With the private building sector making up 93 percent of total buildings in the United States, many green building advocates believe funding efficiency projects within that sector in the stimulus could have significant effects on the economy and job growth. Architecture 2030, a nonprofit research organization, recently released its 2030 Challenge Stimulus Plan, proposing a mortgage buy-down program that could help homeowners lower their mortgage rates if they renovate and improve the energy efficiency of their homes. During today's OnPoint, Edward Mazria, executive director of Architecture 2030, discusses the proposal and explains how the building sector can improve the accountability of efficiency improvements.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Ed Mazria, executive director of Architecture 2030, a nonprofit research organization. Ed, it's nice to have you back on the show.
Ed Mazria: Oh, thank you, it's nice to be here again.
Monica Trauzzi: Ed, your organization recently introduced the 2030 Challenge Stimulus Plan. It's a suggestion to the Obama administration about how we can address private buildings, the private building sector in the stimulus. Why is it so important to talk about and to tackle the private building sector? We've been hearing a lot of talk about public buildings.
Ed Mazria: That's correct. Well, the 2030 challenge is a two-year stimulus plan and it could be extended out as we have it now. But the private building sector is 93 percent of the total sector. The public building sector is very small, it's only 7 percent and the total focuses on the public building sector, which doesn't really address the issue. It's the private building sector that is really driving the economy down. And so in order to get a handle on it we're going to have to address the sector that's really creating the problem.
Monica Trauzzi: But it's easier to mandate changes in the public building sector than it is in the private building sector and to implement those changes.
Ed Mazria: But it's such a small percentage that it really doesn't do anything. The private sector cannot help the public sector. It cannot affect the public sector. It's a very, very small percentage. And dollars that go in don't create any additional private spending. But if you address the private sector that can affect the public sector and create a whole different outcome, because in the private sector you stimulate private spending. And when you stimulate private spending and create jobs, you have a new tax base and it's the tax base that basically funds the infrastructure projects.
Monica Trauzzi: So, let's talk specifics. What does the plan included and how many jobs specifically are we talking about being created through this plan?
Ed Mazria: Well, the plan, let me talk in medical terms for example. We all know we have a problem and let's just say that that problem is an infection. We had the first stimulus, what the first stimulus did was it gave the patient with the infection two aspirin, put a Band-Aid on it and sent him home. He's now back and the infection has basically spread. If we just address the public building sector we're not addressing the infection. We're basically giving him now two more stronger painkillers and putting a new bandage on, but he's going to be back if we don't address that 93 percent. So what our plan does is by addressing the 93 percent we create 9 million new jobs, we create new spending and $1 trillion in new investment, private investment in spending. We create a new $1.8 trillion renovation market and, from the new tax base, from the 9 million new jobs, the plan actually pays for itself. The money coming back to the federal government is equal to the money going out. It's actually equal to more, so it can pay for infrastructure.
Monica Trauzzi: How does the plan address all the bad mortgages that we've seen coming out of the weeds in the last year?
Ed Mazria: Well, a lot of folks are calling for mortgage buy-down rates so that people can now bring their monthly payments way down, but it's not tied to anything. What we want to do is tie the mortgage buy-down rates to efficiency, so that in order to get very lucrative rates, even 3 percent below market rate now, let's say down to 2 1/2 percent you would have to make your house 75 percent more efficient. So you would have to actually invest, take that money, add it into your mortgage to get a very, very lucrative mortgage buy-down rate, so it wouldn't cost you anything, but you would be investing in jobs, so people would have to do the renovation. You come out ahead on two sides. One is your mortgage payments are lower, even with the renovation added in, and your energy bills are now lower. You're saving $150 to $200 a month. So, on average, by tying the mortgage buy-down to renovations you're saving between $500 and $700 a month on your outlay. That helps with foreclosures.
Monica Trauzzi: The green building industry has been hit significantly as a result of the economic downturn. What are you expecting will be the trend in 2009 for the building of new green structures?
Ed Mazria: Well, we believe that the only way to get the economy back on track is to look at efficiency, because what happens is we buy energy for example. Our building sector is very, very inefficient, so you see money that you're paying out, energy is coming in to the building, you're seeing that money flow out of the building basically. What we want to do is get it more efficient so that you're keeping that money and you save that money and you can then recycle it back into the economy. So we see tying the mortgage buy-down rate and addressing the housing sector, which is the sector that has been dragging the entire economy down. We have over a million construction workers right now out of work and that affects all sorts of other folks in the building sector. And that's what's really dragging us down. We need to get that back on its feet; otherwise we're not going to succeed.
Monica Trauzzi: Does the plan benefit any particular industries? I mean who makes out the best with this plan?
Ed Mazria: Well, first of all, the plan, because people have houses all over the country, it benefits everyone all over the country. It doesn't favor anyone, any one particular area. And it's incentivizes pretty much every sector of the economy. Just look, just for example in this room or if you're in a house, there's literally a thousand materials in here. You have everything from wiring to fabric to carpet to wood to metals, caulking. So basically what we're doing is bringing pretty much every industry in the U.S. back. They are all now going south and we need to bring them back so we create a healthier economy.
Monica Trauzzi: What about the education hurdles? I mean what else can actually teach people how to build in this way.
Ed Mazria: Absolutely. We actually have all that infrastructure in place now. For example, we have, RESNET has 4,000 raters that will go into your home and do an audit and tell you what you need to do to meet the efficiency targets that we have and they are ready to scale up. They can scale up and put out 400 or 500 new raters a month. They have training centers all over. It takes about five to six days to train a rater. And there's already legislation that's been passed, the Energy Efficiency and Conservation Block Grant Program. They just have to fund that to actually train all the, and that's more jobs that we haven't even included in our 9 million new jobs. So all of that infrastructure is in place.
Monica Trauzzi: How can we improve accountability on the backend of improvements? I mean how can we be sure that what's drawn as an energy-efficient structure actually does produce efficiency?
Ed Mazria: Yeah, we talked to NASIO, which is the building inspectors basically, the organization of all the state building inspectors. They're not doing anything right now. There's no building going on. It takes five days to train building inspectors, a five-day program to train building inspectors to know what they're doing in all the efficiency and new renewable technologies. So we need to get the money through the block grant programs to the state energy programs to put those folks into training. And then, if we revive the industry, then they have something to look at.
Monica Trauzzi: So there is a structure in place to certify that these buildings would actually be ...
Ed Mazria: Absolutely.
Monica Trauzzi: ... be energy-efficient?
Ed Mazria: Absolutely.
Monica Trauzzi: Who's come out in support of this program?
Ed Mazria: Oh, well, we have many, many groups that, the plan is relatively new. It's only four to six weeks old. We had the American Solar Energy Society has endorsed…supported the plan. National Wildlife Federation, across the board, United States Green Building Council, RESNET. So we have support for many, many, many different organizations.
Monica Trauzzi: All right, well, it will be interesting to see who gets the money from the stimulus. I thank you for coming on the show again.
Ed Mazria: Oh, thank you very much for having me.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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