Green Investment Failure

By Rebecca Steele

Building “green” is all the rage in Portland. Eco-roofs and solar panels have become routine, and now the goal is for “net-zero” buildings that consume less energy or water than they produce.

However, while the idea is green, expect red. The City of Portland’s last attempt to promote net-zero construction ended in a subsidized spending spree.

In 2005, the Green Investment Fund was established as a competitive grant program, awarding money for five years to spur green building. Enormous government subsidies were required for most grantees. DaVinci Arts Middle School, the only project actually to achieve net-zero energy, was realized because of $500,000 in community-donated services. The June Key Delta House, a proposed net-zero community center, received over $400,000 in PDC grants and loans. The Blanchet House of Hospitality, also hoping for net-zero energy, is enabled by a PDC $2 million grant and land swap. Other subsidized Green Fund projects failed miserably. Construction never began on the million-dollar Shizen condominiums or the Kenton Living Building, both net-zero energy contenders.

Now the City wants to build the Oregon Sustainability Center, a $90 million high-rise near Portland State University. The proposed net-zero building would require $80 million in University bond revenue, $6 million from the City, and various other subsidies. Yet even then, the rents would be the most expensive of any office building in the state.

Going “green” takes green. The city should learn from the experience of the Green Investment Fund before it commits taxpayer money to a new “sustainability” center.

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

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Posted by at 06:00 | Posted in Measure 37 | 28 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Ron Marquez

    …..”Going “green” takes green. The city should learn from the experience of the Green Investment Fund before it commits taxpayer money to a new “sustainability” center.”…..

    The city learns nothing from past experiences and will continue it’s head long plunge into “greeness.” Witness the plastic bag fiasco Mayor Adams has proposed.

    Every morning when I wake up, I thank God for getting me through the night and that I had the good sense not to settle in Portland.

  • Anonymous

    If this is like the Oregon University System planned venture into South Waterfront with OHSU those bonds will be paid with future tuition revenue. Both another chapter is gross misappropriation by reckless and irresponsible officials.
    A new Republican Governor will replace the board of higher education and purge the system of the zealots and fools.
    Kitzhaber will leave intact all status quo “stakeholders” and the madness will continue.
    PSU is planning on spending millions to relocate their entire biology and chemistry departments to SoWa. The new OHSU/OUS building in SoWa will pay no property taxes while hobbling both institutions with massive debt service. Officials are excited about this venture.
    Why? Because just like with Urban renewal schemes, they are able to waste millions of tax/university dollars and remain entirely insulated from any consequences.
    Not one of these dishonest scheming incompetents will have any of their livelihood effected at all. They won’t be investing any of their own money, won’t be taking any personal risks and will never take responsibility for any adverse outcomes.
    In fact they will use additional public resources to concoct success regardless of what is spent or produced.
    This is a pattern long adopted and refined to prevent any accountability and maintain control.

    There is not a Democrat politician in this state who would dare fracture this regime. Kitzhaber is even worse having already served two terms preserving this entrenched and dysfunctional status quo.

    So why do democrat activists want to preserve the dysfunction strangling Oregon?

    They simply do not care about anything but electing democrats. If they are Sam Adams or other defective people so be it.

    • eagle eye

      “If this is like the Oregon University System planned venture into South Waterfront with OHSU those bonds will be paid with future tuition revenue.”

      Aside from your claim about how those buildings will be paid for — what is your source for that? — what exactly is wrong with those new higher education buildings for PSU/OHSU? And how do you think they should be paid for?

  • Rupert in Springfield

    Nothing says more about the stock politicians are pulled from than this sort of thing.

    Politicians aren’t incredibly stupid people – its just it should be realized that their job is just that, politician. They generally have no expertise in engineering or business and if they even deign to ask experts to study the matter they are apt to hire yes men who will give them the answer they want.

    Rare is the politician that gave up a successful business or engineering practice to go into politics – yet this kind of ninnydom is the sort of thing any businessman or engineer could take one look at and realize was almost certainly destined for failure.

    The businessman would focus on the wasteful nature of making a building using fad technology, the engineer would point out that a building to produce more water than it uses is generally called a well, more power than it uses an electrical plant.

    It used to be said the most dangerous thing was when politicians committed sociology.

    I am beginning to think a far more wasteful practice is when people with no particular expertise start playing engineer and businessman and treating the taxpayer money as play money for their little game.

    • valley p

      “Rare is the politician that gave up a successful business or engineering practice to go into politics”

      Maybe so, but in this case one of the city commissioners is a professional engineer.

      A “businessman” would look at a project differently if they expected to make a profit, as they should. But public investment is not usually aimed at making a profit. It’s aimed at other public benefits.

      “the engineer would point out that a building to produce more water than it uses is generally called a well”

      A well is not a building, its a hole in the ground. And if more gallons of water fall on a roof surface over the course of a year, and that amount is greater than the water consumption within a building, then it is simple math to conclude that a building CAN CAPTURE, not PRODUCE more water than it consumes. My own feeble house rainfall capture system comes close to this, the only limit being lack of adequate storage.

      “more power than it uses an electrical plant.”

      See above. Given enough surface area available for solar collectors a building in Portland can capture more energy than it uses. This ignores the question of whether cheaper, higher polluting energy sources are available and whether the public is better served by continuing to use polluting sources or should invest in new, less polluting sources.

      But as long as “conservatives” like yourself think it is ok to shove the cost of pollution onto others, then I guess you are right.

      • Rebecca Steele

        Whether or not it is possible for a building to be net-zero for energy and water use is not the larger issue. Rather it is whether or not it’s okay to use taxpayer dollars to experiment with green building. A net-zero building the size of the Oregon Sustainability Center has never been done before. Building green is highly expensive and will translate into higher rents for tenants. Critics say that the OSC would need to charge $31 to $34 per square foot. Similar office space in downtown Portland costs around $25 per square foot. One potential tenant, a firm who makes sustainability industry investments, isn’t willing to pay more than $20 per square foot.

        In this economy Portland can not afford to invest $90 million in a building and not be able to fill it with tenants. Park Avenue West Tower should serve as a warning. Construction on this 40 story office building has been halted for over a year due to lack of financing and no committed tenants and is not expected to restart in the foreseeable future. If a building with no net-zero aspirations cannot find tenants it’s foolish to believe that one with higher rent premiums will. Unfortunately, while going green is a nice ideal in this economy few companies are willing to pay significantly more rent in order to do so.

        “Conservatives” are not trying to shove the cost of pollution on others, rather the City of Portland and those who have unrealistic net-zero aspirations are trying to shove the higher cost of building green onto taxpayers- whether they value it or not. If and when constructing a net-zero building becomes economically viable then allow a private firm with private investors to do so.

        • valley p

          “Rather it is whether or not it’s okay to use taxpayer dollars to experiment with green building.”

          And the answer should be that this is ok if the voters who elected the people who made that decision agree with this use of their money. If they don’t then they can vote out the old and in the new.

          “”Conservatives” are not trying to shove the cost of pollution on others..”

          Au contraire, indeed they are. They are working overtime to preserve the right of people to burn up as much fossil fuel as possible as quickly as possible with no concern at all for the pollution emitted. Conservatives have fought against every anti pollution bill or program ever created since the dawn of time, probably since the first caveman (or woman, call her Oonal) suggested that Og (the first fire maker) be required to cut a hole in the roof of the cave to let the smoke out. Og argued that it there was no proof smoke was bad for you (in spite of the increase in coughing since he started the fire thing) and anyway it would be bad for the clan’s economy to divert resources to chiseling out a hole. (Unfortunately that clan died out from lung cancer, while the next clan over did create the first chimney and prospered).

          Private investors like Og lack the incentive to innovate on green building technology because they don’t factor in the externalities of the pollution their buildings emit. Why should they pay for what they are given for free?

          • Dan

            Valley p,

            Have you heard of property rights and protection of property rights? One of the most fundamental and elementary purposes for government is to protect property rights which include pollution from various energy forms.

            You can stop subsidizing “investments” that are being made through goverment force by protecting property rights of those that are damaged by pollution externalities.

            This way those that create the pollution pay for the damages caused and we are not using government to force others to value expensive and usually unrealistic plans to make net zero energy buildings.

          • valley p

            Yes Dan, I’m a property owner and familiar with property rights. Tell me how my property rights protect me against pollution from the Boardman coal plant. And tell me what rights I have against excess CO2 causing the climate to warm. Who can I sue, and under what legal grounds?

          • Steve Plunk

            Since you cannot provide evidence that CO2 is causing climate change and cannot prove specific damages from such change if it were occurring you have no grounds for a claim. AGW is still a theory and far from proven.

            This type of building represents the way architects, builders, and bureaucrats prey upon the fears and ride the fads of society. Shameless snake oil salesmen plying their trade.

          • valley p

            OK you proved my point. I can’t claim property rights damage to sue for externalities associated with pollution generated by buildings that waste energy. Thanks.

            As for evidence on CO2 causing climate change, every major scientific organization in the US and most in the world have studied the evidence and have said in no uncertain terms that CO2 accumulating in the atmosphere primarily from fossil fuel energy use is indeed causing climate change. That you don’t accept this evidence is your issue, not mine.

            The fear mongering is from the side that fears change.

          • Steve Plunk

            I didn’t prove your point. I helped Dan’s point. Provable damages from spillover effects are worthy of court action. Unprovable allegations are not. Inefficient buildings will pay more energy costs while your claims of environmental damage have no basis. The fear mongering is coming from the AGW crowd and there nonsense about polar bears, ice caps, and glacier melt. All proven to be false evidence.

          • Dan

            Your example of the caveman was absolutely ridiculous. Protection of property rights would have solved that easily.

            Your alarmist claims that the sky is falling due to a small increase in CO2 (not an actual pollutant that causes ANY direct negative human health effects) should not be eligible for property right infringement.

            Court cases all around the US have turned these claims and down. There was one in Louisiana making some claim about Katrina being caused by global warming caused by oil companies and there was one also in Alaska with an Inuit tribe being relocated due to sea levels. Both failed because of the obvious reasons…..alarmism not actual science was the background of their claims.

            Tell me this….Are you affected by the real externalities (not CO2) by boardman?Are they dumping pollution that affects your health or your property in a negative way? If you are then you have a legitimate claim. Or are you just upset because you are another irrational enviromentalist that would simply sleep better at night not having affordable and reliable energy that Boardman produces?

          • valley p

            “Protection of property rights would have solved that easily.”

            Only if the cave people had laws that protected individuals against pollution created by others. Otherwise, if Og were larger and stronger and had a bigger club, he would get to be the decider.

            “Your alarmist claims….”

            They are not my claims. They are the claims of every major scientific body in the United States.

            “Court cases all around the US have turned these claims and down. ”

            2 cases? That does not amount to much. A single storm event cannot be scientifically tied to a global rise in temperature, so no surprise on Katrina. As for the Inuits, I think they have a good case. The permafrost they live on is melting, and when that happens the entire infrastructure of the village sinks and breaks. There is not much question that warming has been much greater in the arctic, and the climate models all predicted this. The problem is, who do they sue? You and me for driving too much? Car companies? Oil companies? Utility companies? Who’s pockets do they have to reach into?

            This is why your “solution” is nonsense. We can’t file property damage claims, even if we prove these attributable to global warming, because the cause of the problem is too dispersed.

            Am I affected by Boardman pollution? Absolutely. I breathe their pollutants. I sweat in the summer heat caused by their CO2. I lose my views of the Columbia Gorge and Mt Hood to their haze. I may be drinking their mercury. Am I an irrational environmentalist? No, I am a quite rational conservationist. The economic evidence is clear that individuals and businesses will externalize their costs onto others rather than bear the burden of internalizing as long as they have that opportunity. Boardman only produces “affordable” electricity because it can externalize its costs. Its fools gold and bad economics.

          • Dan

            “I sweat in the summer heat caused by their CO2.”

            Yep…argument ends here. Irrational and stupid…

            Shouldn’t have wasted my time to begin with.

          • valley p

            Dan, you can run but you can’t hide. We just had the 2nd hottest year on record in 09 (05 was the hottest) and the hottest 1st 6 months of any year globally. While Portland is having a nice cool summer, the rest of the nation is boiling. But lets keep pretending we don’t have a problem and there will be no economic consequences. Lets pretend we don’t need more energy efficient buildings. Let’s pretend that cheap electricity is actually cheap.

      • Rupert in Springfield

        >See above. Given enough surface area available for solar collectors a building in Portland can capture more energy than it uses.

        What idiot told you that?

        This is the most inane thing you have said in a while.

        How do we know this?

        Well, because if what you said was true – then you would be the number one developer with your magical buildings where no one ever pays for heat and electricity.

        You think developers build office buildings with heating and cooling costs, lighting costs etc. just because they like paying bills?

        What nonsense.

        Please – Restrain your pop offs of ninnydom to a level that doesn’t insult the intelligence of even school children.

        • valley p

          “What idiot told you that?”

          Well, to start I have a friend with a house in southern Oregon who has a house built 30 years ago that is off the grid and generates all the energy it (he) uses. To add, I have an architect friend who has designed several “net zero” buildings here in Portland for clients willing to spend the money it takes. Neither of my friends are “idiots” however.

          Developers can build buildings more cheaply by relying on energy provided by the Boardman coal plant and thus shift the cost of their pollution onto others. That is why they don’t build solar or insulate to the max.

          So the only thing amounting to inane, ninnydom, popping off around here is your response. Even school kids would have understood what I wrote.

          • jim karlock

            School kids & progressives. Both scientifically illiterate.

            *First water.*
            Sure for a single occupancy house you have lots of water falling on you . Now divide that water per unit by 30. (for 30 floors.)

            Same problem for a roof of solar panels. Can help a bit if we lined the south wall with solar, but that blocks the light and doesn’t work with closely spaced buildings. Oh, and if we all did that we would need massive power on cloudy days and nothing on sunny days. But I have every confidence that will find a way to hide the storage problem.

            *Basic Problem* is still economic. Why spend a million on solar panels, when putting that million in the bank will pay the electric bill and have left over cash. Only governments a progressives think this is a good deal.

            If you really cared about sustainability, you would advocate single story houses on 1-10 acre lots.


          • valley p

            Jim, in a “net zero” building, the waste of water use is cut way down. For example, waterless urinals and faucets with high air pressure. So in a new office building, there isn’t that much water use, unlike in a home that does laundry, where lots of showers are taken, and so forth. This allows rainfall capture to handle all uses except drinking water unless it is well filtered and sterilized, like at my own home.

            And, in a modern, net zero office building, there are all sorts of measures in addition to solar panels. The types of lights used, the use of natural light, the capture of waste heat, and better insulation all add up. Go talk to any architect who designs commercial buildings and they can give you a tutorial on how to design a building that captures as much energy as it consumes. Then you can write back and apologize for calling others who know more than you, including school kids apparently, ignorant.

            Yes, the problem is as you say “economics.” As long as building owners can dump their pollution costs onto the wider public and nature, they can waste energy and save money. That is what I’ve said 3 times now. Its an economic question, not a technical question. Tell that to Rupert please.

            I’ll take a pass on your version of sustainability. Its hogwash.

  • Bob Clark

    It’s amazing wall street and individual investors keep extending this city credit. I guess judging from the Greece experience it can be decades for a financial blow up to occur. I just hope I am outside the city limits when it does occur, and don’t get tagged for such fiscal irresponsibilities (which seems to be standard practice at Portland cityhall).

    I don’t think students quite understand they could get a lot more education if their tuition weren’t being splurged on high end buildings.

  • Anonymous

    eagle eye,
    In case you were unaware rising tuition and revenue shortages is a big problem in the Oregon University system.
    There is no future excess tuition revenue to use for debt service.
    The gross recklessness and irresponsibility in the Oregon University System planned venture into South Waterfront with OHSU by bonding against tuition is inexcusable.
    The Venture itself is a crap shoot without merit. The $250 million price tag is a misappropriation starting with the $110 million the legislature hid in special session closing bill. Bonded against future lottery proceeds it will divert and devour at least $200 million now going to other needs. Similar to the $250 million going to Milwaukie Light Rail that will divert $400 million by the time it is paid off.
    But the legislature never read the bill and OHSU/OUS does not care where the money is taken from.
    This is standard operating procedure for Oregon.
    Like the abuse of Urban Renewal where now revenue that would fund 800 teachers is diverted from the State Common School fund every year.

    Your naive presumption these buildings will provide a worthy benefit for higher education is exactly like early Tram support and ignorant acceptance that 10,000 biotech jobs would follow.
    Instead the Tram is a flop and the first “higher ed building in SoWa at the bottom of the Tram generated no biotech research at all. The OHSU (doctors) Medical Group who built it ended up signing over the building to OHSU.

    You foolishness is a perfect fit for the lunatics running so much of Oregon.
    My sources are the government agencies where the facts can easily be found but your progressive pals cover up.
    What’s wrong with those new higher education buildings for PSU/OHSU is they are not to improve higher ed. They are eviro-zealot projects.
    They should not be wasting millions in operations revenue with misguided and dishonest people like providing cover.

    These radicals pushing sustainability, global warming, light rail, Urban Renewal/TIF and the rest of their mess are ruining Oregon.
    A bunch of Vera Katz types who are so incompetent and agenda driven they advocate dysfunction without recognizing it.

  • eagle eye

    Just asking. I guess I should be grateful to learn that I’m naive, presumptuous, foolish and one of the lunatics. I couldn’t make much sense out of the rest of your post.

    I take it you don’t think this new building is a good deal. I can hardly judge. I’ll tell you, in Eugene, UO has had a lot of construction the past 20 years or so — new library, new law school, new business, education, music schools, new science buildings, of course new athletic facilities including the sumptuous arena. Most people on and off campus seem pretty happy with the new building, except in some cases for the arena. Certainly, with enrollment growth, the new space must have been needed, as well as updating of the facilities. I don’t see why OHSU/PSU shouldn’t be able to do as well.

  • Jeff

    Green will never “pay”. Ever. We do green because we love the earth. Our mother Gaia. Rejoice and be proud to save her.
    The cost in lives and living will always be more than in the dollars.
    Learn it now.

    • eagle eye

      I hear you, Jeff, but I have to demur. Things like solar energy (and monstrosities like the landscape-wrecking wind turbines going in on the Steens Mountain, thanks to the enthusiasms of our Governor) are not doing much to save mother Earth, they’re hurting. Because they distract from real environmental issues (such as not treating our landscapes with brutishly ugly monstrosities, wildlife habitat, preserving natural areas, etc etc) in the name of very costly feel-good initiatives.

  • Anonymous


    These buildings are academia bling.

    The $250 million OHSU/OUS, SoWa ‘Life Sciences Collaborative Center” building is another horrible venture by OHSU. Too bad they got the OUS into their mess.

    $110 million was stuck in an end of special session bill no one read. It’s lottery backed bonds so it will divert $200 million from the lottery revenue stream.

    Add that to the $400 million Milwaukie Light Rail will also divert from the lottery. The same people are perpetrating both and the MLR will wrap around the OHSU/OUS building in SoWa.

    Millions more will be bonded against future tuition revenue that has not been projected as be available.

    The hype of a biotech research cluster has returned with this SoWa building along with other pure propaganda.

    OHSU has been mismanaged into a fiscal quagmire and SoWa is a money pit.

    Of course there has been lots of university construction the past 20 years or so.
    You just assume this new building is normal growth becasue you know nothing about it, OHSU or the PDC?
    Like I said naive. And your presumptionof merit provides cover for the incompetent and dishonest people behind these boondoggles.

    • eagle eye

      You are telling me nothing of stubstance about the OHSU building, nothing useful.

  • bennie

    What a total waste of money. Of course Portland has plenty of “Other Peoples Money”!

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