From Architecture 2030: Energy Efficient Homes, Lower Interest Rates, Better Use of Stimulus

Once again, architect Edward Mazria is on to something good. His 14x Stimulus plan, hatched earlier this summer, plots out a seemingly fantastical route to collecting a fourteen times (14x) return on investment for each (1) dollar of stimulus money granted for energy efficiency improvements. This is not the first time we have tipped our hats to the folks at Architecture 2030 for setting lofty goals that anyone with a bank account can wrap their head around; but as it was then, the hat tipping now is overdue.

Not surprisingly, Mazria's plan stems in part from his understanding that buildings are the lynch pin of both our environmental sustainability and our economic recovery. He also understands that those two paths are inextricably linked. Two aspects of Mazria's plan resonate particularly strongly with us. The first is that it envisions applying stimulus money to existing residential and commercial buildings. The second is that it focuses intensely on the ability of energy efficient retrofits to increase property values while saving home owners money.

Essentially, rather than "tricking out a new public library with solar panels and insulated windows," Mazria suggests that municipalities use that money to incent homeowners to make energy efficiency improvements.  Under a 14x agreement, the homeowner refinances with the help of the municipality, which pays the bank percentage points up front to secure lower interest rates. In exchange, the homeowner agrees to perform energy efficiency upgrades. The deeper the energy efficient retrofits, the lower the interest rate.

Under the plan, mortgage interest rates would be lowered by one percent if an existing home  is renovated to meet a minimum HERS (Home Energy Rating System) 70 rating. In turn, the homeowner is required to make a minimum investment in energy efficiency and/or renewable energy systems dependent on the amount of the mortgage. (See chart below). New home interest rates would be lowered by one-half percent for achieving a HERS 70 rating, and one percent for achieving a HERS 50 rating.

Architecture Week Breaks it down: If a homeowner wanted to refinance a $200,000, 6%, 30-year mortgage at a 4% interest rate,  the homeowner would need to invest a minimum of $16,000 in efficiency measures. At the lower 4% interest rate, the homeowner would pay a minimum of $168 less each month, and would save approximately $60 in energy costs. In addition, homeowners can take advantage of the $1,500 federal energy efficiency improvement tax credit and 30% solar power tax credits, as well as any local incentives that apply.

That this plan is a boon for banks and employment is evident from its long list of vetters-turned-supporters, from Wells Fargo to the Teamsters, and mayors  from Des Moines to Albuquerque, to North Little Rock, Arkansas. 14x is billed as a "A Plan for State and Local Governments."  But for once, it seems to us, the true winner is homeowners. At its heart, this plan makes clear that home energy efficiency is a valuable long-term investment. This is the kind of incentive (with accompanying backbone) we've been looking for.