Rest Village site would transition from Sunstone Way to another provider, marking a shift in the nonprofit’s role in city-managed shelter operations.

Whistleblower lawsuit alleges costly decisions and retaliation

In February 2026, a former director of finance sued Sunstone Way in Multnomah County Circuit Court, seeking damages and alleging imprudent spending and financial mismanagement. The complaint alleges leadership decisions that increased overhead during periods of cash-flow strain, including a move to more expensive office space while the prior lease remained in effect. The lawsuit also alleges the plaintiff faced retaliation after raising concerns internally about expenses and financial controls.

The organization did not immediately provide a public response to the allegations at the time the lawsuit became public. Multnomah County also did not immediately provide detailed public comment in that initial reporting.

Earlier audit findings and contracting oversight remain in focus

Sunstone Way’s financial practices have previously drawn scrutiny. A county auditor report regarding a predecessor operation found the organization overbilled the county by hundreds of thousands of dollars in 2022, including duplicate payroll expenses submitted across separate invoices for the same pay period.

The controversy intersects with broader efforts by Multnomah County to strengthen oversight of its network of homelessness-service contractors. In recent years, county leaders have faced sustained pressure to improve monitoring practices, update policies, and increase compliance checks tied to public spending.

• Market Street Shelter closure date: March 31, 2026.
• Whistleblower suit: filed in February 2026 in Multnomah County Circuit Court.
• City transition: Multnomah Safe Rest Village operations shifted away from Sunstone Way effective July 1, 2025.

The combined effect of shelter closures, provider transitions, and legal disputes is expected to increase pressure on remaining shelter capacity and complicate continuity for clients and frontline staff as the region enters the spring planning cycle.

County and city homelessness systems are expected to provide updated transition plans for clients affected by the Market Street closure, including referral pathways to alternative shelter sites and services.