Portlanders have seen several iterations of the Portland Clean Energy Community Benefits Fund (PCEF) since they voted to approve the fund to kickstart more climate-friendly initiatives in 2018. PCEF— which is funded by a 1 percent surcharge on local sales at large retailers— has consistently outperformed expectations, requiring leaders to reevaluate the fund’s purpose and strategy. Now, an unanticipated surge of cash has prompted yet another paradigm shift for PCEF.  

This week, leaders in Portland’s Bureau of Planning and Sustainability (BPS), which houses PCEF, announced city budget planners have projected the clean energy fund will have an additional $540 million to spend on clean energy projects over the next five years. The money is on top of the $750 million allocated for PCEF’s Climate Investment Plan, which Portland City Council adopted earlier this year

That’s right: Portland’s clean energy fund is set to rake in more than $1.2 billion from now until 2028, and PCEF leaders already have a plan about how they want to spend it. If the PCEF committee and City Council approve the plan early next year, about half of the newly-projected funds will go to cash-strapped city bureaus for work addressing climate change. The other half is designated for street tree maintenance, green affordable housing, climate-friendly infrastructure at the fire bureau, and more. 

The influx of money is notable not only because it shows Portlanders really like to shop— healthy sales at large retailers like grocery stores have kept PCEF (very) well-funded. During a time when several crucial city bureaus are staring down significant budget shortfalls, and looking at layoffs and program cuts, PCEF’s success is an anomaly. With its latest spending plan, the fund is doing something new: Offering a lifeline to these struggling bureaus, so long as they’re engaging in projects that contribute to PCEF’s overall decarbonization mission. 

Responding to New Needs

Upon its initial implementation, PCEF’s programming was mostly dedicated to doling out grants to local nonprofit organizations, who would carry out the fund’s mission through community projects. While providing nonprofit grant funding is still a significant component of PCEF operations, the program has honed in on its goals through its new Climate Investment Plan, which provides a more targeted framework for how funds should be spent. PCEF is also now able to partner with private organizations and government agencies. 

The PCEF code changes City Council adopted in 2022 were partially instigated by a bruising audit of the program, which found PCEF had difficulty effectively allocating all the money it was raking in. But the fund’s evolution was also spurred by a new understanding of what’s needed to curb local carbon emissions. 

One good example of this shift is how PCEF has addressed transportation-related carbon emissions. The transportation sector is the largest contributor to local and statewide greenhouse gas emissions, but went largely ignored in PCEF’s first and second grant allocation cycles. Now, PCEF’s Climate Investment Plan allocates a significant portion of funding to transportation decarbonization, including by funding programs like electric bike incentives. 

Fund leaders have decided to use the additional $540 million PCEF will have access to over the next five years to respond to a citywide budget crisis impacting several bureaus. PCEF leaders initially said they didn’t want to designate funds to backfill existing programs: Its $750 million Climate Investment Plan is intended to expand the city’s capacity to address climate change and specifically targets low-income Portland residents and people of color, who are most likely to experience the worst effects of the climate crisis. However, with city departments like the Portland Bureau of Transportation (PBOT) on the verge of cutting some of its own emissions-reductions programs, it was no longer tenable for PCEF to sit on the sidelines. 

At a September City Council meeting discussing PCEF’s Climate Investment Plan, Commissioner Rene Gonzalez raised concerns about whether or not the fund “put sufficient resources toward transportation decarbonization,” considering PBOT’s “impending funding crisis.” It looks like Gonzalez’s words were effective. 

PCEF’s new spending plan allocates $282 million to six city bureaus: PBOT, the Bureau of Environmental Services (BES), the Portland Housing Bureau (PHB), the Office of Management and Finance, Portland Parks & Recreation (PP&R), and the water bureau. The remaining $258 million is dedicated to other projects, such as green affordable housing production and right-of-way street tree maintenance, both of which will receive a $100 million cash infusion. 

For PBOT, the funds couldn’t come at a more dire time. The transportation bureau has long been under-resourced and struggled with a growing maintenance backlog, and their financial outlook took an unexpected hit this spring, when Portland City Council voted to cut a parking fee increase PBOT had been counting on. Bureau leaders have been staring at $32 million in budget cuts in the next fiscal year, which would require laying off dozens of staffers and eliminating integral programs. 

Under the new PCEF spending plan, however, PBOT would receive $112 million over the next five years: Not enough to completely solve their money woes, but a much-needed lifeline. The funds would be split into a one-time $30 million allocation and $16.4 million annually until 2028. If approved, the money will go toward bike lane maintenance, active transportation capital projects, community programming, new, energy-efficient LED streetlights, and replacing the Portland Streetcar fleet. 

“We are appreciative of the $112 million investment in transportation from PCEF. With over 40% of Portland’s carbon emissions coming directly from transportation, we have significant work to do to meet our climate goals,” PBOT Communications Director Hannah Schafer said in a statement to the Mercury. “This funding will help PBOT fulfill a key priority of our bureau, the city, and PCEF: making low-carbon travel options safe, accessible, and convenient for all Portlanders.” 

Schafer said PBOT is “currently assessing how this will impact our overall budget shortfall.”

“We anticipate this funding will help us keep some jobs and programs that otherwise would have been cut,” she said.  

PCEF’s emphasis on green housing development is in response to Portland’s housing affordability crisis, and the benefits that dense, multifamily housing projects can have for reducing a city’s carbon footprint. 

At a press conference on December 13, Rubio and BPS Director Donnie Oliveira faced pushback about the focus on housing development, with one reporter suggesting voters didn’t approve PCEF in 2018 because they wanted the funds to support housing. 

“We’re not just investing in things because we think they’re cool,” Oliveira said. “They actually have to demonstrate greenhouse gas reductions or sequestration, they have to show a community benefit. All the goals and requirements of the fund will still be applied to the housing projects that are funded.”

Oliveira said housing developments built with PCEF funds will contain energy-efficient heating and cooling systems like the ones the program is installing in existing buildings. If the developments are prioritized for transit-dense, walkable communities, the city will see an additional climate benefit through reduced single passenger vehicle usage. 

What’s next for PCEF?

In addition to the new spending plan, PCEF launched its third request for grant proposals at the end of November. The fund will allocate between $40 and $60 million in grants to qualified nonprofit organizations, specifically focused on energy efficiency and renewable energy, transportation decarbonization, regenerative agriculture, green infrastructure, and workforce and contractor development. The grant application will close on February 1. 

The PCEF committee will need to approve the new spending plan before it goes to City Council early next year. It’s unclear at this point if any members of the committee will want to make changes to the plan. In a PCEF press release, committee co-chair Ranfis Villatoro expressed optimism about the new plan, saying it is “yet another opportunity to go even further while continuing to remain aligned with program goals.”

You can read more about the spending plan for the additional $540 million here