Portland’s climate action fund could double spending over the next five years

Portland’s billion-dollar climate action fund can’t spend fast enough.

City Council is scheduled to vote on whether to formally amend changes made earlier this year and double the Portland Clean Energy Fund’s original five-year $750 million Climate Investment Plan.

The voter-approved program imposes a 1% tax on large retail businesses in Portland. It’s a first of its kind environmental justice and climate program aimed at reducing greenhouse gas emissions while advancing racial and social justice. The money is used to fund a range of climate related projects, including energy-efficient retrofits, renewable energy development and job training in the construction and energy fields. Already tax forecasts have been much higher than expected, at $1.2 billion. The latest forecasts now estimate the fund will have an additional $400 million.

The proposed changes, which were recommended by the PCEF committee despite some members’ concerns about pressure from city staff, would boost spending for city bureaus as well as increase money for the fund’s climate action programs and extra funds to cover inflation costs.

If City Council approves them, the amendments would more than double the amount of the original plan to $1.591 billion over the next five years.

The proposed changes include:

• Aligning the five-year plan with the city’s fiscal year through June 30, 2029.
• Sending an additional $411 million to city bureaus through the 2024 City Climate Projects, including an increase of $12.3 million for inflation costs. The total going to city bureaus could be more than $623 million.
• Increasing spending for the program’s Community Responsive Grants by $120 million, for a total of $306 million and,
• Allocating $300 million for Collaborating for Climate Action, a new competitive grant that would be aimed at supporting “high-impact, multi-stakeholder projects that deliver equitable climate solutions.”

PCEF staff say they expect yearly changes to the Climate Investment Plan as staff reevaluate the existing performance of the programs to better understand where resources are needed and incorporate new opportunities that arise.

Bureau of Planning and Sustainability Deputy City Administrator Donnie Oliveira said the proposed amendments formalize the changes made earlier in the year during the city bureau budget process, as well as account for inflation.

“It also addresses increased demand from our communities and our private-sector partners for bigger investments, now that the fund is much larger than a grant program,” he said. “We’re evolving the Climate Investment Plan to reflect changes and commitments this council has made.”

The Climate Investment Plan is the “vessel” that contains the tax dollars that will be spent by the climate fund, Olivera said. The original plan plan was created in September 2023, after a nearly yearlong revamping process. It was followed by a $540 million city bureau five-year plan that could be boosted to $623 million, if the proposed changes are approved.

The Cooling Portland program, which offers free portable air conditioning units to qualified city residents, would also receive an additional $10 million — more than doubling its original budget to $26 million.

Since 2022, the program has installed more than 13,000 units. The program’s goal is to install 15,000 cooling units by 2026. The additional funding would provide resources to deploy an additional 10,000 units, for a total of 25,000 AC units through 2026.

Portland City Council will vote on the amendments on Dec. 18.

The proposed changes come as the Portland Clean Energy Fund has more than exceeded its expectations and generated hundreds of millions of dollars more than originally expected. But the fund’s healthy sum of money has been eyed for other projects outside of its original intent. The PCEF staff say the Climate Investment Plan is aimed at creating spending accountability as well as outlining how and where the funds should be spent. But some of the fund’s committee members as well as proponents of the program say the fund is moving away from helping the community and is instead providing life support for Portland’s unstable budget. They have called for improving processes, as they have for nonprofit applications, when it comes to allocating funds for city bureaus.

The push to improve Portland’s proposal process

PCEF Committee Co-chair Ranfis Giannettino Villatoro said it is great to continue to be able fund needed projects within the new plan and beyond.

The committee is currently reviewing applications for the Collaborating for Climate Action plan, which originally was allocated $158 million. PCEF received about $2.4 billion in funding requests. With additional allocations, that fund could increase to $306 million.

But the changes to allocations and increase in tax funds collected for the Climate Investment Plan have also contributed to growing pains between the PCEF committee and staff when it comes to the process.

“I think the need for climate investments is still there within our communities, while making sure that we’re creating good jobs for the sector, but I think perennially what’s really important for committee members has continually been about process and balance and fairness between city specific fund work as well as work performed by the community at large which includes nonprofits, schools and other forms of government,” Giannettino Villatoro said.

During a Nov. 21 PCEF Committee meeting, Bureau of Planning and Sustainability Deputy City Administrator Oliveira said the new plan is “less reinventing the wheel” and builds on what PCEF staff have heard in the past.

“As we get better and more sophisticated aligning the PCEF process with our budget process, and as our budget process evolves, it’s going to be really important, so you all don’t feel rushed and we are consistently hitting the markers logically so that the fund is in alignment with decision points,” he said. “I think we’re getting better, much work to be done but this is us improving from last year.”

But committee members still brought up process concerns, as the committee has repeatedly called for more time to deliberate city proposals, like a $50 million plan for a multi-bureau-led Blue Green Deal, that includes transparency and due diligence.

Committee member Robin Yang said the current process puts the committee in a position to be asked to consider a proposal “forced down our throat,” with a short amount of time to deliberate because of city budget cycles.

“This is not the first time this has happened,” he said during the November meeting. “Every time this happens, we yield to whatever concerns that we have and say, ‘Next time we’ll address it,' and next time constantly happens and it’s frustrating.”

Yang called for a process that addresses city-led proposals. He said the Portland Clean Energy Fund is intended to be community led, and the committee should hear more proposals from the community.

“Right now, we’re spending more money in the city budget… It just feels like this is driven by city leaders and not community,” he said.

Yang also said there is a double standard when it comes to city-led proposals versus proposals from nonprofit organizations.

In January 2022, the city withdrew a $12 million PCEF grant from a recipient who was previously convicted of fraud. That led the committee to add extra steps to its grant review process that would include further screening and more time to request additional information the committee may want.

Yang said a nonprofit organization would never get a $50 million grant approved if they only submitted a six-page proposal.

Committee co-chair Giannettino Villatoro said the committee is continually facing the challenge of “creating a precedent that appears to the public as us cherry picking or rubber stamping proposals.” He said the committee’s north star is ensuring the process is consistently transparent and diligent, while balancing city government needs as well as nonprofits, schools and other qualified recipients.

“Process for us will be important making sure PCEF staff is engaged, PCEF committee members are engaged and making sure that there is fairness for all city bureaus seeking funds as well as other nonprofits and other forms of government seeking funds.”

Giannettino Villatoro said there is a natural tension when it comes to approving proposals and seeing results versus the process.

“We can’t wait for investments, we can’t wait for folks to get to work, we can’t just have process for process itself,” he said. “Process has to mean something, and process means putting projects on the ground, seeing progress on the ground and if people and voters can’t see progress on the ground, I think the challenge goes back to us as a committee and as a city.”