Month: July 2011

The Dirty Secret Behind Clean Jobs

By Nick Sibilla

New jobs are scarce. In June, Oregon’s unemployment rate rose to 9.4%. Many environmentalists claim the government should invest in “clean jobs” to address both the unemployment rate and their concerns about climate change. Unfortunately for them, clean jobs have a blackened record.

The Brookings Institution defines a “clean job” as a job that produces a good or service with some sort of environmental benefit attached to it. Brookings recently claimed there are almost three million clean jobs nationwide. Among U.S. states, Oregon had the second-highest proportion of clean jobs.

But many of these clean jobs are heavily subsidized by the government. Of the top ten cities with the highest share of clean jobs, six are state capitals. They include Albany, Harrisburg and Sacramento. While Brookings praises these cities, the report neglects a few inconvenient truths.

For example, Harrisburg, Pennsylvania is the fourth cleanest city in the Brookings report. But Harrisburg is on the verge of municipal bankruptcy. In 2010, the city’s debt burden topped $670 million, or $9,500 per resident. What led to this fiscal insolvency? A $300 million scheme to update its trash incinerator…and save 60 clean jobs.

Clean jobs have a dirty secret: They will not put Americans back to work.


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Read Blog Detail

Which Oregon School District Teaches No Students?

Oregon’s major teachers union, The Oregon Education Association (OEA), is seen by many observers as the big loser coming out of the recent legislative session in Salem. Why? Because it failed to convince enough legislators to stop some modest school choice bills from passing. It also couldn’t stop Governor John Kitzhaber, whom it endorsed and financially supported, from agreeing to sign these bills as part of a larger education reform package.

The highest profile bill in question was House Bill 2301, known as the virtual public charter school bill. The union has been trying to shut down online public charter schools ever since they started making inroads several years ago. This year it had hoped to cripple these schools, which it sees as competition to the brick-and-mortar schools in which its members teach. Instead, the legislature agreed to let these online schools expand from teaching about one percent of the state’s K-12 students now up to at least three percent of students in any and all school districts around the state.

In 2005 the union backed a bill to create a state-run competitor to these innovative online schools. Known as the Oregon Virtual School District, it has since been funded to the tune of more than seven million dollars. Legislators appropriated the funds with the intention that the district would “provide online courses.” But as Nigel Jaquiss reported in his recent Willamette Week exposé, “…after six years and the appropriation of $7.1 million, including another $1.5 million lawmakers just approved for the current biennium, the Oregon Virtual School District has yet to provide a single ‘course.’”*

This revelation calls into question which online schools are real and which may appear to be real, but are not. Schools like Oregon Connections Academy and Oregon Virtual Academy are real schools with hundreds of real teachers educating thousands of real students across the state.

The state-run Oregon Virtual School District, on the other hand, is truly a virtual district in the not real sense of the term. It has no teachers and no students. The only real part is that it has spent millions of real taxpayer dollars. And for what? It has a nice website and offers some helpful content and tools for teachers. But that’s about it. Somewhere along the line, its mission morphed from providing real online courses to hosting some “academic materials vetted by the Education Department and training for teachers.”

The Oregon Department of Education manager who oversees the Virtual District says that it is not an alternative to online charter school offerings. “We are not set up to compete with them from a financial point of view,” he says.* Real online charter schools, paying real teachers to teach real students, receive on average less than 5,700 public dollars a year for each enrolled student.** A simple calculation tells us that the $7 million allocated to the Virtual District so far could have been used to teach at least 1,200 students for one school year, or 200 students over the six years it has received state funding. But, again, so far the district has taught zero real students.

The teachers union keeps calling for more accountability from Oregon’s real online public charter schools, the ones with real teachers educating real students. It seems far past time for state legislators and taxpayers to call for accountability on the part of the Oregon Virtual School District. What have we gotten for $7 million in this “district”? If the answer is “not much,” then we should close it down and refocus our energy and resources on real schools with real students.

Oregon’s online public charter schools are not virtual; they are real schools where real learning occurs. Just because their teachers may not wear the union label shouldn’t give OEA the right to stop them from competing with the brick-and-mortar schools its members occupy.

Parents and students hold real online public charter schools accountable every day as they freely enroll and disenroll. More school choice will give more parents and students that power over brick-and-mortar schools as well. If OEA wants to keep students in classes taught by its members, it should figure out how to do that without holding the kids hostage. All students and their families deserve the right to choose where they get their education. Anything less is a disservice to them and to the taxpayers.

* “Virtual Combat: Oregon’s teachers union hates online charter schools. But its alternative has little to show for millions of taxpayer dollars,” Nigel Jaquiss, Willamette Week, July 20, 2011, www.wweek.com/portland/article-17755-virtual_combat.html.

**  “Unintended Consequences: an analysis of charter school funding in Oregon”, Vanessa Wilkins, Northwest Center for Educational Options, April 21, 2010 http://www.nwceo.org/pdf/NWCEO_Charter_School_Funding_Study_May_2010.pdf.
The average Oregon public charter school received slightly over $5,700 per student in 2008/2009 according to the Oregon Department of Education Financial Database, depending on the district that charters them. Current online charter schools are chartered in districts that pay less than this amount; but if the Oregon Virtual School District were to accept students statewide, it likely would receive closer to the average charter payment per student. Note that the $5,700 average per student charter school funding is approximately half the total public funding of brick-and-mortar public schools in Oregon.

Read Blog Detail

John Charles responds to Portland Mayor Sam Adams

At the July 14, 2011 JPACT meeting, accusations were made about John Charles and the Cascade Policy Institute.  The response from John is below.


Dear Mayor Adams:

I am writing regarding the public criticism you made of Cascade Policy Institute at the July 14 JPACT meeting. I recently listened to an audio recording of the entire meeting.

You twice referred to an essay of mine about Milwaukie light rail as a “screed.”  You also said, as a follow-up to Councilor Burkholder’s earlier attack on me: “The forces to erode the foundation of objective analysis that we all seek to rely on are real. We’re under attack. Basic, impartial information is under attack. I’d like that group [a JPACT subcommittee to be formed in the future] to figure out how we’re under attack and what we can do to make sure that objective information is out there. I worry that we’ll come out with ideas that will just sort of sink for failing to sit on firm, objective soil. “

As the CEO of a policy research center, I share your interest in empirical evidence and data. Therefore I offer the following specific concerns about the Portland-Milwaukie light rail (PMLR) project, and invite you to respond to them in a factual manner:

  1. The Milwaukie-to-Portland corridor is already well-served by TriMet. There are nine buses stopping at the Milwaukie Transit Center, and five of them specifically travel on McLoughlin Boulevard to Portland city center via the Hawthorne Bridge. Of the five, three are local bus routes (31, 32, and 33), one is an express bus (#99), and one is a hybrid – the #30 originating in Estacada continues on to Portland for six runs in the morning peak, where it becomes known as the 31E or the 31L. Both offer types of express service to Portland city center from Milwaukie.

 

According to the published FEIS for this project, once light rail opens, all of these buses “would no longer provide service north of Milwaukie.”[1] Transit customers boarding buses from points south will be forced to transfer at Milwaukie to a slow train with limited seating capacity. This is a degradation of service for them, not an improvement.

 

The ostensible goal of this project is to provide improved transit. Why are you planning to spend $1.5 billion on a train line that will clearly make thousands of current TriMet customers worse off than they are today?

 

  1. The current scheduled time-of-travel for a trip from downtown Milwaukie to PSU on the #99 McLoughlin Express bus averages 17.5 minutes. An early morning run makes it in only 12 minutes. The forecasted time of travel for light rail – which offers no express service — is roughly 19 minutes for the same distance.[2]

Why are you planning to spend $1.5 billion in tax dollars to offer slower service than we already have for peak-hour transit commuters?

  1. The current scheduled time-of-travel for a trip from downtown Milwaukie to PSU on the #33 McLoughlin Boulevard local bus averages 19.8 minutes, with a range of 18-22 minutes. Both the #33 and the planned light rail line offer all-day local service at roughly the same speed, to the same neighborhoods, except that light rail will have fewer stops so it will serve fewer neighborhoods.

 

Why are you planning to spend $1.5 billion in tax dollars to offer local service that already exists?

 

  1. Average daily traffic on McLoughlin Boulevard is 46,000 vehicles.[3] This is not a particularly high traffic load. In comparison, the ADT on the Sellwood Bridge is approximately 30,000 vehicles, and that is a two lane bridge. McLoughlin Boulevard has four lanes for its entire length, and six lanes in some places.

In the key stretch that could be a potential traffic choke point – the subarea of Powell Blvd. to Tacoma Street, which is mostly two lanes in each direction – all McLoughlin Boulevard intersections except one meet current jurisdictional criteria for acceptable levels of service.[4]

This is precisely the reason why current bus service is a success. The widely-promoted assertion that McLoughlin Boulevard is gridlocked (and thus in need of the exclusive ROW that rail transit would provide) is a myth.

This point was made anecdotally in yesterday’s Sunday Oregonian in a feature story in the Homes and Rentals section, which highlighted a new, 18-unit subdivision of “small footprint” homes in Milwaukie. Developer Nick Stearns says, “I think Milwaukie is kind of a secret because commuting from almost any other city in the area takes much longer to get to and from downtown Portland.  I’ve come down here at 5:00 p.m. right at rush hour and it was 11 minutes from downtown.”

A recent home buyer there, Sam Salstrand, echoes that observation: “I work six days a week, and the commute was just killing me. This place is great because there’s an express bus, and it’s incredible!”

I wonder if Mr. Salstrand is aware that his wonderful express bus will be terminated in 4 years because you and other members of JPACT think he would be better off with a slow train?

  1. According to TriMet’s official “Fact Sheet” for this project, the opening of light rail service will mean 110 bus trips on the downtown transit mall will be removed. This is advertised as a “benefit.”

But to the thousands of transit customers who currently get off in city center, being forced to take a slow train that only goes to the south end of the PSU campus is highly inconvenient. For most of them, the re-routing will likely require a transfer to the Green line or a bus to get further north in city center.

Why are you planning to spend $1.5 billion to force the majority of current Milwaukie-Portland transit customers to get off at a college campus, when most of them are probably not college students?

  1. TriMet estimates in its December 2010 long-range financial forecast that in the opening year of 2015, the Milwaukie line will carry an average of 13,000 weekday “boardings.”[5] Of those, 4,500 will be former bus rides diverted to light rail.[6] Since each rider typically makes two “boardings” per day, the number of actual new transit customers will be around 4,250. So in construction costs alone, this project will cost more than $352,941 per new rider.

Why are you planning to spend $1.5 billion just to recruit 4,250 hoped-for new transit customers, when none of them will pay even one dime in direct user fees for the construction of this project? How is that a sustainable business model for transit?

Concerns about the new bridge

 

The new bridge is being advertised as a “transitway.” Unfortunately, the actual vehicle or passenger throughput of the bridge will be tiny, especially compared with real transitways operating elsewhere.

When the project opens in 2015, the bridge will carry six light rail trains at the peak hour plus bus service for three TriMet buses currently operating on the Ross Island Bridge (lines 9, 17 and 19). Those lines cross the Ross Island 16 times per hour (total) at the morning peak. So the total transit throughput on the new bridge will be 22 vehicles per hour at the peak (roughly equivalent to 28 buses).

The highest-volume transitway in the country is the Lincoln Tunnel Express Bus Lane (XBL) traveling from the New Jersey Turnpike into mid-town Manhattan. During the 3.75 hours the busway operates in the morning weekday peak, it carries roughly 62,000 passengers on 1,700 buses, or 453 buses per hour. So in comparison, the new PMLR bridge will carry only 6.2% of the vehicular throughput that the XBL carries per hour.

Moreover, because the XBL is a busway, not a rail line, it is flexible. Thus, at off-peak hours, it operates as a general purpose lane that can run in either direction, serving all manner of trucks, buses and cars.

It is fine that the new PMLR bridge will have excellent access for pedestrians and cyclists, but the exclusive use of the primary ROW for one light rail line and three buses is a gross misallocation of capital.[7]

Servicing the South Waterfront District

Among other things, the PMLR project is being promoted as a way to provide an eastern portal for the South Waterfront district. While it’s true that South Waterfront desperately needs additional options for people traveling there, currently 79% of all weekday person-trips to/from the district are made by private automobile (see below), not transit.

Trip Counts for the South Waterfront District

Average Weekday, 6:00 a.m. – 10:00 p.m.

All passenger-trips Market share of trips by mode
Auto/truck 17,023 79%
Streetcar 1,832 9%
Bicycle 1,076 5%
Bus 926 4%
Pedestrian 642 3%

 

Note: Research was conducted on various good-weather weekdays during the months of May-January, 2010-2011.

 

We know these are the travel patterns because last year we laboriously counted every trip to and from the district by the hour (including observed vehicle occupancies) to learn how the district actually works. Contrary to assertions made by local planners, the South Waterfront is primarily auto-based, including (and especially) the OHSU Health and Healing Center.

 

Since every downtown bridge is currently over capacity at the peak period, why are we building a new Willamette River bridge that will specifically exclude the dominant mode of travel both in the South Waterfront district and everywhere else?

PMLR as a means of promoting “Transit-Oriented Development”

PMLR is also touted as a so-called “catalyst for transit-oriented development.” If you actually believe the claims being made by planners, please give me examples of current light rail stations that serve as models for what you have in mind. Are there any on the Green Line, which is dominated by empty park-and-rides? Are there any in the 25-year-old Blue Line to Gresham? I assume you are not thinking of Rockwood Station, Ruby Junction, Gresham Station, 122nd street, Gateway, 82nd Avenue, or the Rose Quarter.

My own field research over the past decade shows that rail stations, usually funded in part with urban renewal dollars that are statutorily restricted to improving “blight”, usually create blight. If I’m wrong, please provide empirical examples of what you would consider “rail station success stories” on the east side.

Conclusion and Recommendation

I recognize that you are a passionate believer in the PMLR project. Unfortunately, you have been badly advised by the people who are supposed to know something about transit. Milwaukie light rail is destined to be the most wasteful transit project in Oregon history.

Fortunately, there is still a reasonable alternative: build the new bridge (which is needed anyway), but cancel the light rail project. TriMet is about 10 months away from having a signed FFGA with FTA, and the project may not even be approved by FTA due to events now taking place in Congress related to the budget.

The changing political climate in Washington, D. C. is actually your last lifeline to fiscal sanity. If you take it, you can preserve the existing high-quality bus transit service from Milwaukie to Portland, and spend the $750 million in committed local matching funds on dozens of other more important infrastructure projects, such as the Sellwood Bridge replacement.

It is not too late to make this change. We terminated the Mt. Hood Freeway at the last minute, and we can do it again with this project. All that’s necessary is a commitment to assessing the actual facts.

Sincerely,

John A. Charles, Jr.

President & CEO


[1] Portland-Milwaukie Light Rail Project FEIS, October 2010, p. 2-29

[2] Ibid, p. 2-28; TriMet bus schedules as of July 25, www.trimet.org.

[3] Portland-Milwaukie light rail project, Transportation Impact Results Report, October 2010, p. 4-12.

[4] Ibid, p. 4-12

[5] TriMet, Fall 2010 Financial Forecast, p. 52

[6] Ibid

[7] Note that the Portland streetcar is also expected to run on the bridge, but that will have to happen through a separate project; it is not part of the PMLR project.

 

Read Blog Detail

John Charles attacked by Metro Councilor Rex Burkholder and Portland Mayor Sam Adams

At the July 14, 2011 JPACT (Joint Policy Advisory Committee on Transportation) meeting Metro Councilor Rex Burkholder and Portland Mayor Sam Adams had some interesting words regarding John Charles and the Cascade Policy Institute. Below is a link to the Cascade specific segments, or you can opt to listen to the whole JPACT meeting.

Listen to the whole JPACT meeting

Listen to the Cascade segments (Councilor Burkholder speaks first, followed by Mayor Adams)

Read Blog Detail

A free-market guru with ties to Portland

The following op-ed appeared in The Oregonian the day after Milton Friedman passed away in 2006. Below it is the full text, including some words edited out for space.


 


 
Full text

A great champion of human liberty passed away on Thursday at the age of 94.  Milton Friedman won the Nobel Prize in economics in 1976, but he likely will be remembered more for his passionate devotion to individual freedom.

Friedman’s connection to Oregon was through his devoted wife Rose, a member of the Director family. He was born in New York City in 1912, the son of poor Eastern European immigrants. She emigrated with her family from Eastern Europe to Portland in 1913. She attended public schools and Reed College before transferring to University of Chicago. Rose and Milton met as graduate students at Chicago and the rest, as they say, is history.

They raised two children together and co-wrote three books on economics and public policy: “Capitalism and Freedom,” “Free to Choose” and “Tyranny of the Status Quo.” Rose also helped produce the 10-part PBS television series, “Free to Choose,” which introduced the power of free-market economic ideas to the general public here and around the world beginning in 1980. They published their memoirs, “Milton and Rose D. Friedman, Two Lucky People” in 1998.

Milton started his career as a young economist in the 1930s working for the New Deal Roosevelt administration in Washington, D.C. He worked in the U.S. Treasury Department during World War II before leaving government for teaching. He later said: “My experience in those years shaped the advice I regularly gave my graduate students in later years: by all means spend a few years in Washington — but only a few.”

Friedman issued that warning because he came to realize that government controls over prices, wages and production were both inefficient and violations of liberty. He described himself as “thoroughly Keynesian” back then but later said, “You know, it’s a mystery as to why people think Roosevelt’s policies pulled us out of the Depression. The problem was that you had unemployed machines and unemployed people. How do you get them together by forming industrial cartels and keeping prices and wages up?

More than perhaps any other modern economist, Friedman’s ideas were credited by Western leaders such Ronald Reagan and Margaret Thatcher, and free-market revolutionaries in formerly communist countries, as a driving force behind their efforts.

Milton Friedman was fond of saying that he was not a conservative. He did not want to conserve much of what our current political culture has to offer. He called himself both radical and libertarian. He was an early and strong advocate for abolishing the military draft, and he saw more harm than good in government’s attempts to outlaw peaceful human behavior such as drug use and prostitution.

Of all the ideas he advocated, none was more important to him than universal school choice, a concept he first wrote about in 1955. He and Rose founded the Milton and Rose D. Friedman Foundation to advocate for both public and private school choice.

I first met Milton and Rose when they attended the Ashland Shakespeare Festival in 1989. Just this past Monday I thought about what Milton would have said in response to a front page Oregonian story about how many citizen initiatives aimed at limiting the power of government had not passed in the recent election. The headline read, “Voters nip libertarian dreams across U.S.” If Milton had seen that, I think he would have responded, “It was the tactics that didn’t succeed in this election. The dreams, which are really American Dreams, live on.”

Milton Friedman, lover of liberty, is gone.  But his dreams, the dreams of countless people here and around the world, live on.

 

Read Blog Detail

Remembering Milton Friedman: A Legacy of Freedom

This year is being coined a “Season of Growth” for the dramatic gains that have been made in school choice. And, indeed, it has been, with school choice programs being enacted or expanded in more than a dozen states across the country, including Oregon. But as we celebrate those fruits and those who cultivated them, we also must recognize their original “Johnny Appleseed.”

Although Dr. Milton Friedman died almost five years ago, his impact on freedom – and specifically on school choice – continues to be recognized by freedom-loving people both in the United States and around the world.

In celebration of Dr. Friedman and the seeds of freedom he planted decades ago that continue to bear fruit, Cascade Policy Institute, in conjunction with the Foundation for Educational Choice, will host the annual Friedman Legacy for Freedom Day. On Friday, July 29th from 3pm to 7pm, Oregonians are invited to a Birthday Party and Open House at Cascade’s offices, 4850 SW Scholls Ferry Road, Suite 103, Portland. There is no cost to attend, although RSVPs are requested. Milton Friedman would have been 99 years old at the end of this month, and Cascade is happy to host this event to discuss his influence on human freedom in general and school choice in particular.

Today, Americans are gravely concerned about our country. They’re awaiting solutions to the debt crisis, rightfully worrying about inflation, and trying to improve public education’s performance and costs. In response, Dr. Friedman’s writings and ideas could not be more relevant. From Capitalism and Freedom to A Monetary History of the United States to Free to Choose, Dr. Friedman’s work contains many of the answers Americans are seeking today.

Dr. Friedman once said that “[g]overnments never learn. Only people learn.” How true. If our country’s current crises show us anything, it’s that the American people are learners. They know what works and what doesn’t. That is precisely why they’re opposing an increase to the debt ceiling. It’s why businesses aren’t hiring over concerns of new government regulations. And it is exactly why Americans are standing up for school choice – because they’ve learned it works for them and their children.

But with Dr. Friedman gone, his ideas need new spokesmen – individuals who can eloquently and plainly explain the theories and benefits of free markets. On this July 29, Cascade Policy Institute will be searching for and empowering new “Johnny Appleseeds” who can instill in the hearts and minds of their friends, neighbors, and children the values of freedom and the fruits they can bear for us all.

Read Blog Detail

Portland’s Debt Isn’t Rosy

By Christopher Robinson

The Federal Government isn’t the only one with a spending problem. Local governments are finding themselves under a mountain of debt as well. The City of Portland currently owes more than $6.5 billion in long-term obligations. That comes out to about $11,000 for each of the city’s residents.

Portland is required by law to have a balanced budget, meaning income has to equal expenditures. However, an Oregon Revised Statute permits Portland to issue revenue bonds for “any public purpose.” $3.6 billion of the city’s obligations come from the sale of such bonds. The balanced budget requirement doesn’t mean much when funding can be created so easily, simply by going into debt.

Furthermore, only $60 million of Portland’s bonds receive the highest Aaa rating from Moody’s. If the city continues massive spending without strong assets to back its borrowing, the majority of its bonds risk being downgraded. This would lead to an overall reduction in Portland’s credit rating, which would spell financial catastrophe.

The simple truth is that to remain fiscally responsible, you cannot spend what you do not have. Portland inevitably must raise taxes to pay for its obligations or cut spending. Given the still-troubled state of the economy, tightening belts and cutting spending is the best option.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Read Blog Detail

Reason Foundation authors in Portland

Cascade friends Nick Gillespie (Reason.TV) and Matt Welsh (Reason magazine) will discuss the themes and ideas presented in their new book, The Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong With America, at Powell’s Books in Downtown Portland on August 1st beginning at 7:30pm. A book signing will follow the discussion.

 

Read Blog Detail

EcoFlats: One More Unsustainable Green Icon for Portland

By Christopher Robinson

So-called “sustainable development” is a longtime political interest in the city of Portland. Although the term itself is never defined, the concept implies the use of “green” design and technologies in order to reduce energy consumption, water use, solid waste and automobile travel. The loftiest goal is “net zero,” whereby all electricity and water needs are met from on-site generation and no outside sources are necessary.

One such “sustainable” project is the EcoFlats apartment building located on North Williams Avenue in Portland’s Boise neighborhood. Recently, the development received a good deal of media coverage due to its implementation of green technologies and an “affordable” price tag. EcoFlats has no interior hallways, no air conditioning, a large roof top solar array and the goal of net-zero energy usage. On the surface it would seem an excellent model for future affordable, sustainable development; but an extensive back-story to EcoFlats’ financing and planning reveal otherwise.

First, EcoFlats’ location is no coincidence. Although promoted as a bicycle commuter friendly location (North Williams Avenue is considered a major “bicycle thoroughfare”), it is within the Portland Development Commission’s (PDC) “Interstate Corridor Urban Renewal Area.” This means businesses and developers can receive subsidies from PDC. EcoFlats sits on land previously occupied by a small equipment repair shop, which was considered underutilized space. In order to aid redevelopment, PDC provided the developer with a $740,000 commercial loan representing roughly 23% of the total project cost. Loans approved by PDC are intended to close financial gaps and may have reduced interest rates if applicants meet certain requirements, such as using sustainable technology.

In addition to the incentives from PDC, the developer also applied for Oregon’s business energy tax credit. The program covers up to 50% of costs towards the purchase of certain technologies. These include high-efficiency combined heat and power projects, such as the $200,000 solar array on top of the building.

The estimated costs are misleading. Tenants pay the energy costs for their residence, so the tax credit only benefits the developer. Proponents argue that energy costs will be lower because the building produces its own energy, cancelling out the cost of solar panels. However, the solar panels are subsidized by taxpayer money. All Oregonians, including the tenants, are footing the bill.

Furthermore, the developer of EcoFlats was not required to build any off-street parking for the building, a significant subsidy that allowed for more revenue-generating units. The developer received a parking exemption because North Williams Avenue is considered a “transit street” because it has a TriMet bus route. However, the majority of tenants likely will own an automobile, meaning the surrounding neighborhood will have to bear the burden of increased on-street parking.

Finally, EcoFlats is part of Energy Trust of Oregon’s “Net Zero” pilot program. The Energy Trust is a non-profit organization funded through a three percent, state-mandated surcharge on customers of the state’s largest energy suppliers, including PGE, PacificCorp and NW Natural. The Energy Trust works to promote reduced energy use by providing incentives from the money they collect. Projects enrolled in their “Net Zero” pilot are eligible to receive up to $575,000 in various incentives. The goal is to achieve net-zero energy consumption through careful planning and implementation of new technology. Again, however, the benefits are concentrated in developments such as EcoFlats, while the cost is spread across all who pay the three percent energy surcharge.

In total, EcoFlats has $1,415,000 in potential and realized subsidies, representing roughly 44% of the total project cost. Yet, even with these subsidies, the rents are very high for the local market. Portland Housing Bureau designates the Boise neighborhood as a low-moderate income community. Rent for 600- and 750-square-foot apartments at EcoFlats are $1,000 and $1,500 a month, respectively. This means it does not meet the requirements of low-moderate income families for affordable housing, which should represent less than 30% of gross annual income. Current Boise neighborhood residents are effectively priced out of the development.

There are clear winners and losers here. The 18 residential units and two commercial spaces are filled, which is good for the developer. The City of Portland wins, because they now collect almost double the property taxes on the land. The Energy Trust wins, because they can claim more energy savings, though whether or not the building ever achieves its net-zero energy goal will depend on the usage of the tenants. It will require a conscious effort in order to do so, and actual performance is likely to lag the estimated performance.

Oregon taxpayers and all who pay the Energy Trust surcharge are the big losers. They are required to make up the difference in costs for “sustainable development” but receive none of the touted benefits. EcoFlats is only one in a long list of heavily subsidized projects which have increased in number in recent years. Eventually, people will realize that “sustainability” in Portland is not about helping the environment, but rather about creating an image that only benefits a select few.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Read Blog Detail

Unfunded Liabilities: Oregon’s Hidden Debt

By Michael Bastasch

Congress is still debating raising the federal debt ceiling. This would allow the U.S. government to continue to borrow and to add to the already staggering $14.3 trillion in debt. However, the feds aren’t the only ones with debt problems. State and local debt is rising, including $3.1 trillion in unfunded liabilities.

Oregon’s debt is piling up as the state government continues to make future promises it won’t be able to fulfill. A study by the National Center for Policy Analysis found that Oregon’s unfunded pension liabilities totaled $47.5 billion, and its unfunded Other Post-Employment Benefits (OPEB) liabilities (mostly for retiree health insurance) were $765 million, totaling about 30% of Oregon’s GDP in 2008.

The real situation is much worse because the study failed to recognize the vastly unfunded OPEB liabilities of other Oregon government entities. A report by Oregon Capitol News showed that the largest 100 government entities in Oregon had $2.8 billion in unfunded OPEB liabilities. Including unfunded liabilities from all 1,700 government entities no doubt would reveal a much grimmer picture.

Future taxation will be determined by what government spends now and has promised to spend down the road. Taxes must increase if government debt isn’t decreased. All levels of government must reduce the debt burden on citizens to avoid severe fiscal distress and high taxes down the road.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Read Blog Detail