[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
FULL COMMITTEE HEARING ON SMALL
SMALL BUSINESSES AT THE FOREFRONT
OF THE GREEN REVOLUTION: WHAT
MORE NEEDS TO BE DONE TO KEEP THEM HERE?
=======================================================================
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JULY 11, 2007
__________
Serial Number 110-34
__________
Printed for the use of the Committee on Small Business
Available via the World Wide Web: http://www.access.gpo.gov/congress/
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA M. VELAZQUEZ, New York, Chairwoman
HEATH SHULER, North Carolina STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona TODD AKIN, Missouri
MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas STEVE KING, Iowa
DAN LIPINSKI, Illinois JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa DEAN HELLER, Nevada
YVETTE CLARKE, New York DAVID DAVIS, Tennessee
BRAD ELLSWORTH, Indiana MARY FALLIN, Oklahoma
HANK JOHNSON, Georgia VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
Michael Day, Majority Staff Director
Adam Minehardt, Deputy Staff Director
Tim Slattery, Chief Counsel
Kevin Fitzpatrick, Minority Staff Director
______
STANDING SUBCOMMITTEES
Subcommittee on Finance and Tax
MELISSA BEAN, Illinois, Chairwoman
RAUL GRIJALVA, Arizona DEAN HELLER, Nevada, Ranking
MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana STEVE KING, Iowa
HANK JOHNSON, Georgia VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
______
Subcommittee on Contracting and Technology
BRUCE BRALEY, IOWA, Chairman
HENRY CUELLAR, Texas DAVID DAVIS, Tennessee, Ranking
GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York SAM GRAVES, Missouri
JOE SESTAK, Pennsylvania TODD AKIN, Missouri
MARY FALLIN, Oklahoma
.........................................................
(ii)
Subcommittee on Regulations, Health Care and Trade
CHARLES GONZALEZ, Texas, Chairman
RICK LARSEN, Washington LYNN WESTMORELAND, Georgia,
DAN LIPINSKI, Illinois Ranking
MELISSA BEAN, Illinois BILL SHUSTER, Pennsylvania
GWEN MOORE, Wisconsin STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania MARILYN MUSGRAVE, Colorado
JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
VERN BUCHANAN, Florida
JIM JORDAN, Ohio
______
Subcommittee on Urban and Rural Entrepreneurship
HEATH SHULER, North Carolina, Chairman
RICK LARSEN, Washington JEFF FORTENBERRY, Nebraska,
MICHAEL MICHAUD, Maine Ranking
GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana DEAN HELLER, Nevada
HANK JOHNSON, Georgia DAVID DAVIS, Tennessee
______
Subcommittee on Investigations and Oversight
JASON ALTMIRE, PENNSYLVANIA, Chairman
CHARLIE GONZALEZ, Texas LOUIE GOHMERT, Texas, Ranking
RAUL GRIJALVA, Arizona LYNN WESTMORELAND, Georgia
(iii)
C O N T E N T S
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OPENING STATEMENTS
Page
Velazquez, Hon. Nydia M.......................................... 1
Chabot, Hon. Steve............................................... 2
WITNESSES
PANEL I
Blum, Hon. Marty, Mayor of Santa Barbara, CA..................... 4
Fenty, Hon. Adrian, Mayor of Washington, D.C..................... 5
PANEL II
Seo, Danny, Environmental Lifestyle Specialist................... 16
Genachowski, Julius, New Resource Bank........................... 18
Maxman, Susan, American Institute of Architects.................. 20
Jones, Bob, National Association of Home Builders................ 23
McGrew, Mary Beth, University of Cincinnati...................... 25
APPENDIX
Prepared Statements:
Velazquez, Hon. Nydia M.......................................... 39
Chabot, Hon. Steve............................................... 41
Altmire, Hon. Jason.............................................. 43
Blum, Hon. Marty, Mayor of Santa Barbara, CA..................... 44
Fenty, Hon. Adrian, Mayor of Washington, D.C..................... 48
Wynn, Hon. Will, Mayor of Austin, TX............................. 51
Seo, Danny, Environmental Lifestyle Specialist................... 55
Genachowski, Julius, New Resource Bank........................... 57
Maxman, Susan, American Institute of Architects.................. 61
Jones, Bob, National Association of Home Builders................ 66
McGrew, Mary Beth, University of Cincinnati...................... 73
Statements for the Record:
Stanford Social Innovation Review................................ 77
(v)
FULL COMMITTEE HEARING ON SMALL
SMALL BUSINESS AT THE FOREFRONT
OF THE GREEN REVOLUTION: WHAT
MORE NEEDS TO BE DONE TO KEEP THEM HERE?
----------
WEDNESDAY, JULY 11, 2007
U.S. House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:06 a.m., in Room
2360 Rayburn House Office Building, Hon. Nydia Velazquez
[Chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Cuellar, Braley,
Chabot, Akin, Gohmert and Heller.
OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ
ChairwomanVelazquez. Good morning. I now call this hearing
to order, entitled Small Businesses at the Forefront of the
Green Revolution: What More Needs to Be Done to Keep Them Here?
Since the beginning of the 110th Congress, this Committee
has considered a variety of energy-related issues. Whether it
be renewable fuels, production or installation of equipment to
improve energy efficiency, small businesses are making our
world better, and building green is no exception. Today's
hearing will explore further just how small businesses are
playing a critical role in improving conservation and energy
efficiency while expanding the so-called green economy.
Entrepreneurs are leading the effort to combat global
climate change by taking steps to reduce energy consumption.
One of the major developments over the last decade has been the
profound growth of building green. Green buildings are
environmentally responsible, economically viable and healthier
places to work and live. It started out as a novel concept that
seemed to be out of reach for many. Now firms across the
country are looking for ways to incorporate these practices and
achieve certification. Due to this growth, it will soon become
the norm to have an energy-efficient and environmentally
sensitive building or home.
As installers of solar panels, inventors of bio-based
products or the architects who create the designs, small
businesses are responsible for much of the rapid growth in
green homes and buildings. The National Association of Home
Builders, who have representatives here today, reported a 20
percent jump last year in home builders focused on
environmentally responsible construction. It is estimated that
some 50 percent of all builders will produce at least some
homes using green methods by the year 2010.
Our first panel shows how the government can play an
effective way in encouraging further innovation in green
infrastructure. These mayors have been at the forefront and
have put in place policies that have allowed small firms to
flourish in their communities while protecting the environment.
They have provided educational tools, financial incentives and
an overall structure that makes a green small business
economically viable. I look forward to their insights on these
successful programs and how the Federal Government may be able
to provide similar assistance.
This Congress has already started taking steps to ensure
not only are we creating domestic supplies of clean energy, but
that the Federal Government can reduce overall consumption. The
Small Business Committee has passed four pieces of legislation
that provide education, financing and resources on energy
efficiency and production. I look forward to hearing about what
policies have been successful and if there are additional
reforms needed to ensure future growth.
I appreciate both mayors for coming here today, and I am
really very grateful for the insights that you will be
providing to this Committee. And now I yield to the Ranking
Member Mr. Chabot for his opening statement.
OPENING STATEMENT OF MR. CHABOT
Mr.Chabot. Thank you very much, Madam Chair, and I want to
welcome everyone here and wish you a good morning for being
here as we examine how small businesses are leading the way in
the green building industry. I would also like to thank
Chairwoman Velazquez for holding this hearing and each of the
witnesses for taking the time to provide this Committee with
testimony, both the first and the second panel.
I would also like to especially thank Beth McGrew from the
University of Cincinnati for making the trip here from
Cincinnati, which happens to be in my district.
Constructing and operating buildings requires enormous
amounts of energy and raw materials that create large amounts
of waste. Where and how they are built affects the ecosystems
around us in countless ways. The buildings themselves create
new indoor environments that present new environmental problems
and challenges. As the environmental impact of buildings
becomes more apparent, a growing field called green building,
also called sustainable building or high-performance building,
is leading the way to reduce that impact at the source.
Several studies have shown this type can improve energy
efficiency. For example, recent research conducted on the
financial ramifications and benefits of green design and
buildings found that the up-front investment of no more than 2
percent typically yielded life cycle savings of over 10 times
the original investment. Another study supported reduced annual
costs in energy and water by almost $10,000 in a 20,000-square-
foot building.
Increased energy efficiency along with developing new
domestic sources of energy and ensuring a diverse energy supply
is a key component of improving our Nation's energy security.
The practice of green building means making intentional
decisions that positively impact energy efficiency, resource
conservation and indoor environmental quality throughout the
entire design and construction process. The ultimate goals of
this thought process is to reduce operating cost by increasing
productivity and using less energy and water, improve public
and occupant health due to improved indoor air quality and
reduced environmental impacts.
Green building is a new and evolving field. Small
entrepreneurs and businesses were at the forefront of this
industry in the 1970s in response to the energy crisis of that
time. Today this commercial enterprise is still evolving and
still being driven by small entrepreneurs and businesses. It is
well recognized that small business is the engine of innovation
and the center for entrepreneurship. This new evolving industry
opens up great opportunities for small businesses to be the
trailblazers and become its future leaders.
Since today there appears to be a valid business case for
green building, we must ensure that taxpayer dollars are put to
the best use. Artificially subsidizing the growth of this or
any specific industry could cause potential problems in the
future. If this type of construction can be cost-effective and
environmentally friendly for builders, installers and tenants
alike, there should be little need for congressional
intervention. The industry will grow organically and grow
stronger without government interference.
While many of the goals of green building are worthwhile, I
am similarly concerned about the possibility of legislating
mandates, intended or otherwise, that could be costly and
burdensome to our taxpayers and communities. That said, I do
believe Congress and this Committee in particular does have a
role to play in reducing impediments to the growth of this
industry, especially so that small companies can continue to
innovate and produce new technology that will improve the green
building process.
We have excellent witnesses here today both on this panel
and the following panel to provide us with insight as to how
this burgeoning industry is performing and provide suggestions
to Congress that will help it continue to grow. I look forward
to their testimony, again, both panels. And I want to again
thank the Chairwoman for holding this important hearing, and I
yield back the balance of my time.
ChairwomanVelazquez. Thank you.
ChairwomanVelazquez. And now I welcome our first witness,
the Honorable Marty Blum. Ms. Blum has served as mayor of Santa
Barbara since 2001. Under her leadership the city of Santa
Barbara has instated a green building policy that requires new
construction and major renovations for city-owned and -operated
buildings to achieve LEED silver certification. For her work in
helping Santa Barbara become a greener, healthier and more
sustainable city, Mayor Blum was nominated as one of five
finalists for the U.S. Mayors Climate Protection Award for
small cities.
Mayor Blum, welcome, and you will have 5 minutes to make
your presentation.
STATEMENT OF MARTY BLUM, MAYOR, SANTA BARBARA, CALIFORNIA
Ms.Blum. Well, thank you, Madam Chairwoman, and I am
pleased to be here today to represent the city of Santa Barbara
and the U.S. Conference of Mayors. We are working very hard on
green building, and what we would like to do is talk about how
we encourage small businesses to become more energy-efficient
and to explore renewable energy. I want to also share the
highlights from a recent U.S. Conference of Mayors survey on
climate protection efforts in cities nationwide.
The city of Santa Barbara is focused on helping our
community learn to be green at work and at home. We use B20
biodiesel in our whole fleet, including the fire trucks and
construction trucks. We purchased hybrid vehicles, and we have
a green building policy, as you mentioned.
With the urgency of climate change, we are working with
businesses in climate protection. And a few years ago we formed
a partnership with Southern California Edison and with a local
nonprofit called Community Environmental Council, and we go
into businesses and do inventories for them and help them be
more energy-efficient.
What we have found, our experience with the small
businesses have given us some valuable insight to help them
become more energy-efficient. In some ways it is easier for
them to change their ways than it would be for a larger
business because they don't have the bureaucracy. But on the
other hand, many of them are owners who spend their time
running the business and don't have time in their busy
schedules to deal with energy efficiency. Many of them don't
even own their own buildings. So it makes it very hard to
invest in air conditioning or light fixtures that they don't
own. Many also are marginal businesses. They are just making it
month to month, and it is very hard for them to spend the money
to become more energy-efficient.
For these reasons, our partnership with Edison and with
CEC, with our Community Environmental Council, has been very
good because Edison has provided money for installing upgrades
for these businesses. But we would like to encourage Federal
assistance to businesses to encourage them to purchase Energy
Star appliances. That would be helpful, and it would
significantly reduce energy demand.
To encourage the use of renewable energy, tax credits also
should be renewed for renewable energy installations and
maintain a stable level for long term. The uncertainty of
changing rebates, going up and down--for example, the solar
rebates, some years they are there, some years they are not
there. It makes it very hard for small businesses to plan
ahead.
In addition to energy efficiency, we have many years of
experience assisting small businesses with waste prevention and
with water conservation, and we work closely with them to
conserve water. And in Santa Barbara, we are in a semiarid
situation, and this year has been a big drought year for us. So
free water check-ups, landscape irrigation evaluations for
businesses, and we give them rebates of $350 per fixture if
they use low-flow fixtures.
Shifting toward national, nationwide city efforts, nearly
600 mayors--and I believe we are over 600 now--nationwide have
joined as signatories to the U.S. Conference of Mayors Climate
Protection Agreement, committing to reducing their cities'
greenhouse gases by 7 percent below 1990 levels by 2012.
The U.S. Conference of Mayors recently surveyed many of the
mayors to learn more about their local energy and climate
protection initiatives, and the responses were just released at
a meeting in Los Angeles a couple weeks ago. Foremost among
these findings for this Committee, the mayors reported that
they would expand programs and initiatives to encourage
individuals and businesses to change energy practices, to go
green in commercial, residential and public buildings, and to
promote renewable and other energy sources.
When mayors were asked to describe how they would invest a
new Federal block grant assistance program, here is what they
said. They cited these things: to retrofit existing buildings,
improve their carbon footprint; outreach to business
communities to revamp energy-efficiency programs; to develop
solar, water and electric programs that provide low-cost
financing; and promotion and education to the public and
business community.
We know that the Nation's cities not only play a vital role
in our national goal of energy efficiency and conservation,
energy independence and climate protection, but it has been
proven that there are many advantages to community-based
solutions. And as such, I want to join my colleague here and
underscore our strong support for the enactment of new energy
legislation that establishes a new energy efficiency block
grant program. It was recently approved by the House Energy and
Commerce Committee. And, Madam Chairwoman, I would strongly
encourage you and the members of this Committee to join with
other House colleagues to ensure the adoption of this important
initiative. This is the number one priority for the U.S.
Conference of Mayors, and I thank you for this opportunity to
address this Committee.
ChairwomanVelazquez. Thank you, Mayor Blum.
[The statement of Ms. Blum may be found in the Appendix on
page 44.]
ChairwomanVelazquez. Our next witness is our own Mayor, Mr.
Adrian Fenty. He was elected last year to his first term as
Mayor of the District of Columbia. As part of an aggressive
100-day strategy, he included a number of sweeping green
initiatives that will make the District more energy-efficient
and environmentally friendly.
The city of Washington, D.C., is involved in the
construction of the first green Major League Baseball stadium.
Prior to serving as Mayor, he was a council member representing
the ward number 4. Welcome.
STATEMENT OF ADRIAN FENTY, MAYOR, WASHINGTON, D.C.; AND WILL
WYNN, MAYOR, AUSTIN, TEXAS
MayorFenty. Thank you very much, Chairwoman Velazquez,
Ranking Member Chabot, members of the Committee. Thank you for
inviting us to testify today about the role of municipal
government and small business in protecting the environment. I
am especially pleased that you have invited fellow Mayor Blum
to take part in this hearing.
The majority of the United States population now lives in
urban and suburban areas, and about half of the Nation's
private-sector employees, as you all know, work for small
businesses. This is the perfect time to take a look at how
cities and small businesses can work together for
sustainability. This important work has already begun in the
District of Columbia, and I am pleased to be joined somewhere
back there by my director of the Department of the Environment
George Hawkins.
As the Nation's Capital and an international tourist
destination, our city attracts worldwide attention. My vision
is of a municipal government that sets an example for other
cities not only across the country, but really around the
world. Last year we began to set an example when it comes to
green buildings here in the Nation's Capital.
Prior to serving as Mayor, as you stated, Madam Chair, I
served for 6 years on the council. I joined my council
colleagues then in passing an innovative Green Building Act,
and my predecessor Anthony Williams signed the bill into law.
We became the first city in the United States to require
environmentally conscious design and construction not just in
government buildings, but in private development as well.
Beginning in 2012, private nonresidential buildings of
50,000 square feet or more must meet LEED-NC 2.2 or LEED-CS 2.0
standards. Our public buildings, including those owned and
leased by the District government, will begin to meet these
standards earlier and at a higher level. We have made these
changes to our building code and will provide incentives in the
first year of the program.
The developer of a 50,000-square-foot building usually is
not a small business, but small businesses rent space in these
buildings. It will be easier for a small business to adopt
innovations such as reduced energy consumption, grey water
reuse, and increased recycling into its business model if the
entire building takes part, making these practices easier and
less expensive in the process.
With a little help from municipal governments, small
businesses can team up on green initiatives. This spring I
joined a group of businesses in the U Street corridor of
Washington, D.C., to announce their participation in the Clean
Currents Initiative. These 10 businesses, including a bakery,
several restaurants and a yoga studio, have formed a green
energy-buying group. Together these small local businesses will
buy nearly 2 million kilowatt hours of wind energy per year for
3 years. The carbon offset from this purchase is equal to
taking 185 cars off the road. By buying their energy together,
the group will save at least $21,000 a year.
Our Department of Housing and Community Development funds
small business technical assistance for several nonprofit
groups in the District of Columbia. One of these nonprofits,
the Latino Economic Development Corporation, helped to broker
the Clean Currents deal. It is the first collaboration of its
kind in the District of Columbia, and I am pleased that my
administration was involved in putting it together.
The District government will continue to lead the way by
opening what we hope will be the Nation's first LEED-certified
baseball stadium, as you mentioned, Madam Chair, in April of
2008. As we embark upon an aggressive school modernization
campaign, we are looking for ways to incorporate green building
technologies and reduce resource consumption into our
classrooms. We hope doing so will begin to bring the cost of
these materials and programs down. We also hope green
classrooms will help teach the next generation of small
business owners about sustainability.
Chairwoman Velazquez, this concludes my prepared remarks,
and I would be glad to answer any questions today and to work
with you in the future on this important priority. Thank you
very much.
ChairwomanVelazquez. Thank you, Mayor Fenty.
[The statement of Mayor Fenty may be found in the Appendix
on page 48.]
ChairwomanVelazquez. I would like to note that Mayor Will
Wynn of Austin Texas had planned to be here today.
Unfortunately he was unable to fly in last night due to the
weather. I ask unanimous consent his statement be entered into
the record. Without objection, so be it.
[The statement of Mr. Wynn may be found in the Appendix on
page 51.]
ChairwomanVelazquez. I would like to address my first
question to Mayor Fenty. As the District begins implementing
green building standards, there are many small business
contractors who may be looking for guidance. What are some of
the challenges in getting these businesses up to speed on new
requirements, and how will the city work to assist these
contractors?
MayorFenty. Well, that is a great question. On the
municipal level, I think there is two impediments; one, just
outreach. And we have had to make sure that our Office of Local
Business Development is not only in the business of providing
more opportunities for small businesses, but they understand
the regulatory framework with which they have to operate. So we
are charging our Office of Local Business Development to work
with our Department of the Environment to get the word out to
small businesses, and we do know that will be an enormous task,
but we will get it done.
The second thing is funding. I think we have to make sure
that there are incentives available, and, to the extent
possible, making the opportunity for small businesses to pool
together, as we did in the Clean Currents Initiative, I think
is a way to allow small businesses to become more
environmentally sensitive and green without having to tap into
their own profits and too much into the government treasury.
ChairwomanVelazquez. Do you believe that more contractors
are starting to voluntarily implement LEED standards on private
construction products as they become educated about these
building techniques?
MayorFenty. No question about it. I went to a
groundbreaking for a property right on the back side of Gallery
Place by Akridge Development. It is going to be a silver LEED
building, very advanced. And I think they are doing it, one,
because of their own priorities for the city that they do
business in, but, two, the Congress and, on the local level,
the mayors have been pushing these initiatives. So the more we
do, I think it goes to show that it is not just the substance
of our work, but setting the example for the private sector.
ChairwomanVelazquez. And, Mayor Blum, some have been
frustrated with the way the Federal Government has failed to
put green initiatives at the forefront. What suggestion would
you offer in creating new green policies at the Federal level
that can encourage the private sector to implement more
environmentally friendly practices?
Ms.Blum. Sure. It has been a couple years now that the
mayors have been working on this. I think it was in 2005 when
we first started working on climate change agreement, and we
have all taken it back to our cities and worked very hard. So
there are a lot of things already in place in various cities
all over this country. And it would be good to share the best
practices which we are doing at the mayoral level, but it would
be useful for you to know what are the best practices going on
in the big cities and small cities alike.
The small businesses are a little bit different because we
don't have an environmental person or, you know, someone in
charge of the buildings. But we can work closely with our
builders association, with our contractors, with our AIA, with
the architects, and we are doing that, and that makes a big
difference.
But you asked what the Federal Government can do to focus
on this, and I think you are already doing it, having this
hearing. And we are starting to see some real differences
coming along in Congress. Hopefully--the energy block grants is
something we are really pushing, and hopefully if you make
climate change a priority, and you talk about the green
buildings and green initiatives all over the country, then you
can find some money to appropriate for it, and I know that is
difficult. But it depends upon what your priorities are, and if
you can show us what your priorities are by showing us the
money, that works.
ChairwomanVelazquez. Thank you. Thank you. It takes money.
We all know that. It is a matter of priorities.
Ms.Blum. Yes.
ChairwomanVelazquez. Mayor Fenty, we know that the
celebration of the D.C. Nationals new baseball stadium is to
take place later today, and the green stadium is the first
major stadium to try an acquired LEED certification. What
example does this set for large construction projects
throughout the Nation? Can you talk to us about the experience
of getting this project done this way?
MayorFenty. Well, I think it sets a number of different
strong precedents; one, that these real public-private
projects, like baseball stadiums, that if the public is going
to put forth dollars, then they have to be beneficial to the
community. And this one is for lots of reasons, including the
economic development. But the green initiatives that are going
to come out of having a LEED-certified stadium to that area, it
is a brownfields area, of course. It has been blighted for
years, and we haven't taken care of the area. As this being the
anchor for the redevelopment, I think it is going to show other
developers coming in, and we have some great developers working
there, that we also want them to create green buildings that
are LEED-certified.
I also just want to note, as with a lot of other stadiums
across the country, this one is being built on the banks of a
river. This is being built on the banks of the Anacostia River
here in Washington, D.C., which is historically polluted. And
by saying that we are sensitive to the run-off that comes out
of this stadium and buildings near it, and the impact it has on
the river, I just think that it is a great substantive and
symbolic way to show how cities are being revitalized, and
hopefully it will be a national model.
ChairwomanVelazquez. Can you talk to us if you know or if
you are aware of any of the materials being used in the
construction of this stadium?
MayorFenty. You know, that is a great question. I am not as
good on the materials. We would be glad to provide that to the
Committee.
ChairwomanVelazquez. Sure.
MayorFenty. But I know that one of the great focuses of
this project has been to make sure that we reduce the run-off
into the Anacostia River and keep everything sustained within
the building. But we will get that to the Committee, because
again, this is the first of its kind.
ChairwomanVelazquez. Thank you.
ChairwomanVelazquez. And now I recognize Mr. Chabot.
Mr.Chabot. Thank you very much, Madam Chair.
Mayor Blum,if I can go to you first. You had expressed
support for tax credits concerning renewable energy and making
them permanent, and I completely agree with you in that
respect. And one of the biggest impediments to economic growth,
as you know, can be uncertainty in the Tax Code and not knowing
what incentives will be there 2 or 3 or 4 years down the road.
And unfortunately it can really put the breaks on development.
Could you again maybe expound upon that idea a little bit?
And I would say this goes beyond even this topic today. We have
a tendency in the Tax Code in all areas to make things there
for a couple of years, and we really, I think, need to make a
lot of these tax cuts, whether they be credits or deductions,
permanent so people can rely on them in the long term. But
specifically with respect to this area that we are discussing
today, could you expound upon that a little bit?
Ms.Blum. Sure. We have found that small businesses, as I
said, sometimes are very marginal, and sometimes there are
families working together to open a restaurant, and they don't
have a lot of extra money, and they don't have a lot of extra
time, but what they do have are some hopes for the future. And
they can make plans for the future. But sometimes it is not
just this year. Sometimes they say, well, in 5 years we would
like to whatever, put solar panels on or buy more energy-
efficient appliances or whatever it is, but they just don't
have the money together right now. But by the time they get it
together, the tax credits have changed or the solar credits or
whatever it is, and then you wait out another 5 years to hope
they come back. And I think it makes it very, very difficult to
run a small business, and I am talking about the real small
businesses, when you don't have assurances that government will
stay the same, as you say, that they will be the same year
after year so that when you finally do pull together the money
and make that commitment, you can get some tax credits on it.
So I just think it is vital.
Santa Barbara has about twice as many small businesses for
its size than other cities because we are a small city, we are
90,000 people, and each one of those small businesses needs
some kind of certainty in their taxes, in their--what kind of
solar credits they can get, what kind of tax credits they can
get. And it is just vital for them to have that.
Mr.Chabot. Thank you.
You had also mentioned, which I found interesting, that 23
percent of Santa Barbara's electrical energy is currently
derived from renewable sources. What are the prospects for that
in the future? Is there a way to expand that even more? And
what realistically with today's technology could your goals be?
Ms.Blum. Sure. With our inventory, we were really surprised
that we were already at 16 percent. We just had no idea. And I
think when people do an inventory of what they are doing, they
will find that they are doing a lot more than they even know.
Their own departments are trying, and people at the grassroots
level are really working on this.
But what really gave us a boost was that instead of the
flare-off at the wastewater treatment plant of methane gas, we
usually just fired it off into the air, we capped that and put
it into a fuel cell. And you had better not ask me any more
than that because I don't know. You put it into this magic box,
and it comes out electricity, and I think it is wonderful. And
then we use that for the plant itself, saving us about $35,000
a year, which doesn't sound like a lot to you, but to us it is
huge. And that pushed us up over 20 percent alternative fuels.
And we are also capping the methane out at our landfill.
We can see--you asked us about the future. That was without
really trying very much, and now we are really working in each
of our departments. And I can see us getting up to 50 percent,
but not while I am probably alive, but in the next 20 years, 30
years, I can see us getting up there. And it would be wonderful
if we could even get to 100 percent. But we are going to need
some help on research and development for that.
Mr.Chabot. Okay. Thank you very much.
Mayor Fenty, could you explain the mechanics of the U
Street corridor's buying of wind energy? And basically how does
the power generated in wind get sent specifically to these
businesses? And one other thing. You had mentioned rainwater
being incorporated in the planning for buildings, and how that
can be part of the overall plan and being more energy-efficient
and utilizing resources which are essentially free. Could you
discuss those two aspects, please?
MayorFenty. Yeah. I will do the best I can. I was even at
the press conference on this Clean Currents Initiative, but it
is wildly technical. It is my understanding that the 10
businesses together buy energy, and that they buy enough
kilowatt energy to last for 3 years, and that the energy is,
thus, more efficient than normal, such that it saves the
District of Columbia and these businesses the carbon offset
amount of about 185 cars. So they pool together, purchase it,
they get it for less, savings are about $21,000, and they use
it for 3-year periods.
And so that is the extent of my knowledge on it. But we can
get you more specifics by working with our Department of the
Environment and our local business office.
And then I think your question was about stormwater run-
off. Again, along the Anacostia, one of the great pollutants is
from the businesses. We have a lot of work to do in making sure
that we don't have a combined sewer run-off into the Anacostia.
But one of the things that we know is that just literally the
run-off from the buildings carries all kinds of pollutants into
the Anacostia River.
And, Madam Chair, I actually do have in my notes some of
the things that are going to be in the stadium. Note for
officials like myself, check your staff notes. This stuff is
usually there. There is going to be garages that feature
special parking for energy-efficient cars and car pools, water-
conserving plumbing fixtures, energy-conserving light fixtures
including the field lighting. Construction materials will
include a minimum of 10 percent recycled content, and adhesives
paints and glues will be low VOC. And then, of course, the
intricate stormwater management system, which I suspect is like
a lot of the green buildings you see where the water is kept in
the building on the roof, and then it helps to cool the
building, and then they will find various different ways to
actually reduce the water on site.
Mr.Chabot. Thank you very much, Mr. Mayor.
MayorFenty. Thank you.
ChairwomanVelazquez. Mr. Gohmert.
Mr.Gohmert. Thank you, Madam Chair. Appreciate the hearing,
appreciate you all being here.
And just following up on that and the comments, Mayor Blum,
you had made, too, about needing the consistency. I was struck
because, you know, bio mass itself has proved to be a valuable
source of alternative energy, and people do need that
consistency from the Federal Government, and yet just in the
last month in Resources Committee we had a law, Federal law,
that was going to move forward, provide incentives to utilize
bio mass as an alternative energy source. And, of course, it
was against my vote, but the Majority passed a bill that would
pull that program back and not start the incentives and do what
the government seems to do best, and that is do a study for a
number of years more to see whether bio mass would be helpful,
and then come back and look at the grant. So it really yanked
the rug out from a number of communities in my district and
others around that couldn't be characterized as Republican or
Democrat, just communities, many of them probably majority
Democrat. But it sure was a surprise to them. So I guess it
shouldn't be a surprise that if there is one entity you know
you can always not count on, it is probably the Federal
Government, you know, at the times it is most critical.
Veering just a little bit because of a recent issue over--
well, it is not a recent issue, it is a long-term issue, Mayor
Fenty. But I am curious, with regard to the issues, whether it
is green structures, environmentally friendly structures, I
will also come back to the issue. And I filed a bill. I felt
like the easiest way without a constitutional amendment to get
Washington, D.C., with proper representation not only in the
House but in the Senate would do what was done over 150 years
ago with land on the other side of the Potomac where it was
just ceded back to Virginia. So I consulted some folk. I had
not talked to you, but I have filed a bill. I am curious, since
I have you here, how you would feel about having land that was
not occupied by a Federal building ceded to Maryland and making
it a part of Maryland, as was done with the land across the
river for Virginia?
MayorFenty. Well, let me just say that I would be lying if
I didn't admit that there are District residents who probably
do support such a plan, and there probably are some in
Maryland. It is my experience in having lived here for some
time and been an elected official now for over 6 years that the
majority of residents, both in the District and in Maryland,
are--just for no other way to say it--are just set in our ways,
as every one of your constituents probably are. You have become
accustomed to the jurisdiction being established as it is. And
there now is an identity of being in Washington, D.C., that
probably would make that difficult for most of our residents
and, again, most Maryland residents, I think, to support.
That being said, our administration, and I think most
people in Washington, D.C., are very open towards continuing
the dialogue. We want to thank Congress for supporting the
legislation that is now before the Senate to give Congresswoman
Norton a vote on the House floor. We think that is a great step
forward, and there are lots of different alternatives we can
explore going forward, and we just appreciate the interest in
the subject because it will make a big difference on us being
able to lead on so many different issues like the environment
and small businesses.
Mr.Gohmert. Well, my big concern was since I agreed with
the Democrats that led the charge back in the 1970s that it
requires a constitutional amendment, and even if that were to
pass the Senate, become law, it would likely be struck down. I
was trying to cut to the chase and get you that representation
sooner.
MayorFenty. Thank you.
Mr.Gohmert. Thank you for your efforts. You are the Mayor
of the city that we all have a vested interest in, so we
appreciate your work on all of our behalves.
MayorFenty. Thank you for your support.
ChairwomanVelazquez. I have another question for Ms. Blum.
You mentioned that one of the challenges to encouraging small
businesses to invest in energy-efficient appliances is that
many storefront and businesses rent their properties. As such,
they may not realize the long-term cost savings. A related
program is that businesses who rent do not receive the tax
treatment of building owners when it comes to these home
improvements. Do you think that if Congress were to offer
similar tax treatment for small business renters that this may
encourage more to invest in energy-saving technologies?
Ms.Blum. Thank you for mentioning that because that would
make a big difference in our city. We have--58 percent of our
residents are renters, which is huge compared to most cities. I
think most cities have about 70 percent ownership. So here we
are with that. And then also businesses, I think--and don't
hold me to this--but I think it is in the 70 percent of the
people who are renting the places where they are having their
business. And I think if you could somehow tie it to the
businesses instead of to the actual building, it would make a
big difference to the small businesses for sure.
ChairwomanVelazquez. Mayor Fenty, would you like to
comment?
MayorFenty. No question. I think in the District of
Columbia, like our dwellers, the businesses probably just are
in staggering numbers in the amount that actually rent. So I
think what you would see is you would have a lot more buy-in
participation amongst businesses going green, and we would love
to be able to--I think establishing some type of pilot for
rental businesses, especially very small ones, would go a long
way in moving the agenda.
ChairwomanVelazquez. Mr. Heller? No questions?
Mr. Cuellar.
Mr.Cuellar. Thank you. Just a general question. When you
look at the endeavor that I think we are all interested in,
that is trying to get our cities and our Federal buildings and
other office buildings green, we can make efforts. But if you
look at the big picture, it is one building here, a couple
buildings here. How do we do the mass education of the public,
which is, I think, the hardest part of doing it? I mean, how do
we get somebody on 6th Street, kind of like where I live, right
across from the Eastern Farmers Market, how do you get folks
there that are so busy with their daily lives or interested in
other things, how do we get them to that point?
I guess that is the hardest thing. We can appropriate
certain dollars, or we can say here at the Capitol, under
Pelosi, we will start turning green, and we can get several
Federal buildings, you can do certain municipal buildings. But
how do you get the mass amount of folks to do that? And I guess
that is the hardest question that I can think of.
MayorFenty. Let me just say, Mayor Blum mentioned, I think,
how important incentives are. She has been a mayor longer than
I have. I can tell you that the Federal dollars that do come
down for tax credits and such are really paid attention to by
the small business community. We have got a really vibrant one
here in the District, represented by the Chamber and the Board
of Trade, et cetera. So I have no question that as dollars are
appropriated, the businesses will suck them up and use them for
environmental priorities.
I would also say that--we had to play with this when we
passed the Green Building Act, how much of a stick, how much of
a carrot do you use? And I think we came up with a very good
compromise. We are not mandating every business to do it no
matter what, but enough of a stick that people will pay a
little bit more attention. And I think there may be something
there on the Federal level there as well. You explore
legislation. For some businesses you have got to meet certain
standards, and the way to do that is by going green.
Mr.Cuellar. So the incentives--for example, give me some
examples of a stick. Examples of a carrot would be the tax
incentives.
MayorFenty. Exactly.
Mr.Cuellar. A stick, moderate use of a stick would be what?
MayorFenty. I think if your building produced a certain
amount of run-off or wasted energy, then you would probably
then have to--then you would have to pay some type of
additional fee or cost to the Federal Government, or if you
wanted to do it through the local government. I think those are
ways to explore. And again, it is more of a consciousness-
raising issue. But once you do it from the bully pulpit, people
pay attention.
Ms.Blum. If I can add, too, one of the incentives we have
found helps is that if you are going to use green practices,
you can go to the head of the line when you are trying to get
your permits. And that is real simple for us. But there is a
scramble to get to the head of the line right now because
people would rather not have to spend months and months and
months; instead, a couple weeks would be much easier on their
business. So that is a big incentive for us.
And the other thing is almost anything that we do in local
government, we look for a tipping point, because about 75, 80
percent of the people need to be educated or need to start to
feel it, whatever it is. And then when you have got them with
you, you have got it. And I think the green building, at least
in Santa Barbara, is at the tipping point. It is doing very
well because our contractors association is all with it so that
when you go to hire somebody to put in a window at your home,
they are going to talk to you about green building, because
then they can go to the front of the line.
So I just think that--we are starting a general plan update
where we go out to the community, and we have had four
community meetings. I was amazed at how much of the community
is talking about green buildings and making things more
walkable and livable, and it is very refreshing to know that
what you say in speeches actually is starting to come back at
us.
Mr.Cuellar. And if I can just--last point. It is true, I
think, now the word has been at least raised to a point,
because I come from Texas, and it is a big oil State, but now
in Texas we are talking about the alternative fuels. We are
looking at green buildings, which is something that years ago
we had never heard before--well, we had never really talked
about it on a practical basis on that.
Madam Chair, thank you very much. Thank you.
ChairwomanVelazquez. Mr. Chabot.
Mr.Chabot. Yes, I just had a quick question.
Mr. Cuellar kind of raised this in my mind. When we talk
about the sticks and the carrots, would you both agree as
mayors, and being obviously in charge of, you know, cities and
part of the government, et cetera, would you agree that it
ought to be our goal to ultimately use as few sticks as
necessary and maybe try to use the carrots as much as possible,
tax incentives, and ultimately rely upon small businesses and
entrepreneurship and common sense to develop technology which
makes economic sense so that you are building--the green
building occurs because it makes economic sense to do it,
because we have advanced beyond the need to use sticks, you
know, against businesses and make them do things. They will
want to do them because it makes economic sense to do them.
Would that--
Ms.Blum. We are seeing that right now. When we cut the
methane gas off our wastewater treatment center and put it back
to the fuel cell, and then we found we were saving $35,000 a
year, we had no idea we would be saving that much money. So it
was an eye opener. And then we started looking for other things
we could do. I think businesses are the same way. If they can
save money, if the payback is in--I will say 5 years or less,
that is wonderful. Then they will want to do it. Otherwise if
the payback is in 30 years, awfully hard to get a small
business to do that.
Mr.Chabot. Mayor Fenty, I think I saw you nodding as well.
MayorFenty. Absolutely. I think we are in the business of
spring economic developments, so we have to keep sticks to a
minimum and incentives to a maximum. And I think that this is
one of the industries and initiatives where the private sector
sees the rewards as benefits, because if you own a big office
building, and you make it green, I think your tenants want to
come into a building like that.
When we were responding to the Congressman's question, I
think there is a role for the government, though, even in just
setting standards in a law, because while you don't necessarily
have to mandate someone to comply, but the setting of standards
itself raises the awareness of this in a macro way that--and I
think you then expedite the country going green. So I just
wanted to have that on the record, that whatever comes out of
Congress I think is paid attention to on the local level more
than you may have even known.
Mr.Chabot. Thank you very much. I yield back.
ChairwomanVelazquez. That was a great closing, by the way.
MayorFenty. Thank you.
ChairwomanVelazquez. With that, I want to take this
opportunity once again to thank you. I know that you have a
busy schedule. You took time to be with us, and for that we are
very grateful. This first panel is excused.
MayorFenty. Thank you.
Ms.Blum. Thank you.
ChairwomanVelazquez. We welcome the second panel to take
your seats.
We are going to move with the second panel. Our first
witness is Mr. Danny Seo. He is the author of several books
that encourage Americans to live green lifestyles by offering
eco-friendly home design suggestions. At the age of 12, he
founded Earth 2000, which was the country's largest teenage
activist charity. Through his books, how-to lifestyle, weekly
Sirius satellite radio program and companion TV show, Mr. Seo
promotes his widely popular Simply Green lifestyle philosophy.
Mr. Seo, you have 5 minutes to make your presentation. Your
entire statement will be entered into the record.
STATEMENT OF DANNY SEO, ENVIRONMENTAL LIFESTYLE EXPERT, AUTHOR
OF SIMPLY GREEN
Mr.Seo. Thank you. Good morning, Chairman Velazquez and
members of the Committee. Thank you so much for having me this
morning.
As you mentioned, I am an environmental lifestyle expert.
And I am sure you are probably thinking, if I had a nickel for
every time I met an environmental lifestyle expert, you would
have a nickel. But my company produces media content that gives
a how-to content information to millions of Americans.
Through our television programs, books, magazine columns,
products and partnerships with both large and small businesses,
my personal goal has always been one thing: to show Americans
how to live a greener life that is simple, stylish and, most
importantly, accessible.
My testimony today will address several points. One, the
green revolution is more than just a trend, which is key;
number two, how small businesses can compete with major
corporations; and three, what needs to be done to help small
business in their quest to go green, which I think is probably
the most important point.
First I want to talk about the movement. There are two
movements going on in consumer tastes and interests. What I
believe we are seeing at the consumer marketplace is a major
shift; it is a cultural one where consumers are looking for
products and service that gives value to their lives, their
homes, their families and their community. It is all about
quality, not quantity. What we are seeing is what I call the
meaningful life. It is if our lives, our homes, our family,
community we live in aren't disposable, then the products we
use in our everyday lives shouldn't be either. And as we see
this rejection of cheap goods and services and the emergence of
green and sustainable living at the crossroads, what we have is
something that is very interesting. Going green is more than
just better for the planet. It represents good quality and
value.
Now, there has been a lot of attention in the media lately
about major corporations and manufacturers going green and how
it might affect small businesses. It rhymes with sprawl mart.
But small businesses should welcome the green revolution. Here
is why. Going green is not like adapting quickly to consumer
tastes and fashion trends. It is a philosophy rooted in the
very big idea of saving the planet. So as consumers seek out
green products, they will want what is really, truly the real
deal. They want authenticity. A smaller business can create a
corporate DNA that has sustainability through and through,
while larger corporations struggle because of their size.
So I am going to use the cleaning category as an example.
Global companies like Procter & Gamble and Clorox have a
stronghold on the cleaning industry. They also don't have a
history of creating nontoxic products. You just have to look at
the warning labels. At our small company called Method--it is a
small company I recently partnered with, who took the drudgery
idea of cleaning one's home and actually made it fun by making
products that are nontoxic and packaged in fresh containers
with bright colors and pleasant scents. Method, a cleaning
company, even has thousands of fans called influencers who
volunteer their time to spread the marketing message of Method
to others. Seriously, when was the last time you heard of
someone joining a Clorox bleach fan club?
So as major retailers are going green, they need a company
like Method to stock their shelves. These retailers can't turn
to a global manufacturer to simply invent a green product. It
would be inauthentic and without any trace of green DNA. So how
do the small business owners concerned about the environment go
green? Here is a few ideas.
First I think one solution is to create an interactive Web
site which gives small business owners a handful of useful
suggestions, 10 or 20, to help their everyday business needs go
greener. It could be anything from ideas on choosing energy-
efficient lighting, buying green power for their office, to
tailored resource listings that help set up a recycling system
for their office. There could be a primer of what going carbon
neutral actually means, a way of calculating what their current
output is and tips on reducing and neutralizing their
footprint. The program would not be dissimilar to the
Environmental Protection Agency's Energy Star program Web site,
which is basically an interactive Web site giving homeowners
tips on conserving power.
Another idea is to create a certification program that
gives small businesses official recognition for going green.
This could be modeled after the LEED program, which is a
program of the U.S. Green Building Council. In the LEED
program, buildings that are designed in an environmentally
sound manner could submit their designs to the council for
certification. Those who meet LEED requirements are then given
ranks ranging from gold to silver to platinum, with platinum
being the highest, or in this case the greenest. Small
businesses who adopt green practices could apply for a new
certification and use the achievement as a marketing tool.
Since they will need to prove they are, in fact, practicing and
adopting green practices through a certification program,
receiving such an honor can be used as a real marketing tool to
differentiate themselves in a crowded field. Earning this
certification will help a small business prove their green DNA
to the consumer.
In conclusion, small green businesses need to continue on
the paths they are leading now. Innovative new products, good
service and great design and the green space will help them
thrive and profit. Assistance in educating small business
owners who want to go green about practices in everyday action
will go a long way. Taking steps to go green will help these
businesses create a foundation of business practices that will
go a long way to earning the trust and dollars of the American
consumer.
Thank you so much.
ChairwomanVelazquez. Thank you, Mr. Seo.
[The statement of Mr. Seo may be found in the Appendix on
page 55.]
ChairwomanVelazquez. Our next witness is Mr. Julius
Genachowski. He is the cofounder of New Resource Bank in San
Francisco, California. The New Resource Bank is one of the
Nation's first commercial banks to offer financing aimed
specifically at green businesses. Mr. Genachowski is also the
founder and managing director of Rock Creek Ventures, an
advisory and investment services firm. Prior to his current
position, Mr. Genachowski was chief of business operation and a
member of the Office of the Chairman at IAC InterActiveCorp.
Welcome.
STATEMENT OF JULIUS GENACHOWSKI, COFOUNDER, NEW RESOURCE BANK,
SAN FRANCISCO, CALIFORNIA
Mr.Genachowski. Thank you. Thank you for inviting us to
testify. I am testifying as a cofounder of New Resource Bank, a
new and innovative bank with a mission of providing financing
and other banking products to businesses serving the broad goal
of environmental sustainability. New Resource Bank, the
country's leading commercial green bank, provides banking
services to clean-tech, renewable energy and other businesses
bringing to the market resource-efficient, healthy and
environmentally friendly products. The businesses with which we
partner, generally small businesses, are creating jobs
contributing to U.S. economic growth and helping solve some of
the Nation's most challenging problems.
Our belief is small businesses need banking partners who
understand the category, their business models and their needs.
We opened our doors at New Resource Bank with our first branch
in San Francisco last November. It has quickly grown to 100
million in assets, more than quadrupling in size from launch.
We started work a number of years ago when there was broad
skepticism that the words "green" and "business" could be used
in the same sentence. Today there is a growing consensus that
resource efficiency is not only a commercial opportunity, but a
national imperative. We commend the Committee for holding this
hearing and for its other work in this area.
My written testimony describes some of the founders and
investors, initial investors, in the bank, which include some
of the country's leading entrepreneurs: Mitch Kapor, who
developed Lotus Development; Bob Epstein, cofounder of Sybase;
Lisa Gansky, cofounder of Ofoto.
To date New Resource Bank financing has been applied to put
solar energy systems on roofs, construct energy-efficient
buildings, helped entrepreneurial businesses expand. In the
solar arena we introduced financing that makes conversion to
solar power as easy as possible for both small businesses and
homeowners. They can use our financing to get solar energy with
no money down by simply paying a monthly bill that is roughly
the same as a utility bill.
We have also structured loans that encourage real estate
developers to build green by providing a lower interest rate
and potentially higher loan-to-value for projects built to LEED
levels and energy efficiency and environmental design, and we
deployed our capital to help small businesses pursuing
strategies based on sustainability.
Some examples of small business customers to which we
provided an expansion capital or other banking services are
Solaria, a solar technology company developing products that
improve the efficiency and reduce the cost of solar cells with
the goal of allowing solar energy to compete effectively in the
market; Sustainable Spaces, which provides monitoring and
retrofit services to help small and medium-size businesses
improve energy efficiency, reduce utility bills and improve
work environments. Revolution Foods provides schools with a new
food service option that replaces junk food with nutritious and
good-tasting alternatives, part of a sustainable solution to
our health issues; Cowgirl Creamery, a cheese maker that is
crafting award-winning cheeses with organic and sustainably
grown ingredients, which just expanded to the District of
Columbia with a store on S Street.
We believe there are opportunities for our government to
promote the efforts of small businesses like these, giving
young businesses a chance to succeed and helping accelerate
their growth.
Today, of the Federal support that exists for alternative
energy, a good deal is accessible namely by larger businesses
and projects, such as those targeting coal gassification,
large-scale renewable energy production and nuclear energy.
Small businesses will be a key source of innovation and job
creation in this area.
Some of the opportunities for Federal action are captured
in H.R. 2389, the Small Energy-Efficient Business Act, and we
applaud this Committee for its work on this bill. SEEBA
includes sensible modifications of existing SBA loan guarantee
programs like SBA 7A and the 504 program; an expansion of the
Small Business Investment Corporation; and a creation of a
renewable fuel capital investment program. We support these
measures as smart and efficient ways to increase the flow of
private capital to small businesses developing or requiring
energy-efficient technologies.
We would like to offer two comments on SEEBA based on our
experience at New Resource Bank. First we recommend that the
provisions offering more flexible loan terms, such as those
applied in 504 loans, be expanded to include more categories of
business. As we understand it, the bill now applies to
manufacturing businesses, and we encourage the inclusion of
small businesses in other categories as well, such as
agriculture, real estate, construction and transportation, if
they meet the standards in the bill for developing or acquiring
energy-efficient technologies.
Secondly, we suggest a clarification of the more flexible
loan terms provided by SEEBA so that they are not limited to
renewable fuels. We believe the intention of the bill is to
support small businesses involved in a broad range of
alternative energy, not just renewable fuel. We read the
definitions of the bill as consistent with that, but a
clarification may be in order.
We also recommend that the Committee consider changing the
name of Renewable Fuel Capital Investment Program to the
Renewable Energy Capital Investment Program to make this
clearer.
We suggest Congress consider tax credits for renewable
energy, providing clarity for small businesses. We would
recommend Congress to consider updating commodity support
payments in the farm bill to encourage renewables and
sustainable production. The U.S. agriculture industry is
increasingly embracing the business opportunities provided by
our need for alternative energy. We encourage Congress to make
sure the commodity support system doesn't discourage renewable
fuels on farmland, and that it specifically encourages
renewable fuel production.
We also offer our perspective on the debate over measures
to limit greenhouse gas emissions. We believe economy-wide
carbon emissions limitations will provide a clear signal,
spurring investment in commercial solutions to our energy
needs. We think small businesses would benefit from clear
regulation in this area as opposed to vague rules that are hard
for them to plan on.
ChairwomanVelazquez. Mr. Genachowski, would you be able
to--
Mr.Genachowski. Final comment. I speak as not a cofounder
of New Resource Bank, but a depositor. Our initial capital of
24-1/2 million came not from a few institutional investors, but
from about 200 individual investors that has been exceeded by
funds provided by our depositors, over another 75 million more
in capital that New Resource Bank can deploy in support of its
mission. Our depositors are attracted by our great service and
product features like free worldwide ATM access. But my last
note is they have also come to our bank from around the
country, Colorado, Illinois, New York, Missouri, Oregon, Texas,
Virginia, Wisconsin, Washington State and here, District of
Columbia. Whether they are from red or blue States, they want
to bank green.
Thank you for the chance to give this testimony, and New
Resource Bank looks forward for the opportunity to work with
the Committee in developing legislation in this area.
ChairwomanVelazquez. Thank you.
[The statement of Mr. Genachowski may be found in the
Appendix on page 57.]
ChairwomanVelazquez. Our next witness is Susan Maxman. She
is the principal in the firm of SMP Architects, located in
Philadelphia, Pennsylvania. Her firm offers a full range of
architectural services, and they have been a leader on green
design.
For her contributions to the profession, Ms. Maxman has
received honorary degrees from Ball State University and
University of Detroit-Mercy, and in 2007 was the initial
recipient of the American Institute of Architects,
Philadelphia, Thomas Walter Award. She is testifying on behalf
of the American Institute of Architects where she previously
served as president. AIA represents the professional interest
of over 80,000 members.
Welcome.
STATEMENT OF SUSAN MAXMAN, OWNER, SUSAN MAXMAN & PARTNERS,
ARCHITECTS, PHILADELPHIA, PENNSYLVANIA, ON BEHALF OF AMERICAN
INSTITUTE OF ARCHITECTS
Ms.Maxman. Thank you, Madam Chairwoman and members of the
Committee. Good morning.
Since nearly half of the AI members own or work for small
firms, we appreciate all the Committee does for small
businesses. Thousands of small businesses across the U.S. are
realizing the economic benefits of going green. As and
architect who has devoted much of my career to making the
environment much more energy-efficient, I am gratified to see
how this issue has taken center stage in Congress and across
the country, but I also see there is much more to do.
According to the Department of Energy, buildings and their
construction are responsible for nearly half of all greenhouse
gas emissions produced in the U.S. every year. DOE reports the
building sector accounts for 39 percent of the total U.S.
Energy consumption, more than both transportation and the
industry sectors. The same study found that buildings in the
U.S. Alone account for 9.8 percent of carbon dioxide emissions
worldwide. That equals nearly the same amount of carbon
emissions of all sectors of Japan, France and the United
Kingdom combined, which is startling.
The data shows the building sector's impact on the
environment will only grow over the coming decades. Currently
U.S. building stock sits at 300 billion square feet. Experts
predict that between now and 2035, 52 billion square feet will
be demolished, 150 billion square feet will be remodeled, and
another 150 billion square feet will be newly constructed. If
the United States wants to be the world leader of energy
efficiency, our buildings must be a significant part of the
discussion.
That is why the AIA has adopted a position stating that all
new buildings and major renovations to existing buildings be
designed to meet an immediate 50 percent reduction in fossil
fuel-generated energy, with further reductions in 2030 when all
new and renovated buildings should achieve carbon neutrality.
The Senate responded to our call by requiring all new Federal
buildings to meet these goals as part of their recently passed
energy bill. The House Committee on Oversight and Government
Reform has approved similar legislation.
Building green is critical to the effort to address
greenhouse gases and reduce our dependence on foreign sources
of energy, but has another equally important benefit. It is
good for business, especially small business. By using energy-
efficient building systems and technologies, businesses can
reduce monthly energy bills, improve worker productivity,
increase worker retention and the well-being of building
occupants. More, they can have a significant impact on the
quality of life in their communities. As well, businesses that
care about their environmental footprint find they have a
competitive edge in the marketplace with the growing concern
for the environment.
However, significant and very significant barriers remain
for small businesses that want to go green. I have an example I
would like to share with you personally. Our firm is currently
working with an entrepreneur in upstate New York on the design
of the Worden Hotel, which is a small luxury boutique hotel in
the heart of Saratoga Springs, New York. The client came to our
firm because they wanted to be green, and they wanted a green
building. Our conceptual design included many strategies,
geothermal heating and cooling systems, green roofs, solar hot-
water heating, sequestered rainwater for flushing toilets, and
on and on and on, similar to what the mayor talked about in the
big new stadium that is being built.
When the conceptual budget was completed, the client found
they could not afford to retain many of those strategies and
make their pro forma for investors work, even though we found
other strategies to reduce costs, such as room sizes and other
strategies. Although New York State has a very aggressive
incentive program for energy conservation in buildings, it was
not enough to offset the cost for the geothermal system and
green roofs and other things, and the geothermal system has a
10-year payback, but it can make tremendous difference in terms
of energy consumption and environmental quality.
This is a story that we see over and over again, and small
businesses and nonprofits often cannot afford the initial
capital investments to create high-performance buildings.
There are numerous studies that show the initial cost of
going green can be quickly recouped in the first few years of
operation. There has been a challenge getting the message
through a system where first costs are often the only things
that the financial institutions see.
With this in mind, I would like to offer three areas where
the Committee and Congress can help small business remain at
the vanguard of creating a more sustainable environment. First
we need to do more to help small businesses get finances to
build green. I am pleased to see that the Senate-passed energy
bill contains provisions in the SBA to expand its programs to
help small business become more energy-efficient. I hope this
Committee can help ensure the energy legislation passed by the
House includes similar provisions.
Second, despite the benefits of energy efficiency, many
small business owners are not aware what they can do to make
their buildings green. With the technologies changing, there is
a way--there has to be a way to educate them to do that.
Finally, I believe that this Committee can also help small
businesses lead the way by ensuring that Federal agencies that
design and build buildings follow the law when it comes to
hiring architects and engineers. The last 35 years the Federal
Government has required that agencies procure architectural and
energy services based on which firm is most qualified and not
who is the lowest bidder. Thanks to this law, the Federal
Government has benefited from the highest quality of design,
and smaller firms have had much more of a level playing field.
In recent years more and more agencies are circumventing
this law by putting design services on GSA's competitive
schedules and by bundling contracts in ways that give large
corporations unfair advantages over small firms. At a time when
we are looking to the Federal Government to make its buildings
more efficient, the last thing we should do is lock out small
design firms at the very cutting edge of sustainable design.
Small businesses have always been at the forefront. With
the help of this Committee we can lead the way in designing and
building a more sustainable future.
I thank you, Madam Chairwoman.
ChairwomanVelazquez. Thank you.
[The statement of Ms. Maxman may be found in the Appendix
on page 61.]
ChairwomanVelazquez. Our next witness is Bob Jones. He is
the president of Robert Jones Homes, which specializes in land
development and the design and construction of single-family
luxury homes throughout Detroit.
Mr. Jones is the 2007 vice president of the National
Association of Home Builders. The National Association of Home
Builders is a District of Columbia-based trade association
representing more than 235,000 residential home building and
remodeling industry members.
Welcome.
STATEMENT OF BOB JONES, PRESIDENT, ROBERT R. JONES HOMES,
BLOOMFIELD HILLS, MICHIGAN, NATIONAL ASSOCIATION OF HOME
BUILDERS
Mr.Jones. Thank you very much, Madam Chairwoman and
distinguished members of the Committee. My name is Bob Jones. I
am a home builder from Bloomfield Hills, Michigan, and I am the
vice president and secretary of the National Association of
Home Builders, NAHB. NAHB represents over 235,000 members, who
employ millions of individuals in the home building,
remodeling, multifamily and light commercial construction
industry.
I am here to talk about the success that our Nation's home
builders, many of which are small businesses, have had in
cultivating a progressive green building program that is
producing sustainable, energy- and resource-efficient homes
throughout the country, NAHB members build more than 80 percent
of all new homes in the United States, and by the end of 2007,
more than half of our members will be incorporating green
building practices into the development, the design and the
construction of these new homes.
Because housing is such a major part of our Nation's
economy, home builders have the potential to profoundly affect
sustainability, conserve natural resources and preserve our
environment.
I am proud to say NAHB members are true leaders in the
green building movement. We have been implementing green
practices for over a decade. According to McGraw-Hill, about 10
percent of the homes built in 2010 will be green homes, which
is a major jump from 2 percent in 2006.
Being green is more than being trendy. Green building means
making an intentional decision to positively impact energy
efficiency, preserve resources, and to reduce and recycle waste
throughout the entire design and construction process and for
the life of the home.
NAHB took the lead in 2005 working with more than 60
stakeholders, environmentalists, builders, product
manufacturers and designers and developed agreed-upon criteria
to guide builders on how to construct a green home. These model
green home-building guidelines were developed for use by any
builder. To date more than 100,000 green homes have been built
in voluntary programs.
Two dozen local homeowner associations have adopted
programs based on these guidelines, and dozens more are in
development. Some have already been endorsed by State and local
governments. The net effect is thousands of homes are being
built to green criteria.
NAHB has proactively adopted a policy of promoting green
building as a means of reducing greenhouse gas emissions. In
fact, NAHB has partnered with the International Code Council,
the preeminent authority for building codes, to produce and
develop the first true national green building standard for
residential construction. The standard will be accredited by
the American National Standards Institution, which you may know
by the term ANSI. It will be an industry-wide consensus-based
and certifiable benchmark for all residential construction
types, single-family, multifamily, remodeling and land
development.
The Committee that is developing the standard includes
members from the United States EPA, the Department of Energy,
the United States Navy, many State and local housing agencies,
nongovernmental building organizations, small custom home
builders and remodelers. Both members and the general public
will have the opportunity to influence its development, and
once published, the standard will periodically be reviewed and
revised to ensure its rigor and integrity.
Healthy competition in the green building market will only
continue to drive its growth and innovation, as well as keep
costs down for home buyers so that green homes are affordable
and people can easily make the green choice. NAHB urges
Congress to preserve competition in the market by keeping it
free of mandates; to foster greater awareness by sponsoring
education campaigns for consumers about the benefits of green
construction; and extending and expanding the tax incentives
for highly efficient new homes.
NAHB is now developing a national green building program
that will not only support the standard I mentioned earlier,
but will also help State and local governments to implement
green building practices. The housing industry's commitment to
increasing energy and resource efficiency in home construction
is demonstrated by the development of the national green
building standard and program.
On behalf of the Nation's home builders representing many
small businesses I thank you. I thank you all for the
opportunity to speak here today about our industry's advances
in green building and our leadership in the green revolution. I
will be happy to answer any questions, and certainly we will
work with you in the future. Thank you.
ChairwomanVelazquez. Thank you, Mr. Jones.
[The statement of Mr. Jones may be found in the Appendix on
page 66.]
ChairwomanVelazquez. And now I recognize Ranking Member
Chabot for the purpose of introducing the next witness.
Mr.Chabot. I would like to introduce Mary Beth McGrew, who
is a LEED-certified architect with 16 years' experience in
working in private architecture and engineering firms. She
currently works at the University of Cincinnati as the
associate vice president of campus planning and design. The
University of Cincinnati has over 16 million square feet of
space and over 30,000 undergraduate students. There are five
campuses, with the largest in the uptown area within the city
of Cincinnati, and her department addresses the campuses'
design standards, space management and allocation, programming
and planning, capital planning, real estate and environmental
graphics. And we welcome you here for your testimony here this
morning.
Ms. McGrew.
STATEMENT OF MARY BETH McGREW, DIRECTOR, UNIVERSITY ARCHITECT
CAMPUS BUILDING DIVISION, UNIVERSITY OF CINCINNATI
Ms.McGrew. Thank you. Madam Chairwoman, Congressman Chabot
and members of the Committee, thank you very much for this
opportunity to testify before you today on behalf of the
University of Cincinnati's green building efforts and the
relationship that these efforts have and will continue to have
for small businesses. Small businesses can be benefited from
being selected for services and products that meet our
university's green specifications.
Located in the heart of Cincinnati's uptown area, the
University of Cincinnati is a first-tier research public
institution with over 36,000 students, and it is the largest
employer in Cincinnati's region.
The university has made grade strides in our green building
construction with all of our new buildings, and we are learning
more and more each day that we can apply to OUR future design
and construction and renovation projects along with the
maintenance and operations of our facilities. We want the
University of Cincinnati to be a healthy, pleasant and
provocative place to live, learn and also a benefit to the
small businesses in the region.
Recognizing its environmental stewardship role, the
university seeks to incorporate the concept of sustainability
into its academic and research programs, the design and
operation and maintenance of its buildings and landscape, and
its organizational structure and management, while preserving
safety and comfort.
You have heard about some of the statistics. During the
last 16 years, the construction at the university has resulted
in over 48 percent of a transformation of that campus and its
built environment. We now have a cohesive and coherent assembly
of new buildings, renovated buildings, recreation facilities,
improved residential environments, athletics and performance
venues, and sculpted landscapes and plazas.
Because of the great extent of our building efforts, and
because, as the U.S. Green Building Council reports, the huge
amount of energy use, the 37 percent of total energy use with
buildings, 65 percent of the buildings with electric
consumption across the country being responsible for 30 percent
of the greenhouse gas emissions and 30 percent of raw materials
used, 30 percent of waste output and 12 percent of potable
water consumption, we considered embracing green construction
for our buildings as the right thing to do for our campus and
our campus community.
Economically it should have paybacks in energy savings, but
that was not the only reason we did it. It moves the university
forward in the responsible use of our natural resources, and it
is the responsible thing to do for our current citizens and the
most important thing for our future citizens that we are in the
business of educating.
We see that society, business, and the environment and the
economy are all interconnected. The university's physical
campus has a role in the education of the campus community and
in the incorporation of green building principles. It provides
an educational opportunity for the community at large.
The building industry, according to the U.S. GBC,
represents the largest economic sector in the U.S. and the
second largest manufacturing sector. Green building is very
directly concerned with regionally specific issues, and so
there are natural links to local and small businesses. Small
businesses that make the materials green building use will grow
as demand rises, and we have seen evidence of this already.
In our projects, construction waste was recycled by local
companies. Many materials used in the construction were
required to be from a local and regional area. The site
development required capturing of rainwater. We used that as
irrigation for plants and landscaping. It also required
knowledge of local methods for protecting the site during
construction and the kinds of soils that are unique to our
region. We support the city's transportation system by having
negotiated the faculty, staff and students ride in the area for
no cost to us.
The university is involved in collaborations for the
successful development and use of new technologies and process
that contribute to better building efforts in all of our
research efforts. So there are just a few of the opportunities
for green building and local businesses and small businesses to
link.
Construction of green buildings at UC benefits small
businesses in a number of ways. Small companies with the right
knowledge, and this is a knowledge-based economy, can benefit
from green construction practices. For example, at the time the
recreation center at the university was being commissioned,
that is making sure that all of the systems worked as they were
designed to, our commissioning agent was actually a sole
practitioner. Local businesses can supply green goods and
services. With 36,000 customers we can significantly capture
the marketplace.
Contractors and construction companies have learned to use
the tools of green building trade when they design, build, and
help maintain the buildings for our institution.
Another example is there is a need for a sports floor
produced in part from our local region and to have solvent-free
adhesives. One of our local flooring companies has developed
just such a product, and that product was both local and green.
Students. That is what we are all about, the students. They
will live and enjoy the green buildings at UC. They will take
higher expectations for sustainability with them when they
leave the university and join small businesses. UC students are
the future of small businesses, and their experience with green
building should serve to advance sustainability efforts for
many years to come.
In closing, I would like to let you know our president has
joined the President's climate commitment modeled after the
mayor's climate commitment that the mayor from Santa Barbara
was talking about.
Thank you very much for this opportunity.
ChairwomanVelazquez. Thank you very much.
[The statement of Ms. McGrew may be found in the Appendix
on page 73.]
ChairwomanVelazquez. I believe that is a call for how many
votes? Four. So I am going to start asking questions, and we
will recess and come back.
Mr. Jones, I would like to address my first question to
you. You mention in your testimony that by 2007 more than half
of the home builders members will be incorporating green
practices in the development, design and construction of new
homes. What kind of incentives are necessary to convince even
more builders to construct green homes?
Mr.Jones. I think at first when we were talking before
about sticks and that approach to it, and then I agreed with
the Congressman who said we are sort of past that entity. The
main thing, I think, that is an incentive, number one, is
competition. That, in my view--and I hadn't heard anybody
mention that--in my view is one of the--certainly I know as a
businessman, as a home builder that competition drives me in
many instances.
Secondly, I had the opportunity about 3 weeks ago to go to
a reception at the Smithsonian with some of the tribal groups
as well as many representatives of EPA were there, and I have
to tell you and share with all of you that I could not mention
green building without having three or four or five people
gather around me just at an informal reception in terms of
their interest. It is what I would call hot, the green
building, and I think my response is as I said to you, Madam
Chairwoman.
ChairwomanVelazquez. Mr. Jones, can you talk to us about
how do we get more contractors to become aware of Federal
programs or incentives that encourage green construction?
Mr.Jones. Certainly one of the ways of just what you are
doing here today in terms of the fallout that hopefully will
come from this.
Secondly, you may know in my last comment, my last half
sentence, we not only thank you for being here, but even more
importantly we want to continue serving you in any way we can
to get this through.
Thirdly, in terms of across the country, it is really a hot
item. It is hot in terms of not only the builders, obviously,
from our statistics, but also from the consumers' perspective.
And so I just think--the comment was made to me, and I don't
know the year, whether it be by 2010 or 2015, you will not hear
of green building. That sounds like somewhat of an outlandish
statement, but I really think that it is coming on that quickly
that what will happen anymore than any builder or anyone in our
profession or related profession hears anymore that, gee, this
builder does code-approved houses. It will just be accepted
that it is green built.
ChairwomanVelazquez. Can you talk to us about the fact that
you believe, or maybe some of the members of the home builders
believe, that you need to create your own separate
certification, separate from LEED? Can you talk to us about why
it might be necessary for home builders to establish their own
industry certification?
Mr.Jones. Yes. Let me give you an example that hits
everyone that--you at the dais, but also people in this room
and people everywhere, that we don't think it should be
mandated, and that is part of their program. We think it almost
must be voluntarily. The reason my first comment about why is
that--let's think of all of us. Many of us are parents, many of
us have children that will be moving into new homes or moving
into homes period, and we want it so that there is various
levels, there is not just one level. There is a level in--our
approach to it is bronze, silver, gold. We are developing, as I
mentioned, standards because we want the ability that someone
wants to go green, someone wants to have a green residence,
that there is various levels. So when you start talking about
affordability, and we talk about our own children, that they
have to have something we believe that is affordable yet have
both worlds, have the beginning of the green building. That to
me is extremely important, the affordability issue for our
children.
ChairwomanVelazquez. Do you want to make any questions now?
Mr.Chabot. Thank you, Madam Chair. I will go ahead and ask
mine quickly, if I can. I think I will begin with you, Ms.
McGrew, since you are from Cincinnati and all.
Relative to--
ChairwomanVelazquez. Not being biased.
Mr.Chabot. Not being biased at all.
Approximately how much did it cost to build the Steger
Center green versus how much it could have cost in traditional
construction, and how quickly would you expect to get a
considerable return back on that investment?
Ms.McGrew. Well, our buildings are designed by--are very
well-designed buildings, and we don't believe that it costs us
any more to design them green.
At the time the Steger Center was done, it may have cost
the architecture firm a little bit more to submit the
paperwork, although the council is working hard on making that
not be an expensive proposition for the firm. We did not
perform so many radical techniques to the building that it
significantly contributed to the cost.
Mr.Chabot. You also mentioned in your testimony
construction materials. Were you talking about when you tore
down a building, the materials were used in other buildings in
the community?
Ms.McGrew. I was referring to both. We tore down the
parking structure when we started construction on the medical
center, and that concrete was a significant recycling effort
for a local company.
Our contractors are very good at recycling waste during
construction. Every piece of glass comes with packaging
material, and there are volumes of waste generated in new
construction. That, too, is required to be recycled on site. I
think Mr. Jones alluded to that as well.
Mr.Chabot. Thank you.
Mr. Jones, we have votes, but I want to emphasize again
what you talked about, mandates and the way this ought to be
done because it makes business sense to do it, as opposed to
requiring home builders or anybody else that you have to do it,
how important that is. And you also mentioned, I believe, the
tax incentives, how important it is that when we have tax
incentives, when we here at Congress pass laws where there is--
we are trying to make folks in the private sector go with green
building because we are helping out in the Tax Code, but if we
make the tax changes go away in a couple years, you can't plan
on that long term. Could you discuss those two issues?
Mr.Jones. Yes, sir. First of all, the requirement to do it
a certain way, the way we are looking at it is the format for
it, the format, to use your words, that you used in relation to
the tax incentive, that we want to make sure it is sustainable.
Now, I don't mean sustainable in terms of the green building,
but sustainable in the sense of that as how the--our children
and in the following generations, that this is sustained in
terms of the green building and hopefully reaches the highest
level. We think it is inappropriate to have it mandated, much,
sir, as you alluded in the other panel in terms of that kind of
approach to things, and we appreciate your comments in that
regard.
In terms of the tax incentives, again, we are on the same
wavelength, so to speak. From the counting on it in terms of
the green building year to year, it will naturally in that
instance begin to take charge of itself because of the demand
that already exists, but in terms of the tax incentives, that
will help, obviously, our industry.
I mentioned in my original comments to everyone that 80
percent of all new homes in the United States are built by NAHB
members. It is important to understand that the 80 percent
represents home builders that build less than 10 houses a year.
ChairwomanVelazquez. Mr. Jones, we could continue, but we
have only 5 minutes to go to the floor to vote. The Committee
will stand in recess, and we will resume after the last vote.
[Recess.]
ChairwomanVelazquez. Mr. Chabot, you may continue asking
questions.
Mr.Chabot. Ms. Maxman, you mentioned about the 70-room
hotel that was going to be built, and they ultimately didn't
build it because the cost didn't work out--
Ms.Maxman. No, they are going to build it. They won't be
able to do all the green strategies.
Mr.Chabot. Most of the project was that, and my point was
going to be this: Is there--you aren't a person, or are you--do
you believe it should have been mandated by the government that
they had to do certain things regardless of what the cost would
have been, or do you think it is appropriate incentives, but
not necessarily mandates?
Ms.Maxman. It depends on what it is. There could be
mandates at certain levels. I don't think mandates in a large
scale would be really a worthwhile thing. I think it is really
more the carrot and the stick kind of thing.
A couple of examples of different things. First of all, in
the case of this hotel, the big problem there, the up-front
costs, if we can figure out ways to finance up-front costs,
whether it be in the private sector or within the government,
to allow for these incentives. If you put in a geothermal
system, the payback can be 5 to 10 to 15 years. It is a
worthwhile thing to do, but many small businesses do not have
that capital outlay that they can commit to it. If there is a
way to finance that or to give them some financial incentive.
NYSERDA, the New York organization--you probably know about it,
Chairwoman--they do have some incentives, but they are not
enough to really cover these kinds of costs.
The other thing is the stick issue, using an example of
what happens in Atlanta, Georgia, with stormwater. You are
charged--they have a combined sewer system, and you are charged
a very high fee now for putting stormwater into the system
because they have to purify all of it because it is combined
with the sanitary system.
Georgia Tech University has developed this entire new
strategy where they are in 15 years never going to have one bit
of stormwater into their system by all of these wonderful
methods. It will pay back in time easily. And more people are
going to start to look at how they can recharge water basins
and not put stormwater into our stormwater systems. So those
are examples. That is in a way a mandate because it is, you
know, an economic mandate in a way.
I think that the creative financing is really where I think
these things should be happening, and tax incentives, and low-
interest loans and things like that. That is where I think we
have to really start working on it and making a difference and
really maybe--I don't know, Fannie Mae and Freddie Mac, whether
you all can do things with them, but I think that is where
these things are really going to happen.
Mr.Chabot. Thank you very much.
Mr. Genachowski, you represented your support for economy-
wide carbon emission limitations. While it is true it would
create a boon for the green products and services industry,
have you analyzed how such restrictions would affect other
industries; and wouldn't really incentives such as those
through the Tax Code provide perhaps a more realistic approach
to limiting carbon emissions, or should that be a part of it?
Mr.Genachowski. It is a good question. An overall national
strategy for addressing a variety of issues on the table will
have to incorporate many solutions. I think the point you have
been making consistently today about the need for small
businesses to have certainty we agree with. The worst-case
scenario is one where, especially for small businesses, they
start going down a road to discover that the rules are
different. One of the things we hear from our small business
customers, we would rather know what the rules are than not and
find out later.
Is it possible on climate issues to have broad, national,
clear goals that are implemented in flexible ways with respect
to small businesses? We don't really consider ourselves experts
on the overall climate change issue.
On the issue of providing financial incentives, loan
guarantees, flexible loan terms for small businesses, we do
know more about that as an institution and are very excited
about that. New businesses like ours tend to be founded on some
combination of rigorous analysis and anecdote. One of the
anecdotes that drove the founding of this bank was a local
small business person who wanted to start a restaurant as part
of one of the national franchise chains, and he wanted to bill
the company and create a few jobs, but he wanted to do it in a
way that was green. So typically what will happen is a
franchisee will decide to do it, will get the plans and
financial model from the chain, go to a bank which will have
seen these before, and they say, we understand; boom, the loan
is approved.
He said, look, I would like to do this in a green way, I
would like to make some changes with respect to energy, I think
it is the right thing to do. I also think my utilities bills
will be cheaper down the road, and I think it will pay for
itself. He couldn't get the loan for the extra amount. That
struck us as economically illogical, because the payback was
there, the business model was solid, it was one of the things
that lead to a bank willing to say, we understand the business
models, and we are willing to engage in this loan.
There will be some loans that new businesses will pursue
that will be harder to justify on strict economic grounds, and
the kinds of things this Committee is considering with respect
to SBA loan guarantees are extremely helpful. It allows a bank
like ours to say, this is great, we will share the risk with
the Federal Government here on the portion of this that
supports public policy but is a little bit riskier for the
future. It makes a difference in the market. So we do think the
SBA program will make a real difference, and if it can be
expanded to more business categories, we think we can write
more loans in the area.
Mr.Chabot. If I have time for one more question?
ChairwomanVelazquez. Yes.
Mr.Chabot. Mr. Seo, you mentioned some products or the
company Procter & Gamble, which also happens to be located in
Cincinnati, and we love Tide and Pampers and Crest and Gillette
and all products and brands that Procter & Gamble is engaged
in, but that is irrelevant. I just wanted to throw that in
there.
The question I had--and first of all, my congratulations on
starting a business at 12 years of age. That was very
impressive, and to carry on since that time is really quite
inspirational for a lot of people.
Could you discuss a little bit, you know, being green,
whether it is building or products or the rest, versus, you
know, job creation and business, and kind of the idea being in
some people's minds, they think you can be one or the other,
but you can't really be green and for growth and more
employment and new jobs and all that kind of stuff. I don't
agree with that, but there is that mind-set out there.
Could you discuss that issue?
Mr.Seo. I think the interesting part about creating a
business or turning your business into a green business is that
you are actually creating a level of trust with your customer,
sort of the level of trust you would have with your doctor. You
trust your doctor on a certain level, something you sort of
have to agree to or believe in.
I think when your business adopts green practices, it shows
your potential customers that you are more than about a profit
for your business; you also have a concern for the community,
the environment, the planet. You sort of gain their trust for
the long term.
So what we have seen in one of our clients who was a hotel
chain, one suggestion was when someone shows up in a hybrid
car, we would waive the valet parking fees. A lot of customers
felt this was a great reward for doing the right thing, but
with customers it became a great travel tip also for people to
stay at the hotel, to rent hybrid cars at the airport, and it
actually increased their business, too. So it is win-win if you
market it the right way.
Mr.Chabot. Thank you. I yield back my time.
ChairwomanVelazquez. For the record, I have a hybrid car.
Mr. Genachowski, you talk about the financing contained in
the legislation we passed here. I would like to ask you of the
loans that the New Resource Bank provides, roughly what
percentage are financed through SBA programs?
Mr.Genachowski. I will have to get back to you on the exact
number.
Mr.Genachowski. My understanding is that we are writing
some 504 loans now. We haven't written 7 loans yet. We would
like to.
Part of it is a lot of the businesses that we are seeing in
our first market are small businesses that probably don't
qualify right now under the terms, but that would qualify under
the bill as proposed, and certainly if it could be expanded to
cover more categories of business.
ChairwomanVelazquez. And do you think that if we can
provide financing to SBA loans, if you could offer better
terms, financing terms, that will facilitate the growth of
energy-efficient businesses?
Mr.Genachowski. We absolutely think that.
Responding to another question, how do we get the word out
about this, one thing the Committee in Congress can do is
leverage small businesses like ours who would like to get the
message out. So we would love to have the tool of an expanded
SBO--SBA loan program. We would put signs up in our banks and
use it in our marketing materials because we are excited about
sharing the risk with the Federal Government on promoting some
of these loans. We see it as good business. We can write more
loans if we share the risk with another party.
ChairwomanVelazquez. Mr. Jones, the Energy Policy Act of
2005 included tax incentives for builders and homeowners who
put in energy-efficient appliances and materials. It obviously
has been important to your industry and helped many homeowners.
Unfortunately, of the $8 billion in tax breaks in that bill,
only about 6 percent went towards energy efficiency and
renewable energy. Would you agree that directing more of these
tax incentives to small businesses should be a priority for
this Congress to address the issue of energy consumption?
Mr.Jones. Yes, Congresswoman, I would. I have a note here
that the Energy Policy Act of 2005 is one important way to help
smaller businesses who may not be able to absorb costs as
easily as larger builders. Now, that is sort of an
oversimplification.
May I add one other thought?
ChairwomanVelazquez. Sure.
Mr.Jones. One of the things I was thinking in terms of
incentives, that Congress could offer grants for green building
training, training of builders, but I wouldn't limit it--I
think someone made the comment before, I wasn't sure from the
dais there, they were thinking about it for a particular group.
We think it should be for a variety of groups, obviously the
National Association of Home Builders; there are LEEDs and
other entities.
We are in a position, the National Association of Home
Builders, because of our size and involvement, we would make
our own standard, but we are inviting everyone. I think that is
what I sort of want to leave you with today philosophically,
that we--as I said before, we want to continue to participate
with this Committee, if you will have us, for our input. I also
thought if the Committee would feel comfortable with this, we
might send additional notes, if that would be okay with you.
ChairwomanVelazquez. Yes. Also we passed legislation here
to reauthorize the small business development centers. It is a
national network through SBA. One of the important things they
could do is educate the small businesses in terms of energy
efficiency throughout the country.
Mr.Jones. It would be very helpful to continue that.
ChairwomanVelazquez. Because of the emergence of eco-
friendly options, such as low--soy-based paints, low-flush
toilets, compact fluorescent light bulbs and organic cleaning
supplies, American consumers are better able to make
environmentally conscious choices. Despite the success of these
products, does cost remain a barrier for many purchasers?
Mr.Seo. I think it is a misconception that green products
cost more. Part of my job through our television show and
magazine columns is to identify the products and services as
both ecological and economical. The good thing about a boom in
the green industry is that there is competition, and there are
new companies making products, and with competition we
discovered our prices have come down significantly. In some
cases a compact fluorescent light bulb is cheaper when bought
in quantity than a traditional incandescent light bulb now. So
I think the more we can educate and point people in the right
direction, the more people will see that saving money can
actually be saving the environment, too.
ChairwomanVelazquez. Cost will be less of an issue if we
can get more suppliers entering the market.
Mr.Seo. Absolutely. I think it is also identifying who
these suppliers are. So I feel the tipping point or cultural
shift for green products is just a few years ago.
ChairwomanVelazquez. What lead you at age 12--what really
attracted you; what was in your mind?
Mr.Seo. The spark. I happen to share the same birthday as
Earth Day, and it is an unusual holiday because it is a lot of
gloom and doom. It is about the rain forest burning down and
the ozone layer disappearing. At 12 you are impressionable. I
believed everything that I read, and I assumed back in 1989
that the world would be over by the year 2000, so I started
Environmental Group as my 12th birthday wish, and my parents
gave me $23, and I started a group.
ChairwomanVelazquez. Great.
Ms. Maxman, since the inception in 1994, LEED has been a
standard for certifying green buildings. Your firm has been
involved in a number of products that has used this
certification. How effective do you think current LEED
standards are in designating green buildings?
Ms.Maxman. That is a great question. I started doing green
buildings before LEED was even on the radar screen, so we sort
of do green buildings and then apply the LEED standards to
them.
I think LEED has been phenomenal in terms of raising the
awareness of green buildings. People are competitive, and so
you have universities that say, we have to have a LEED platinum
building, or, we have to have a LEED gold building. And I say,
wait a minute, we are just going to design a really good
environmentally sensitive building. If it is a really good
building, it will be a LEED building.
I think it is fabulous in terms of what it has done to
raise awareness. I do think right now it is going through some
iterations and changes. I think it needs to start looking at
carefully the quality of point systems and really be much more
kind of qualitative in terms of how they do it instead of
quantitative so that you can't produce a bad building that is a
LEED-graded building.
ChairwomanVelazquez. Where do you need improvement in
addressing the concerns of architects?
Ms.Maxman. I think from my point of view, and I have said
this to the Green Building Council, and it is a personal point
of view, it is not the AI point of view at all, I feel that
they need to address their value system. When you can get a
certain amount of points for getting a bike rack, the same kind
of points for doing something much more significant, that is
where they have to figure out how to do this to really make
sure that people have a holistic sense.
For example, how could you ever have a LEED-certified
building in Texas if it doesn't conserve water? And yet you
could, by the way that you get these points. So I think you
have to look at what is the big idea. Every project there is
something that is the most important thing that you have to do
that has to do with where you are, the context of the building
and where it is placed. Not everything is equal. So in Texas
you must conserve water.
ChairwomanVelazquez. Thank you.
Ms. McGrew. Sorry. In terms of constructing the student
center and other parts of the campus, did you essentially limit
the number of businesses who were able to work? Basically my
question is did you find that many firms were not familiar with
green construction and unable to bid on the project?
Ms.McGrew. I don't know the answer to that specifically. I
do know that there was more work on the part of the architects
to assist the construction early on. And then over the 16 years
as LEED became more familiar, especially on major project
construction, it was not as big of a problem. That was more the
means and methods.
And since you asked me about LEED, may I clarify one thing?
Congressman Chabot, you asked me about the cost. On the Steger
Center we didn't implement any significant technical issues
that caused an increase in cost, but I would be misleading if I
didn't say on other projects we did; for example, to put in all
the underground piping to collect the stormwater. We expect to
get a payback from that in terms of water conservation and in
our medical school as well. Those energy saving costs are
significant. So we are all--balancing those to report on them.
But in answer to your question, I don't know that we really
eliminated people. Our specifications, because we are a public
institution, are open enough to invite different kinds and
different companies. So I don't recall any complaints.
ChairwomanVelazquez. Well, no. It is just to see how--if
there weren't small businesses who were able to participate or
compete because of the requirements.
Ms.McGrew. It would be a very good question to ask, and it
would be a very good question to ask a lot of the local
contractors.
ChairwomanVelazquez. Sure.
Ms.McGrew. I think early on they might have been a little
bit more intimidated than they are now since it is so common.
ChairwomanVelazquez. Mr. Jones.
Mr.Jones. Thank you.
I would like to make a comment. First of all, typically--I
want to use the word "typically"--LEED is aimed, quite frankly,
at high-end type, whether it be builders, or obviously their
reputation has come from the high end, as has been mentioned,
whether it be hotels, whether it be those kind of examples.
And then I would like to add also, and this we got from the
USGBC council, that they estimate that a LEED home--let me
underline home, but that is the business we are in, residential
homes--could add 12,000 to 15,000 to the cost, just for your
information.
Ms.McGrew. May I comment on that?
ChairwomanVelazquez. Yes, Ms. McGrew.
Ms.McGrew. I wanted to clarify the high end. I think it is
true. High end makes me think of expensive and fancy, and I
think maybe it is a matter of size that the LEED certification
system--if a building is 20,000 square feet and over, at
least--and, Susan, you can correct me, that is kind of in the
architect's language. If it is 20,000 square feet and over,
there is enough mechanisms in place that it is not a huge
burden. For smaller structures, the system wasn't designed to
be as accommodating to those, and I think rightfully so. The
U.S. Green Building Council went after the buildings that used
the most energy, and those are the big ones. I just wanted to
clarify that.
Mr.Jones. I think that is absolutely true.
ChairwomanVelazquez. Okay. My last question--I wanted to
address it to Ms. Maxman, but if there is any other witness who
would like to answer it.
At present, who do you feel is driving the advancement of
green buildings, building owners, designers and builders,
government, or the public in general?
Ms.Maxman. That is a really good question. I truthfully
think it is the building owners. And I think it all started
with LEED. I really do. You know, because I--you know, back in
1991, when I started on this path to doing green buildings, I
mean, there were none then or very few. And you know--and I was
the one who was always driving it to my clients and saying,
look, and making them aware of it and everything. But now, you
know, I think everyone knows about LEED, and truthfully I do
feel that it started with the institutions and the nonprofits
that were the--they were the first wave of interest, because,
you know, they keep their buildings longer; they really do kind
of, you know, always have in mind the greater good, et cetera,
and so on, and the examples.
And then slowly, you know, now the commercial end of it has
taken place, because the marketplace is dictating it, because
of what you are saying--what we are all seeing is this green
tide. So people realize that there is a great advantage, and
the developers and the builders and so on realize there is a
big advantage to being able to say that I am a green building
and so on, and I am a LEED-certified building. A lot of that
has to do with certification. A lot of clients want to be
certified so they can put the plaque on the wall and say, I am
a LEED building. And I don't think it is the government at all.
I really don't. In the case of GSA or something like that or
the Navy or something, they obviously--they are the ones who
have determined--and I think that architects introduced that to
the Navy and to GSAand so on. I think that we really were
responsible for those agencies coming on board.
ChairwomanVelazquez. Any other members of the panel?
Mr.Genachowski. I agree with Susan that the demand is
coming organically, so to speak. It is coming from building
owners and the public for a whole series of reasons. But there
is more demand than there is ability to actually build some of
the green projects. This is where the kind of work that the
Committee is doing in helping whether it is individual
homeowners, small businesses or others act on their desires by
helping bring together businesses and capital so that the
projects can go forward. I think there is less of a demand
issue now than there is of supply of capital issue.
Ms.Maxman. I absolutely agree with that.
Mr.Jones. I just think the Committee might take into
consideration I think there is two separate entities we are
talking about. One, when we talk about buildings, we tend to
think in terms of commercial, of large--when Ms. McGrew said
about 20,000 square feet, well, I don't know too many houses
that are 20,000 square feet, okay? So I would just like you all
to make that distinction because I think in--as I said in my
earlier testimony that in the past 7 years our industry has
done 100,000 homes green, and so I just think--I think it is a
combination of what is causing it to move, as your good
question indicated.
ChairwomanVelazquez. Any other members? Okay.
So Mr. Chabot.
Mr.Chabot. Thank you. I will try to be brief.
Ms. McGrew, one final question, maybe two. The one thing,
relative to, say, UC's campus, University of Cincinnati, it is
obviously essentially landlocked, and there are always
challenges when you are building in an area as opposed to out
in the suburbs or a more rural area. Does that also affect when
you are trying to build something green, when you have more of
a confined area that you are dealing with? Are the challenges
perhaps a little bit greater, and do you have to be a bit more
creative or--
Ms.McGrew. I don't know if it is because it is green, but
it is certainly much more challenging to build in an urban
environment, and ours is one, and it is landlocked. We also
think that is part of being green. The denser you are, the
easier it is to be green and to access public services and to
link with our city. So while it is a challenge for space, it is
also an opportunity, and we are surrounded by so many
businesses that can talk to each other, so there is a nice
network. So I think it is a balance.
Mr.Chabot. Okay. And then the other question somewhat
related. Using the DAAP building as an example, which is--for
those that aren't familiar with it, it is, shall we say,
creative, unique, very few right angles.
Ms.McGrew. Our example of indeterminate space is what I
tell people.
Mr.Chabot. My daughter is a graduate of the program there
and got a very good job on her own and is doing very well. But
in any event--and it is one of the best programs in the country
for what it does. She is in graphic design. But the building is
very unusual in the way it, you know, appears. And so is the
Vontz building, which I also think is part of the university.
Isn't it down the street?
Ms.McGrew. Yes, it is. It is our east campus, but it is
part of our medical campus.
Mr.Chabot. And it is, shall we also say, very unique. And
not being one who considers himself to be terribly
knowledgeable about what is artistic and what is not, I am not
going to weigh into, you know, what I think about those
particular--
Ms.McGrew. Our buildings are educational in nature. They
teach you to think about space.
Mr.Chabot. They really do. So my question is this: With
those two buildings in mind--and when those were built, I think
those were built more from what we are talking about here
today, kind of from the green building aspect, but more from
the creative artistic with that kind of vision. Is that now
something that is combined together where one can be creative
in the looks? Maybe, Ms. Maxman, not being familiar with these
buildings, but knowing--if could you envision in your mind--you
probably can't because these buildings are very unique.
Ms.McGrew. I think those are the two most photographed
buildings on campus. And I am glad you brought that up, because
early on when the campus set about to change its image, those
two buildings were--the green initiative was not big on campus,
so those two buildings did not have the same set of criteria by
which they were judged as the last buildings and our current
medical center on our academic health campus. So you are
correct that those two buildings--that was not part of the
criteria by which they were judged.
Ms.Maxman. But I think what happens in architecture is we
have the star architects, and we have the star buildings, and
we have these pieces of sculpture, and then we have buildings
that are built for people. And I don't think that they are
exclusive of each other. I think many star architects, quote/
unquote, are designing green buildings now. But I think that,
you know, people who are truly green building designers are
people who think about how people like those buildings, how
they live in those spaces, and how to conserve as many
resources as possible so they don't do frivolous things. But
you can still do, you know, a great work of art, and it can be
a green building.
Mr.Chabot. That is what I was asking.
Ms.McGrew. And I think our more recent examples on campus,
and this is not by any means a criticism of our more early
examples, but our more recent examples are a little more
holistic in their approach.
Mr.Chabot. Thank you very much. This was a very good panel.
ChairwomanVelazquez. Thank you very much. We are all very
grateful for your participation. We know some of you have
traveled from across the country, and this has been a very
interesting panel. And the bigger picture here is how can we
reduce energy dependency in our country? And we all know that
small businesses are the innovators, and they are the drivers
of our economy. How can we come up with legislative solutions
to the many problems that small businesses are facing in
accessing capital and continue to do what they do best, and
that is creating jobs for our economy.
So I ask unanimous consent, Members have 5 legislative days
to enter a statement into the record.
ChairwomanVelazquez. And with that, we recess.
[Whereupon, at 12:55 p.m., the Committee was adjourned.]