Prepared Remarks of Secretary Shaun Donovan at the Institute for Professional and Executive Development's 5th Annual Green Homes Sustainable Communities Conference

The W Hotel
Washington, DC
Thursday, July 29, 2010

Thank you, Dana, for that very generous introduction. I want to thank everyone for making this conference possible -- particularly Dana, Tim Block, and Jeff Lesk.

As we join together for this fifth annual conference, we realize that what was cutting edge 5 years ago is now very much mainstream.

I want to thank everyone who has made this green transformation possible -- IPED with educational seminars and networking opportunities, Enterprise with financing, technical assistance and policy advocacy, as well as our sponsors: Nixon Peabody, the Home Depot Foundation, the US Green Building Council and the American Council on Renewable Energy. Thank you all.

I especially want to thank everyone in our audience. As we begin to emerge from this turbulent moment in our country's history, your work is showing us the blueprint for a future with sustainable growth and prosperity.

Green and Affordable

Indeed, this is an important moment. It was only a year and a half ago that we were losing 753,000 jobs a month.

And today--even after six straight months of private sector job creation--too many families across the country are still struggling.

And that is one big reason that HUD is deeply committed to creating strong, sustainable, inclusive communities built on a foundation of green, affordable housing.

Greener buildings and more sustainable communities aren't just a piece of President Obama's vision -- they are cornerstones of it, and I'm proud to say that HUD is playing a central role in helping him realizing it.

As the President has said, it's time the Federal government led by example. For HUD, that means not only transforming the housing we directly subsidize -- but also the conventional market, which given the critical countercyclical role FHA is playing in our housing market at this moment represents a real opportunity.

For each of these segments of our housing market, sustainability is central to our role and objectives, and is reflected throughout HUD's new 5-year strategic plan.

To guide these efforts, we created an Office of Sustainable Housing and Communities to coordinate all of HUD's sustainability work, support sustainable planning and practice at the local level and help coordinate our investments with other federal agencies and stakeholders. This office is run by Shelley Poticha, who many of you surely know -- and her Deputy Director is another familiar face: Stockton Williams, who comes to us from Enterprise.

Our ultimate goal is to use HUD's entire $44 billion budget, the capital investment those funds leverage and all our policies to drive sustainability in the market.

In many ways, that work began with President Obama's Recovery Act, which I believe history will judge not only saved our economy from falling into a second Great Depression -- but by including $90 billion in clean energy investments, its passage will also be seen as the moment America finally got serious about laying the foundation for the clean energy economy of the 21st century.

We certainly see it that way at HUD. By the end of the summer, we will have used our Recovery Act dollars to rehabilitate 230,000 homes.

Through the Green Retrofit Program created by the Recovery Act, private owners of assisted multifamily housing are on their way to retrofitting more than 20,000 units of HUD-assisted housing through HUD's first one-stop national energy efficiency green retrofit program targeted at improving the performance, heath, and long-term stability of our aging multifamily portfolio.

And through the Neighborhood Stabilization Program, communities across the country are engaged in green neighborhood stabilization efforts that, in the wake of the foreclosure crisis, will reduce energy costs and make housing more affordable. Indeed, today, more and more housing development supported by core HUD programs like HOME and CDBG, are meeting high levels of environmental performance such as Energy Star for New Homes.

The benefits of these investments are clear. First, greening America's public and assisted housing stock is helping to create jobs that can't be sent overseas.

As I saw for myself at Shalom Housing in Warwick, Rhode Island, which is installing a wind turbine expected to generate enough power to provide for 80 percent of the buildings' electricity, these funds are helping prepare a new generation of professionals we need to design, install, and maintain the next wave of green technologies -- the mechanics, plumbers, architects, energy auditors, and factory workers.

As I saw at Gibson Plaza Apartments in the Shaw neighborhood of Washington, DC just yesterday, these investments are helping families -- cutting their utility bills by more than 20 percent and at the same time helping them live in healthier homes and communities.

As we finalize a comprehensive energy action plan for HUD over the next several weeks, which will guide all our major programs and policies over the next two years, we recognize that now is the moment to build on the lessons of the Recovery Act -- and bring green into the mainstream.

And so, with the remainder of my time, I want to preview some of what you'll be hearing about from us in the weeks and months to come -- and what you can do to help us make green building an engine for economic growth in America.

Strengthening Standards in HUD's Core Programs

First and foremost, we are raising the bar -- strengthening energy and environmental requirements in core HUD programs.

Every year, HUD spends over $6 billion on energy for our public and assisted housing -- by saving just 5 percent per year, we could generate $1.2 billion in savings over the next 5 years.

Consider that if all the homes built before 1990 were as efficient as those built since then, we'd cut residential energy use by more than 22 percent. That's why HUD is in the process of adopting minimum standards for energy performance that equal or exceed what most states already have in place.

At the same time we are moving to strengthen energy codes, we are increasing the scoring criteria for developments to meet comprehensive green criteria for our competitive grant programs, such as HOPE VI and new initiatives like Choice Neighborhoods.

Already, several HUD programs strongly encourage rigorous green build standards like LEED for Homes and Green Communities. And now, for the first time in the history of federal grant competitions, HUD will be using location-efficiency to score our grant applications as well.

Using the "LEED-ND" green neighborhood rating system developed by the US Green Building Council, the Natural Resources Defense Council and the Congress for New Urbanism it's time that federal dollars stopped encouraging sprawl and started lowering the barriers to the kind of sustainable development our country needs -- and our communities want.

And with as much as $3.25 billion at stake in these competitions, our investments will make a real difference.

New Tools, Smarter, Greener Investments

Second, we're developing new tools to help our partners to make smarter, greener decisions. Many of you are familiar with the green specifications we have developed, as part of the technical assistance effort for our Neighborhood Stabilization program, which is stabilizing some of the communities hardest-hit by the foreclosure crisis. Indeed, Enterprise has played a critical role in showing that Neighborhood Stabilization can be green.

The Wall Street Reform bill President Obama signed into law last week will provide an additional $1 billion for this critical program -- and with those funds, we intend to further encourage communities to seize the energy opportunities in neighborhood stabilization.

Of course, we all know that one size doesn't fit all -- and that especially when it comes to retrofitting our existing housing stock, every property is different and so are its capital needs.

That's why HUD has developed a cutting edge tool called a "Green Physical Condition Assessment" -- which is a perfect example of how the Recovery Act is changing the way the government does business.

Created initially for the Recovery Act's Green Retrofit Program, the tool combines a traditional property capital needs assessment with an energy audit and broader assessment of green improvements.

Not only does the Green Physical Condition Assessment analyze cost effectiveness -- it also provides owners with a concrete list of green improvements their budget can currently accommodate, as well as suggested green measures for future investment.

We believe that this tool can help catalyze the market for green multifamily retrofits at the same time it provides real benefits to low-income families.

We see it as central to the new future of rental housing in America and intend to prove it by making it part of our Transforming Rental Assistance initiative, or "TRA."

Right now our public housing system faces between $20 and $30 billion in capital needs -- money Congress will never be able to provide in the current fiscal climate. And the irony is that antiquated rules developed nearly a half century ago prevent anyone but the Federal government from financing those improvements.

With TRA, we are proposing to eliminate those barriers to public housing capital investment. But to access these leveraged private dollars--which we believe could be $25 billion--we would require each of the owners to promote energy-efficiency in how they propose to rehabilitate their properties and do a complete "green" assessment.

HUD's proposed legislation--the Preservation, Enhancement and Transformation of Rental Assistance Act, or PETRA--would make sustainable development a central feature of our rental assistance programs.

With $25 billion in capital for needed rehabilitation and retrofits at stake, TRA represents one of our biggest opportunities to stimulate markets for green mortgage products, underwriting standards and building materials. And as housers and as leaders in green building, I'm asking for your support of this initiative.

New Forms of Green Retrofit Financing

TRA reminds us that while federal leadership can help catalyze market transformation, greening the built environment won't happen because of government investment alone -- it requires the private sector.

And so, third, we are developing new forms of financing for green retrofits, by creatively utilizing existing authority. And here the FHA has a big role to play in driving this market transformation -- as it has so many times in its history, such as when it pioneered the 30-year mortgage.

For the single family market, later this year we plan to announce a new FHA insurance initiative that will provide low-cost financing to homeowners for cost effective home energy retrofits.

Based on what we've heard from financial regulators with respect to PACE, we recognize that we have more to do to test and prove the most viable ways to finance home energy retrofits. But with home improvement spending to top $300 billion next year, the time has come for a solution that meets a growing market need.

For multifamily properties, we will also be announcing a major new initiative in which FHA and a leading financial institution will take steps to provide additional capital for retrofits to affordable properties at the time of refinancing.

Under the program, which we will formally announce later this summer, FHA and our partner will provide more flexible insurance and underwriting for projects that commit to installing measures, based on the Green Physical Condition Assessment I mentioned earlier.

This initiative represents the first in what will expect will be a series of green financing initiatives involving the FHA.

New Partnerships

Lastly, we are creating unprecedented new partnerships across government to support local innovation.

Through the Partnership for Sustainable Communities, HUD is working closely with the Department of Transportation and the EPA to promote smarter, more sustainable, inclusive development.

Through this partnership we seek to catalyze a new generation of integrated metropolitan transportation, housing, land use and energy planning, encouraging communities to use state of the art data and analytic tools.

Community after community has told us the same thing: That when it comes to housing, environmental and transportation policy, the Federal government must speak with one voice.

Building on this partnership, HUD has recently announced $140 million in new competitive grant programs to help to encourage metropolitan areas and rural communities as well as cities and towns, to integrate economic development, land use, and transportation investments.

Whether a region needs support for long range planning, a city seeks help to pass smarter zoning or a rural area needs assistance making a catalytic green investment, federal resources--for the first time--will be available specifically for those purposes -- representing the most significant federal investment in planning at the community or metropolitan level in a generation.

At a time when state and local budgets are strained, this investment will help central cities, suburbs and surrounding rural areas begin integrating their transportation and housing efforts -- so that instead of just sharing problems, communities can begin sharing solutions.

We expect to make our first Sustainable Communities awards this fall.

HUD has also formed a groundbreaking partnership with the Department of Energy to align and scale up efforts to increase energy efficiency in homes and apartments.

A major area of focus has been to expand opportunities for multifamily housing to receive federal Weatherization funds administered by DOE.

We worked hard to take a first step, establishing a streamlined process for more than one-and-a-half million HUD-assisted and public housing units to be certified as eligible for Weatherization assistance, rather than having to be certified individually.

By simply cutting through red tape, Rhode Island was able to allocate $7 million to weatherize multifamily housing. Colorado expects to weatherize an expected 2,600 multifamily units by the end of the next fiscal year. The innovative multifamily retrofit models of New York and Pennsylvania are finding homes in other states and cities like San Francisco.

Still, we know it remains difficult for many affordable housing owners to access Weatherization funds.

But we're not giving up.

The President has set a goal of weatherizing one million homes per year -- part of which will be reached through the HUD-DOE High Priority Performance Goal.

And we intend to meet it.

Building the Clean Energy Economy

Before we open up to questions, let me say a word about climate change legislation. President Obama said this week that he intends to keep pushing this issue forward -- and we will.

But we shouldn't let the current impasse diminish the progress we've already made these last 17 months.

We've set tough new fuel-economy standards and the first greenhouse gas emissions standards for cars and light trucks, which will save 1.8 billion barrels of oil.

We spearheaded a new commitment by the largest nations in the world to eliminate fossil-fuel subsidies.

And we are leading by example -- cutting energy use across the Federal government. HUD will be initiating an Energy Savings Performance Contract for our own headquarters, the 42 year-old Weaver building as part of the agency's commitment to cutting our greenhouse gas emissions in half by the year 2020.

And it won't take a decade for the American people to see the benefits. The President's Council of Economic Advisors recently reported that by 2012 827,000 clean energy public investment jobs will have been created because of the Recovery Act -- and that's a conservative figure.

These steps remind us why green building can be an engine of economic growth, jobs and opportunity for every community in America.

To be clear: President Obama will sign comprehensive climate change legislation into law. We will make it happen.

But with 40 percent of our carbon emissions coming from our homes and businesses, the largest, fastest and most cost effective way we can unlock a clean energy economy is through better buildings.

Every step we take to reduce energy waste in our buildings and plan our communities in a sustainable way sends a strong message -- that green, sustainable building isn't in conflict with our country's economic growth.

It's essential to it.

By investing in energy-efficient homes and buildings, and by planning our communities in a smarter way, we can make America competitive for the 21st century.

We can create jobs -- and we can lead in this century as we did the last.

That is our goal today. Working together, may we rise to meet it. Thank you.

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