Portland’s first-of-its-kind climate justice program needs help getting off the ground despite generating far more revenue than expected, according to a city audit released Thursday.
In their report, auditors said the Portland Clean Energy Fund is missing key elements of the plan 65% of voters approved in 2018. For example, it doesn’t even have the essential climate change goals the program is supposed to be helping the city achieve.
Auditors flagged multiple structural problems, including a lack of oversight and accountability systems, unpredictable revenue and unclear administrative costs, that could prevent the program from meeting the requirements outlined in its underpinning legislation.
They advised program leaders to set deadlines for completing tasks such as developing accountability systems and to get help from Portland City Council on core elements of the program that still need clarification.
“Not addressing these elements could jeopardize the city’s ability to meet the legislative intent of the voter-approved program,” they wrote.
The Portland Clean Energy Fund was created through a ballot measure that launched a tax-funded grant program to fight climate change and social inequities. The measure outlined specific targets for how the money could be spent to reduce greenhouse gas emissions and create clean energy jobs while supporting low-income communities and people of color.
As of last year, the resulting 1% tax on large retailers had generated more than $185 million — a lot more revenue than expected. The program was predicted to generate $44 million to $61 million a year, and in the last fiscal year, revenues reached $116 million.
So far, the program’s volunteer grant committee has only given out a small fraction of those revenues, and it recently rescinded its first major grant of $12 million after reporting by The Oregonian revealed the grantee had previously been convicted of fraud. The city audit didn’t look at the program’s individual grant awards.
This week, a coalition of groups that supported the original ballot measure wrote a letter to the city celebrating the program’s extra money and asking city leaders “to explore structural changes” to the clean energy program “to more comprehensively meet the needs of low-income communities and communities of color.”
The advocacy groups, which include the Coalition of Communities of Color, Asian Pacific American Network of Oregon, Verde and the Native American Youth and Family Center, said the money is needed to help people prepare for the “immense” impacts of global warming.
“We see this as an opportunity to further address climate change impacts on our most vulnerable and impacted communities,” the groups wrote. “More resources for climate justice above and beyond the earlier projections of [Portland Clean Energy Fund] revenues have always been needed.”
Auditors took an early look
City Auditor Mary Hull Caballero said the clean energy fund is unusual because it was created by a ballot measure, and that’s part of the reason she and her staff decided to do the audit early in the program’s development.
“We try to look at things in the city that have high risks associated with them, where they may not be successful, or there may be some funds that are not used efficiently or effectively,” she said. “We also are always on the lookout for programs that might have inequitable outcomes.”
Hull Caballero said the good news is the city council can fix problems with the program.
“What you’re seeing is something that should be expected,” she said. “When something is brought into the code through an initiative petition it’s not going through the normal checks and balances. …It’s a startup that’s just getting underway.”
In their report, auditors outlined the program’s need for improvement on issues that include its central goals. They found the legislation that created the clean energy fund linked the program’s goals to Portland’s Climate Action Plan, which expired in 2020 when the city council made an emergency declaration that sets new targets for reducing carbon emissions.
The grant program needs to be updated accordingly, auditors found, and its leaders need input from the city council on how the money generated can help achieve the new goals.
Auditors identified a lack of oversight that stems from the original ballot measure. Unlike other initiative-based programs such as the Portland Children’s Levy, the audit report states, the Portland Clean Energy Fund program’s grant committee has the authority to hire its own staff and is required to evaluate its own work, “which may make it difficult for members to be skeptical of their decisions, provide criticism or correct problems.”
Auditors said the committee deserves credit for doing a substantial amount of work so far, but it needs a clearly identified oversight body.
“This is a unique situation where the committee is both giving out the grants and charged with oversight over those decisions,” KC Jones, audit services director for the city, said. “That’s a tough spot to put volunteer community members in.”
The auditors also found that the clean energy fund still needs to develop measurable goals for training and hiring people from historically disadvantaged groups, and they found the program didn’t report on whether its initial grants met requirements for allocating funds in specific categories such as renewable energy, clean energy jobs training and green infrastructure.
They concluded the grant committee volunteers and program staff members at the Portland Bureau of Planning and Sustainability need guidance from the city council, which is ultimately responsible for how the program works and distributes tax dollars.
Auditors recommended setting timeframes for completing unfinished tasks and meeting requirements outlined in the original ballot measure. And they advised clean energy fund leaders to evaluate who is in charge of what, clarify which expenses are included in the program’s administrative costs, and propose a plan to city council for meeting climate goals.
Program leaders say fixes coming
In a written response to the audit, program leaders, including Commissioner Carmen Rubio, Portland Bureau of Planning and Sustainability Director Andrea Durbin, Program Manager Sam Baraso, grant committee co-chairs Megan Horst and Michael Edden Hill, said they will be working on a to-do list that includes setting measurable goals, reviewing leadership structure and developing recommendations for the city council to approve by December.
“We have maintained a meticulous dedication to implementing the program as defined in the ballot language,” they wrote. “However, no groundbreaking program is perfect out of the gate and we agree with the recommendations in the audit.”
Rubio told OPB in a prepared statement that she knows climate change impacts “Black, brown and low-income Portlanders the most — and also first,” and she wants the program to be successful.
“We need to preserve public trust in this new and innovative program and that means addressing not only the auditors’ recommendations but other lessons learned so far,” she said.