WORD ON THE STREET: The Obama administration believes that the energy and economic challenges we face are inextricably linked – and that the key to unlocking America's potential in the 21st century starts with creating a new generation of clean energy jobs and a more sustainable future. Of course, many of those jobs are in the building sector – and will be for years to come. Green construction spending already supports more than 2 million jobs and generates more than $100 billion in GDP and wages.
Over the next four years, the green building industry will support nearly 8 million jobs and generate more than a half trillion dollars in economic activity. Put simply, green jobs are the future of the U.S. economy. And certainly, the most important tool we've had to support those jobs these last two years has been the American Recovery and Reinvestment Act of 2009 (ARRA).
When President Obama signed ARRA into law, he said it would do three things: create jobs, help those most harmed by the economic crisis, and lay the foundation for long-term growth. And according to the President's Council of Economic Advisers, ARRA is responsible for as many as 3.7 million jobs – and nearly a quarter-million clean energy jobs to date.
At the Department of Housing and Urban Development (HUD), we've been at the epicenter of this green transformation. All told, nearly a third of HUD's $13.6 billion in ARRA funds can be used for ‘greening’ America's public and assisted housing stock – making homes healthier and more energy efficient and, at the same time, creating good-paying jobs.
Thus far, we've greened 245,000 homes with a range of energy improvements – another 35,000 have received deep green retrofits that will save up to 40% in energy costs. Thousands more newly constructed homes are being built to green standards, helping prepare a new generation of professionals – the mechanics, plumbers, architects, energy auditors, and factory workers we need to design, install and maintain the next wave of green technologies.
Indeed, at ground breakings and ribbon cuttings in communities across the country, I've seen for myself how the single largest investment in green building and products in America's history is laying the foundation for the clean energy economy we need. And last month, we took additional steps to help America's businesses grow and create jobs when Democrats and Republicans came together to pass the president's tax plan, including an extension of credits for renewable energy production.
And to ensure these funds are creating the kinds of good-paying jobs in the communities that need them most, the Obama administration has been vigorously promoting project labor agreements (PLAs) with housing authorities, redevelopment agencies and city governments around the country. PLAs not only establish up front the terms and conditions of employment and a framework for cooperation, but they have also proven to be extremely effective at ensuring projects are completed efficiently and with high-quality workmanship, and are an important vehicle for providing the job training, employment, and contract opportunities low-income workers need.
In fact, we recently signed a PLA agreement with the Boston Housing Authority, which is undergoing one of the biggest housing rehabs in the country, greening 29 housing developments – ensuring that $63 million in ARRA funds HUD awarded will benefit public housing and other local low-income residents that need it most. In addition, the Housing Authority has committed to contracting with local small minority and women-owned businesses to do a portion of this work with the primary developer.
But we're not stopping with our own grants. HUD already has local hiring preferences embedded into our programs – but many agencies we work with do not. In fact, some are specifically prohibited from doing local hiring – which can result in projects being held up. That's why our Deputy Secretary Ron Sims, who was the King County executive in Washington state for a dozen years before coming to HUD, has been working with sister federal agencies to find a solution.
For opportunities to create more good-paying construction jobs, we need look no further than our public housing system, which faces between $20 billion and $30 billion in capital needs. No one seriously expects Congress will be able to provide these funds in the current fiscal climate – and yet, we estimate there is $25 billion of private and other public capital sitting on the sidelines, waiting to be invested in these properties.
Antiquated rules developed nearly a half-century ago prevent anyone but the federal government from financing improvements to public housing. These rules haven't just stood in the way of building housing. They have also stood in the way of building around that housing – the grocery stores, schools and retail businesses that any community needs to thrive and that are the bread and butter of our nation's construction industry.
As much as ARRA accomplished, we'll never green America's built environment with Recovery grants alone – that real change requires a market transformation with leadership, solutions and capital from the private sector. In a few weeks, HUD will be selecting lenders to offer a product called Federal Housing Administration (FHA) PowerSaver – the first federal financing program focused on single-family home retrofits. Powersaver will allow homeowners to borrow up to $25,000 to make energy efficiency and renewable energy improvements to their homes, stimulating demand for jobs and for contractors to do this important work.
But the single-family market is only part of the green financing equation. Fifteen million households live in multifamily properties. That's why I recently announced the Green Refinance Plus program, through which FHA will provide additional insurance coverage, and Fannie Mae will offer more flexible loan underwriting, to generate additional loan proceeds to make green improvements. Through Green Refi Plus, owners of older affordable-housing properties will be the first to go green in connection with refinancing their mortgages at today's historically low interest rates.
Both PowerSaver and Green Refinance Plus will take advantage of the data we gather on performance by tracking energy saved, bills reduced and value created. It's only through proving that these investments pay for themselves and provide real benefits to families that we can catalyze change on the scale that is truly transformational – driven not just by the public sector but, more importantly, through massive private investment.
Shaun Donovan is secretary of the U.S. Department of Housing and Urban Development. This article is adapted and edited from prepared remarks delivered at the White House-Emerald Cities Collaborative Briefing, held in Washington, D.C. on Jan. 18. The complete remarks are available online.
