There has never been a better time to build green. The recent passage of the American Recovery and Reinvestment Act (ARRA) has appropriated billions of dollars to support green-building projects, as well as energy-efficiency and renewable-energy programs. In short, the federal government finally is investing in a green economy.
“Government incentives are the primary reason for the expedited growth in green building, especially with the recent passage of the AARA,” says Kevin Haynes, senior research analyst at Raleigh, N.C.–based FMI Corp., publishers of the annual “U.S. Markets Construction Overview.”
The seeds of new green projects are being planted rapidly across the nation. Jason Hartke, director of advocacy and public policy at the U.S. Green Building Council, estimates that roughly one-quarter of the total money has been obligated. He predicts that the remaining funds will be obligated throughout the next 18 months.
Green building sits at the nexus of several important initiatives: improving the environment, introducing massive resource and utility savings, and creating new jobs. It is considered by many to be one of the tools that can help steer the U.S. out of its current recession.
The ARRA, signed into law by President Obama on Feb. 17, is helping to grow the practice of green building by funding federal energy-efficiency grants for local governments, home retrofits, and low-income housing weatherization, as well as creating numerous tax incentives. The Act includes benefits for schools, federal buildings, housing, green-job training, transit, energy, and a host of programs related to federal agencies.
Approximately $9 billion is available to modernize, renovate, and repair school buildings to meet recognized green-building standards, such as USGBC’s LEED, Green Globes from the Portland, Ore.–based Green Building Institute, and the Environmental Protection Agency’s Energy Star. For example, upon executive order from the Ohio governor’s office, the Columbus-based Ohio School Facilities Commission has administered funds for school renovations, and now nearly 140 Ohio schools are LEED certified or have registered for certification. “There is an amazing return on investment in greening existing public buildings, particularly schools,” Hartke says. “The programs that institute a focused plan for overcoming first costs and then use the utility and energy savings of green building to reflect savings over time have been the most successful.”
Educational buildings aren’t the only beneficiaries of the ARRA. The General Services Administration and the Department of Housing and Urban Development have appropriated funds for green retrofits and new-construction projects for federal buildings, residential housing, and communities. The law also provides $3 million for apprenticeship programs for the construction and repair of federal buildings. Appropriated through the Workforce Investment Act of 1998 (WIA), $3.95 billion is allocated for green-job training, including $500 million for programs that prepare workers for careers in energy efficiency and renewable energy. Getting to those job-training programs can be more sustainable, too, thanks to the $6.9 billion promised to the Federal Transit Administration to fund grants for mass transit.
Energy provisions remain one of the most well-funded parts of the ARRA—$16.8 billion has been provided for programs within the Department of Energy, including the Weatherization Assistance Program, Energy Efficiency and Conservation Block Grant, State Energy Program, and Energy Star. Guaranteed loans of $6 billion have been reserved for renewable-energy and electric-transmission technologies, covering things like advanced batteries and smart-grid developments.
Credit Where Credit Is Due
These appropriations, combined with the numerous bonds, grants, and tax credits available through ARRA, are paving the path to a greener U.S., despite the downtrodden economy. “The challenge with implementing green building is paying for up-front costs,” Hartke says. “The stimulus is helping to overcome the barriers of financing first costs to do retrofits.”
Awareness of the availability of these benefits is the first step to offsetting up-front costs. Tax credits are extended both to individuals (the credit for making existing homes more energy efficient, for example) and to corporations and agencies (as in the case of the credits available for advanced-energy and renewable-energy production). Bonds, such as Clean Renewable Energy Bonds, Qualified Energy Conservation Bonds, and Economic Recovery Zone Bonds, also provide assistance. Treasury grants for energy investment and low-income housing offer additional encouragement. (Refer to “Green Incentives Resources” to the right for links to more information about these and other funding and incentive programs.)
Another bill with the potential to further fuel the greening of the U.S. is the American Clean Energy and Security Act of 2009 (ACES), which was passed by the House of Representatives in late June and, at press time, had moved to the Senate for review. New initiatives would support retrofits, encourage consumer purchase of sustainable homes, and provide incentives for using water-efficient products. You can monitor the status of this bill by visiting www.opencongress.org/bill/111-h2454/show.
Localities Lead the Movement
If federal funds are the catalyst for nationwide green building, it’s up to state and local governments to distribute the money wisely. “Over the past six months, I’ve seen a lot of creative financing at the local level, which has been supported by federal funding,” Hartke explains. “We’re seeing that green-energy and green-building improvements can pay for themselves because of operational savings over time, and that’s encouraged investments in these projects.”
State and local governments encourage green building and energy efficiency by offering expedited permitting; tax credits, abatement, and reductions; LEED-certification incentives; and grants. States such as Kentucky, Maryland, New Mexico, and New York provide various tax incentives, abatement, and reductions against property or personal and corporate income tax for buildings that meet green-building standards. The city of Cincinnati offers one of the most progressive tax-abatement incentives: 100 percent property tax exemption for properties with LEED certification.
According to Hartke, two of the most innovative local programs include the Long Island Green Homes (LIGH) project in Babylon, N.Y., and the Berkeley FIRST program in Berkeley, Calif. The LIGH program is a self-financing residential retrofit program for upgrading the energy efficiency of existing homes in Babylon. The town set up a benefit assessment program and pays the up-front fee for green improvements. Participating homeowners pay the city back through a monthly assessment fee, which is structured to be less than the monthly savings on the resident’s energy bills. To learn more about the LIGH program, visit www.ligreenhomes.com.
Berkeley FIRST is a solar financing program where property owners borrow money from the city to install photovoltaic systems, then pay it back over 20 years through an annual special property tax. The amount of the tax is based on the cost of the PV system and the interest rate paid by the city. To read about the Berkeley FIRST program, go to www.ci.berkeley.ca.us/ContentDisplay.aspx?id=26580.
A plethora of other incentive programs exist in cities and towns across the United States. Seattle provides incentives for improving energy, lighting, and water efficiency, as well as for projects that implement renewable energy in commercial buildings (www.seattle.gov/dpd/greenbuilding). San Diego’s Green Building Program includes incentives and rebates for resource, water, and energy conservation(www.sdcounty.ca.gov/dplu/greenbuildings.html). New York City’s Greener, Greater Buildings Plan (www.nyc.gov/planyc2030) includes a six-point plan to improve energy efficiency in existing buildings.
Some cities even are charging residents to fund renewable-energy programs—Boulder, Colo.’s Climate Action Plan tax, which expires on March 31, 2013, charges residents and businesses a usage-correlated carbon tax to fund renewable-energy programs. San Francisco also has instituted a carbon tax. “The most innovative movements in the industry right now are savings-related financing vehicles that have a focused plan for overcoming first costs,” Hartke says. Other local incentives include building density bonuses for projects earning LEED certification, grants, fast-track permitting and fee waivers, free expert consultation and technical assistance, and low-interest loans. For more examples, visit USGBC’s public policies search page at www.usgbc.org/publicpolicy/searchpublicpolicies.aspx?pageID=1776.
With so many programs in place, and the potential passage of the ACES bill affecting the green landscape, creating an effective green-building strategy can seem overwhelming. Start by researching programs offered by your local government, then move on to state incentives and federal grants. The Internet perhaps is the most effective way to find the funds to get started.
Green Incentives Resources
Summary of the American Recovery and Reinvestment Act of 2009
How funds from the ARRA are being distributed
U.S. Green Building Council
Green buildings, neighborhoods, and infrastructure
State and federal rebates, tax credits, and incentives
Economic recovery updates for local governments
Environmental Protection Agency
Department of Education
Department of Energy
Department of Energy—Energy Efficiency and Renewable Energy
Department of Housing and Urban Development
Department of Labor
Department of Transportation
Internal Revenue Service