HUD Secretary Donovan on Fighting Sprawl

U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan outlined the state of the economy and housing market, explained HUD’s green programs, announced a new mortgage product aimed at making energy efficiency retrofits easier, and promoted the Obama administration’s efforts to fight sprawl and encourage sustainable communities at the 2010 GreenBuild.

“The built environment helped create the economic crisis,” said Donovan. Sprawl created unaffordable, unsustainable housing. Now, “we are just coming out of the second great depression, where we were losing 750,000 jobs per month. We had 30 straight months of housing price decline.” While low interest rates have helped restore consumer demand, “they don’t provide housing benefits unless there are mortgages available at that level.”

To remedy this, HUD has been working with Fannie Mae and Freddie Mac to stimulate new mortgage growth and restructuring mortgages to create better terms for those facing foreclosure. Since the start of the Obama administration, Donovan said the “overall housing stock value has increased by one trillion. We have also created 10 million new private sector jobs, but unemployment is still too high.” To accelerate job growth, the U.S. must focus on green jobs, and supporting the designers that “are creators of green communities.”

Donovan said “energy, climate, and the economy are linked.” The U.S. can reduce dependence on foreign oil by investing in local clean energy sources like wind and solar energy and efficiency programs like green buildings while creating green jobs in the process. On green buildings alone, Donovan said “the green construction industry has created two million jobs with $100 billion in wages. This has the potential to reach eight million jobs and a half trillion market in the next 20 years.”

HUD’s Green Works

About one-fourth of all new Recovery Act jobs created are in clean energy or energy efficiency, claimed Donovan. The Act created 3.2 million new jobs, and a “foundation for long-term growth.” With the recovery funds, 18 million smart energy meters were installed and eight million homes were weatherized, leading to average savings of $400 per year per household. An additional 250,000 public housing units were greened by HUD and 35,000 “received deep retrofits,” with energy savings of 40 percent.

Donovan added that HUD will soon be expanding the use of the “green physical condition assessment” for all government-owned public housing to guide energy audits, efficiency, and other green improvements. “Even if we have just saved five percent in energy efficiency savings, this would translate into $1.5 billion.” 

Creating a Mortgage Market for Energy Efficiency

While markets are needed to transform the building sector, government can play a catalytic role. “Recovery through retrofits needs to be scaled up. We need green labels on residential homes and buildings like we have on refrigerators.” To spur the home retrofit market, Donovan announced a new pilot project created with FHA called Power Savers, “a mainstream mortgage product that enables you to retrofit your home.” Part of the “Recovery through Retrofit” program, Power Savers is aimed at helping middle class families. 

Also, in the works is something called “Green ReFinance Plus,” another new product created by FHA and Fannie Mae.

Solving the Real Problem: Sprawl

To stop sprawl, Donovan said “we need to connect the location of homes with those for jobs.” Currently, 52 cents of every dollar is spent on housing and transportation, an amount far too high. Congestion across the country has worsened by five times over 20 years. However, he said the “world is changing.” In Texas, for example, the new Dallas Area Rapid Transit (DART) system has spurred $5.6 billion in community investment and created an alternative form of transportation in an area heavily car-dependent.  

In the U.S. government bureaucracy, HUD has created an office of sustainable communities and housing, the HUD arm of the three-agency Partnership for Sustainable Communities formed with the E.P.A. and Department of Transportation (DOT) (see earlier post). Together with its partners, HUD released $170 million in planning grants (see earlier post), which is the “single biggest invesment in planning in a generation.” In addition, HUD has been using LEED-ND to judge the “location efficiency” of the prospective grantees (see earlier post). The new grants will help “increase place-based investment.” 

Another major project aimed at fighting sprawl is a new affordability index (see earlier post), which will be created and rolled-out with DOT. “If we can get lenders to use this index, we can drive billions of dollars into more sustainable places.”

Donovan concluded that the federal government now “speaks with one voice” against sprawl. “This is nothing short of a revolution.”

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