rastra: The Architecture 2030 Stimulus Plan

Recently, The 2030 Challenge committee presented President-Elect Obama’s Transition Team with a Stimulus Plan that could stimulate economic activity throughout the U.S. and most importantly, within the housing industry. The 2030 Challenge Stimulus Plan concludes:

With a single investment, the U.S. can create jobs, strengthen the U.S. economy, reduce CO2 emissions and energy consumption, and save consumers billions of dollars. Investing in the Building Sector is the only investment that can accomplish all of these objectives.

This plan rewards energy efficiency through a government funded mortgage program that buys down interest rates based on the percentage of improvement in energy efficiency beyond code. Homeowners could reduce their mortgage interest rate by 2, 3 or 4 points – simply by improving the energy efficiency of the home. The incentive provides savings of hundreds of dollars per month on a typical mortgage, plus hundreds more in reduced energy bills – for the life of the home. Every homebuyer would be eligible regardless of credit history, financial standing or size of the mortgage. Incentive interest rates for new home construction would be as follows:

% Improvement Beyond Code	Interest Rate
30%	5.0%
50%	4.5%
80%	3.5%
Carbon Neutral	3.0%

With a 30% improvement beyond the building code, monthly energy savings will typically exceed the increased mortgage expense. In addition, the loan repayment is tax deductible while energy, except for business, is an after-tax cost.

Savings are immediately available to spend or save, thereby stimulating the economy. At the same time, the increased demand for energy efficient products will create millions of new jobs. The government recoups its $170B investment to buy-down the mortgages from the income tax collected from the newly employed. Greenhouse gas emissions would be dramatically reduced.

The 2030 Challenge Plan offers the following example to illustrate the type of savings this plan could provide: A homeowner with a $272,000 mortgage at 5.55% would pay about $1,550 a month. To lower the interest rate to just 3.5% the homeowner would have to improve the energy efficiency of the new home to 80% below code, which for this example, increases the cost of the home by let’s say $40,000.

Existing tax credits would offset about $10,000 of that cost with the balance added to the mortgage, raising the mortgage total to $302,000. At 3.5%, the homeowner would pay only about $1,280 – saving almost $300 a month on the mortgage payment, plus another $150 in reduced energy costs. The value of the home rises, homeowners have more disposable income, the construction industry is stimulated and paying federal taxes, and carbon dioxide emissions are reduced.

To achieve a level of improvement of at least 30% below code will require improvements to the building shell. Once this Stimulus Plan is approved, builders will be searching for cost-effective products that make the biggest impact. Careful planning must also be exercised to build energy-efficient homes that are not too tight and unhealthy. The answer is RASTRA.

Thanks for visiting.

mike warren

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Are you eager to secure funds for that dream project of yours?

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