Nothing succeeds like failure
Two Views • Politicians seem giddy about subsidized, unsustainable programs
The Tribune's coverage of Portland's Clean Energy Works showed that the program was flawed in many respects (Long on promise, shy on results, Oct. 14). Costs were higher than projected, and savings to homeowners were often nonexistent.
Yet midway through the first year, before any evaluation of the so-called 'pilot project' had even been completed, the federal government awarded a $20 million grant to take the program statewide. This is how most pork-barrel projects work: Vast sums of public money are spent with no regard for results.
The first problem with Clean Energy Works was that it was unnecessary. Homeowners already have access to bank loans for weatherization projects, as long as those projects will pay for themselves in a reasonable period of time. All Clean Energy Works did was divert tax money to less-worthy projects that probably would not have qualified for such loans. But if the payback is too low for market-rate financing, why are taxpayers being forced to subsidize home loans?
Second, the Portland City Council decided to impose numerous wage premiums on the work force, immediately dooming any chance of cost control. The council established a list of 16 approved contractors, and homeowners were not allowed to shop around for competitive bids. This created a contractor's cartel, to the detriment of homeowners.
The council also mandated that all employees of contractors get paid at least 180 percent of the local 'prevailing' wage, which by itself is well above the market rate. The city then required contractors to engage 'historically disadvantaged workers' to accomplish at least 30 percent of all trade work and strive to provide employment to 'formerly incarcerated individuals.'
These restrictions made program implementation very expensive, but it didn't matter because the subsequent $20 million federal grant was not tied to results. It was purely a political decision.
This is the rule rather than the exception with government programs, as seen by these examples.
• Portland's green power promise: In 2001 the City Council adopted a goal of procuring 100 percent of municipal electricity from 'green' sources by 2010. Despite considerable effort and expense, the city is only up to 9 percent.
The state Legislature, inspired by this failure, mandated in 2007 that private utilities obtain 25 percent of their power from 'green sources' by 2025. That goal is probably unattainable, yet PGE alone has already wasted more than a billion dollars complying, with no benefits to ratepayers.
• Net-Zero Green Building: In 2005, the 'Green Investment Fund' was established by the Portland City Council, awarding money for five years to supposedly spur green building, especially those seeking to become 'net zero' on energy consumption. DaVinci Arts Middle School, the only project actually to achieve the goal, needed $500,000 in community-donated services.
Other subsidized projects failed miserably. Construction never began on the million-dollar Shizen condominiums or the Kenton Living Building, both net-zero energy contenders.
Nonetheless, local green building advocates are giddy about plans for the $90 million, net-zero 'Oregon Sustainability Center,' which will be heavily subsidized by taxpayers.
• Westside Express Service commuter rail: TriMet's Wilsonville-to-Beaverton commuter train was originally projected to cost $65 million and open in 2000. It actually cost $161.2 million and opened in 2009. TriMet projected an average daily ridership of 2,400 weekday boardings in the first year; actual ridership was 1,150. The average subsidy per rider has been $792 per month.
Instead of demanding an explanation for this fiasco, the state Legislature in 2009 mandated a study of expanding WES to Salem.
For politicians, nothing succeeds like failure - as long as taxpayers foot the bill.
John A. Charles Jr. is president and chief executive officer of Cascade Policy Institute, a Portland policy research center.