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Portland could make big businesses pay to protect communities of color from climate change

A first-of-its-kind ballot measure in Portland, Oregon, would create a fund–via a surcharge on large companies–to support clean-energy projects in low-income communities of color.

Portland could make big businesses pay to protect communities of color from climate change
[Photo: Cary Watters]

Yondella Hall has lived in Portland, Oregon, all her life. “I love the rain,” she says. She grew up in north Portland, where, due to the city’s history of segregation, residents of color mainly clustered. Now with two young children, she lives in Cully, another diverse neighborhood slightly to the east.

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As much as she loves the city’s wet weather, it became a problem for her a few years ago when her house, which was built in the 1940s, sprung a leak in the roof. Hall, who works as a family advocate for a local nonprofit, learned about how to access a home repair loan through Habitat for Humanity from a client, who also told her about another nonprofit called NAYA, that was providing weatherization services and energy efficiency upgrades to Cully residents to help them remain in place amid a flood of gentrification. Hall went from coping with a leaky roof and a house in which she could see her breath in the winter, to a more insulated home and a drastically lower energy bill. A new set of windows, a patched roof, and some insulation, she tells Fast Company, means that she no longer has to seek out a second job to pay her energy bill through the winter.

For Hall, the small energy efficiency upgrades have been transformative enough that she’s now attending community meetings, talking to her fellow residents about a ballot measure up for a vote this November that would create a pool of money to help other low-income Portlanders access similar resources. Called the Portland Clean Energy Fund, the measure was developed by a diverse coalition of groups, including the NAACP Portland Branch, the Asian Pacific American Network of Portland, the Coalition of Communities of Color, the Sierra Club, and a local clean energy nonprofit called Verde. For low-income communities, it aims to create both a funding stream and jobs around green energy projects like Hall’s energy efficient retrofit, but also increased tree canopy and renewable energy installations. And it will do so by levying a surcharge on some of most profitable businesses operating in the Portland area.

“It’s a community-of-color-led initiative that is really born out of both a strong desire to address climate change and out of frustration at bearing the brunt of the fossil fuel economy, and not seeing the benefit of Portland’s clean-energy transition in their communities,” says Tony DeFalco, Verde’s deputy director. The PCEF specifically targets companies in the Portland area that make more than $500,000 in revenue locally and more than $1 billion nationally, and would require that they pay a 1% surcharge on a fee they already pay to operate in Portland. Groceries, medicine, and healthcare services would be exempt. The measure targets large companies–in the Portland area, around 120 including Apple, Walmart, and Target meet the terms of the measure–because they have the longest and most complex supply chains, and as such, emit high rates of carbon that disproportionately impact low-income communities of color.

The PCEF generated double the number of signatures required to land it a spot on the ballot in November, when residents will decide whether to approve it. While there has been pushback to the initiative, mainly from companies and local business councils, many in Portland, including city commissioner Chloe Eudaly, are excited about the initiative. “The Portland Clean Energy Fund is the first environmental measure led by communities of color to make it onto our local ballot, and as far as I know, it’s the first in the state and possibly the country,” Eudaly tells Fast Company. Contextualizing the initiative within the larger “just transition” movement, which aims to create greater justice and equity for marginalized communities alongside the shift to a green economy, Eudaly believes that the measure will begin bringing some benefits to residents and communities within the city that have long been overlooked and left out in the conversation surrounding sustainability in Portland.

[Photo: courtesy of Verde]

Bridging a Divided Portland

Cully, where Hall lives, is one of those communities. It’s bounded by an industrial zone and interrupted by commercial roads and contaminated factory sites that have fallen into disuse; it’s poorly served by transit and lacks the pedestrian and bike paths, parks, and neighborhood cohesion that may spring to mind when one first imagines Portland.

The PCEF does not claim that the businesses from which it’s aiming to raise revenue directly caused this stark division in Portland. Though known in the pop-culture discourse as a haven of artisanship and environmental sustainability, Oregon history isn’t as discussed; upon joining the union 1859, it originally forbade black people from living within its borders. Today, Portland, at around 72% white, is the whitest city in America, and its lower-income communities of color have ended up pushed up against its industrial past, and locked out of the city’s clean energy efforts, encapsulated in the city’s Climate Action Plan, which tend to reach its whiter, wealthier residents first.

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“Portland has a reputation as a hotbed of sustainability, but people of color and people in low-income communities have not been driving the city’s sustainability investments or really benefitting from them,” DeFalco says. One of those investments is the Oregon Energy Trust, which offers a rebate for residents who install energy efficiency upgrades in their homes. But Brian Allbritton, executive director of the Oregon Energy Fund, which helps people facing financial emergencies pay their electricity bills, points out that “you have to spend money to get the credit for the upgrades.” If you don’t have money to buy the energy-efficiency upgrades, “there’s nothing to help you,” he says.

As the Portland area faces the likelihood of more extreme heat in the summer and frigid temperatures in the winter, the gulf between people who can afford upgrades and those like Hall, who need outside assistance to install them, will grow. Already, low-income households in the Portland area pay up to 9% of their monthly income on their energy bills, according to a 2016 report from the American Council for an Energy-Efficient Economy. It’s nowhere near as much as the nearly 25% low-income people sometimes pay in Memphis, but too steep, Allbritton says, for families already living on few financial resources, and much higher than the 4% wealthier households pay. The report names Portland as one of the five cities that’s invested the most in utility-scale energy efficiency programs to date, but notes that “even when cities do have strong utility programs, there is no guarantee that low-income households will benefit.” Often, that’s due to a lack of up-front funding for upgrades and green-energy projects, and a lack of communication with communities in need. The PCEF aims to address both.

[Photo: Damon Motz-Storey]

Creating Greener Neighborhoods

Portland knows it will take significant work and investment to bring neighborhoods like East Portland and Cully up to speed with the rest of the city’s sustainability progress. In its 2015 Climate Action Plan, the city of Portland delves into statistics that illustrate the divide between the city’s neighborhoods of color and the rest: While 44% of residents in the rest of the city live less than a quarter mile from a bike route, only 21% of East Portland residents do. Similarly, transit service is notably reduced, and sidewalks have not been maintained. Residents in these neighborhoods, as a result, face much higher exposure to exhaust, which leads to poor health outcomes like asthma and heart disease. Asthma rates in East Portland reach up to 25%, compared to just around 3% to 10% in whiter, more affluent parts of the city.

While the city has pledged, in the report, to prioritize transit, cycling, and pedestrian infrastructure in East Portland–both to drive down carbon emissions from driving, and create greater connectivity with the rest of the city–the Climate Action Plan is less clear on how it will deliver other crucial upgrades, like individual home energy efficiency projects and tree canopy cover.

While seemingly a small issue, residential energy efficiency projects of the variety the PCEF wants to fund not only help people like Hall pay less for their bills and live more comfortably, they also represent a significant opportunity to drive down emissions at scale. According to a report from Habitat for Humanity on the need for energy-efficiency projects in low-income neighborhoods, “energy efficiency remains our greatest single energy resource, generating more available energy than oil, natural gas, coal, and nuclear.” Furthermore, carrying out both energy efficiency upgrades and renewable projects, like solar panel installations, represents an opportunity to build out a job market in the communities that stand to benefit from those projects. The same report points out that even though clean energy projects in low-income neighborhoods produce tangible benefits both for residents and cities as a whole, financing such projects remains a hurdle, which is what the PCEF wants to address.

Community health projects, like increasing tree cover and green space, face similar financing hurdles–despite the fact that greenery is a known tool to both reduce pollution and mitigate heat islands in the summer, which Portland is increasingly dealing with. A 2016 study from the U.S. Forest Service, for instance, found that every $1 spent on urban trees delivered over $5 in benefits, from improving public health to driving down local temperatures, which in turn drives down the need for air conditioning–something weatherization also helps with. The PCEF committee wants to drive home how interconnected all of these solutions are, and to ensure that the people who stand to benefit most from them have a say in how they’re implemented.

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[Photo: Cary Watters]

Why Target Big Business?

Often, communities rely on the public or nonprofit sectors to fund these upgrades. DeFalco and the community groups that developed the PCEF maintain that big businesses have a role to play. Their operations, after all, depend heavily on the carbon economy, and they traditionally invest less in local communities than their smaller counterparts: According to the PCEF coalition, for every dollar spent at a national retailer like the 120 targeted by the measure, 58¢ get recirculated back into the community, as opposed to 73¢ from a dollar spent at a local store. The PCEF, DeFalco says, could essentially service as a corrective to this dynamic, and one that encourages large corporations to use their financial resources in way that offsets the damage done by their operations, and creates more opportunity for local investments.

In Portland, businesses must pay a fee to secure a license allowing them to operate in the city; the heft of that fee varies in accordance with how much revenue the business rakes in. The PCEF calls for a surcharge of 1% that business’s annual fee, and that additional amount would go into the fund. The PCEF coalition expects the fund will raise over $30 million annually–the city won’t disclose exactly how much each business pays in license fees to the city, and how much, consequently, their 1% surcharge payment will amount to, DeFalco says. A steering committee made up of leaders from the supporting organizations will direct the fund into a variety of community projects, from the type of weatherization upgrades from which Hall benefitted, to solar and tree canopy installations in underserved areas, to job training initiatives in green-energy sectors for people from lower-income neighborhoods of color. “It’s a measure that could really tackle climate change and inequality,” DeFalco says.

While the PCEF is unique in its structure–and placing a surcharge on businesses is especially significant in Oregon, which lacks a sales tax–it does fall in line with a spate of recent efforts to hold large companies more accountable to their spillover effects on communities. It’s not, however, always an easy battle. Seattle, recently, enacted a “head tax” on large companies like Amazon and Starbucks to fund housing for homeless and low-income individuals, only to retract it after pushback from those same companies. More successfully, California’s cap-and-trade program is financing an initiative to expand access to solar energy for affordable housing residents.

[Photo: Madison Rowley]

The Pushback

As with any legislation that ultimately asks businesses to pay more money to operate, the PCEF is meeting with some pushback. Leadership of the Portland Business Alliance, a group of over 1,900 companies including local heavy-hitters like Nike and smaller local entities like Deschutes Brewery, maintains that while they applaud the equity goals of the fund, they take issue with the mechanism of raising the money. It’s important to note that the Alliance leadership does not speak for all its members–Nike, for instance, according to DeFalco, is remaining neutral on the proposal. Apple, which is not an Alliance member but will be affected by the surcharge, is also remaining mum.

“It’s tiny,” DeFalco says, “and when you look at the businesses–Home Depot, Walmart, Bank of America, Nike–that would be affected, it’s really tiny.” But many of those businesses, both under the umbrella of the Portland Business Alliance and a smaller coalition called the Keep Portland Affordable PAC, formed specifically to push back against the measure, say that small as the surcharge is, it’s ultimately consumers that will be paying it. Pat McCormick, a spokesperson for the Keep Portland Affordable PAC who runs a public relations firm in Portland, says that the PCEF bears too much similarity to Measure 97, an unsuccessful statewide initiative in 2016 to levy a gross receipts tax on large companies to raise revenue for issues like education and healthcare. Ultimately, what sunk Measure 97 was lobbying from the opposition campaign, with which McCormick was involved, that reminded voters that “much of the taxes are going to be paid by consumers in the form of higher prices,” he tells Fast Company. “That’s the same concern being raised about this measure.”

In a statement provided to Fast Company, Tiffany Wilson, director of communications for Walmart, echoed his sentiment: “We shouldn’t make life even more difficult for families already struggling to get by, and that’s what this duplicative tax would do.” Because the PCEF is arriving before voters as an activist-backed ballot initiative, not a proposal from the local government, the City of Portland has not performed an analysis of how the surcharge would affect local pricing. But the City Club of Portland, a nonprofit research organization that examines issues facing the area, conducted research into the likely effects of the 1% surcharge on prices people will actually see in stores, and found that there’s little evidence they will change. “Current research does not support that a municipality-specific corporate surcharge will increase prices or negatively influence the labor market in any significant way,” the City Club concluded in a report on the initiative.

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And at Business for a Better Portland, the city’s nonprofit commerce organization that advocates for business as a player in community equity efforts, response to the PCEF has been positive. “We are very sensitive to the concern about impact on consumer-facing prices,” says Ashley Henry, BBPDX’s chief collaboration officer, “but we think that the impact would be minimal, if at all. But more importantly, it’s the low-income communities and communities of color themselves that are the primary proponents of this measure, and our sense was that if they were the ones advocating for it, it was an indication that there is not much cause for concern about the impact on pricing.”

[Photos: Rick Rappaport]

An Incomplete Solution

For as much as the state of Oregon positions itself as a progressive leader, particularly in the sustainability arena, its lack of recourse for raising funds from businesses poses a real problem. On top of its lack of sales tax, Oregon’s corporate taxes are among the lowest in the country, and the state’s “kicker,” or rebate, returns revenue to individual and corporate taxpayers when the state lands itself with a budget surplus, rather than saving it for projects like that which the PCEF aims to fund. Revenue generation in the state of Oregon, in short, “is a battle royale,” DeFalco says. The state lacks a consistent mechanism for creating balance between businesses that are permitted to operate relatively freely, and people at the bottom end of the socioeconomic ladder, who often lack assistance for basic needs.

In the context of climate justice, residents feel this absence acutely. Portland was the first city in the U.S. to develop a climate action plan, which it’s updated every several years since 1993. The latest iteration, from 2015, lays out a plan to move to reduce carbon emissions 80% by 2050, and gestures, for the first time, toward building equity initiatives, like energy cost mitigation for low-income households, into the strategy. But as the PCEF coalition has noted, there’s a difference between calling for greater equity, and actually putting the financial and organizational resources behind supporting it.

The $30 million in annual revenue the PCEF would raise would not, in itself, come anywhere close to accomplishing the goals of the Portland Climate Action Plan, which as of 2017, also include a shift to 100% renewable energy by 2035. (The city does not release numbers on the total cost of implementing the Climate Action Plan, but the city has requested $30 million in funding just for ecosystem restoration projects around the Willamette River–one small component of the overall strategy.)

The PCEF coalition does not disagree. Rather than a way to fully meet the demands of the Climate Action Plan, the PCEF, DeFalco says, “is one tool to move us there,” and on top of that, it’s a way for disenfranchised communities in Portland to say to large businesses: “You need to pay your fair share to address some of the impacts that your operations have, and to put back into the communities where you operate and pull capital out of,” DeFalco says.

With the money generated through the surcharge, the PCEF committee can begin funding crucial energy efficiency projects and upgrades in communities that, unfortunately, have too often been left out of the conversation in Portland, and in Oregon as a whole. The state and the surrounding Multnomah County have been outspoken about their commitments to a transition to a clean-energy, low-carbon economy, but have lagged in making equity a priority. Too often in the state and the city, it’s an unseen issue. The PCEF creates visibility for communities and people that have faced a history of disenfranchisement, and puts them first in the conversation around how to create equity while transitioning to a green economy.

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About the author

Eillie Anzilotti is an assistant editor for Fast Company's Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.

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