The astonishingly poor performance of a “green jobs” program in Seattle should raise serious concerns about other proposals to channel public funds toward risky efforts to further inflate the green economy bubble such as candidate for Washington State Governor Jay Inslee’s plan to use public pension funds for investment in high-risk green startups.
Seattlepi.com reported Tuesday that a $20 million federal grant to fund for energy efficiency upgrades – projected to provide insulation upgrades to as many as 2,000 Seattle-area homes and create 2,000 middle-wage jobs – has fallen far short of those lofty expectations.
“[M]ore than a year later, Seattle’s numbers are lackluster,” the article stated. “As of last week, only three homes had been retrofitted and just 14 new jobs have emerged from the program.”
The comment from the city about coming up 99.3% short of expectations was classic doublespeak.
“Yes, we’re not seeing as many completed retrofits as we wanted to,” said Joshua Curtis, the city’s manager for Community Power Works. “While everyone would like to see more upgrades, I think we’re feeling cautiously optimistic.”
Under the program, property owners apply to receive federally-subsidized loans and incentives for energy efficiency upgrades to homes and certain types of large buildings such as hospitals, municipal buildings and large commercial real estate.
Seattle’s application for the Community Power Works grant was made during Mayor Greg Nickels’ tenure, but by the time the award was made under Mayor Mike McGinn’s administration, the housing market was reeling from the subprime mortgage and banking crisis.
The doubling effect of a housing market clogged with “upside-down” properties paired with high unemployment had already hit home improvement contractors of all sorts – including the green variety – extremely hard. Soft market factors did not appear to entice anyone involved in securing the grant to proceed with caution or perhaps reassess whether the program targets were achievable.
By going full steam ahead the Community Power Works program failed to pass the initial test we should demand that all publicly-funded programs (even those that do not seek to support a profit-making enterprise) respond to an existing public demand. A significant waste of taxpayer monies can be traced to the stop-and-go bureaucratic elephant chain that we know as the federal grant award process failing to recognize changes in market conditions, if it ever was asked to consider those factors at all.
The “underperformance” of this one Seattle green jobs program is unfortunately not unique. We hear anecdotal cases of this sort often. If Jay Inslee were to implement his proposal to use pension funds to give “green” start-ups a push, we can certainly expect to hear many more in the future.
If we think of any investment – public or private – as a walk across a busy freeway to claim a waiting basket of cash, the critical relationship between the investor and risk becomes easier to see. An entrepreneur stepping on that road sees everything from the vantage of a vulnerable potential road pizza, and in doing so makes moment-by-moment decisions before and during the trek across the highway to protect their investment. But unlike the entrepreneur, the government (perhaps because its size, power and indirect responsibility for its actions desensitize it from the healthy fear felt by private sector businesses) lumbers blithe and oblivious, often even failing to notice that the prize is still waiting on the other side.
The difference between how governments and investors deal with risk is at the core of the problems with Community Power Works and it is also the primary reason why Inslee’s plan to divert public pension funds to make investments in high-risk green start-up companies should condemned as flawed from the start.
[photo credit: flickr]