    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                    H.R. 2336, THE GREEN ACT OF 2009, PART I

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                       HOUSING AND COMMUNITY OPPORTUNITY

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 11, 2009

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 111-43

                      U.S. GOVERNMENT PRINTING OFFICE
    52-399                    WASHINGTON : 2009
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                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                     BARNEY FRANK, Massachusetts, Chairman

    PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
    MAXINE WATERS, California            MICHAEL N. CASTLE, Delaware
    CAROLYN B. MALONEY, New York         PETER T. KING, New York
    LUIS V. GUTIERREZ, Illinois          EDWARD R. ROYCE, California
    NYDIA M. VELAZQUEZ, New York         FRANK D. LUCAS, Oklahoma
    MELVIN L. WATT, North Carolina       RON PAUL, Texas
    GARY L. ACKERMAN, New York           DONALD A. MANZULLO, Illinois
    BRAD SHERMAN, California             WALTER B. JONES, Jr., North
    GREGORY W. MEEKS, New York               Carolina
    DENNIS MOORE, Kansas                 JUDY BIGGERT, Illinois
    MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
    RUBEN HINOJOSA, Texas                SHELLEY MOORE CAPITO, West
    WM. LACY CLAY, Missouri                  Virginia
    CAROLYN McCARTHY, New York           JEB HENSARLING, Texas
    JOE BACA, California                 SCOTT GARRETT, New Jersey
    STEPHEN F. LYNCH, Massachusetts      J. GRESHAM BARRETT, South Carolina
    BRAD MILLER, North Carolina          JIM GERLACH, Pennsylvania
    DAVID SCOTT, Georgia                 RANDY NEUGEBAUER, Texas
    AL GREEN, Texas                      TOM PRICE, Georgia
    EMANUEL CLEAVER, Missouri            PATRICK T. McHENRY, North Carolina
    MELISSA L. BEAN, Illinois            JOHN CAMPBELL, California
    GWEN MOORE, Wisconsin                ADAM PUTNAM, Florida
    PAUL W. HODES, New Hampshire         MICHELE BACHMANN, Minnesota
    KEITH ELLISON, Minnesota             KENNY MARCHANT, Texas
    RON KLEIN, Florida                   THADDEUS G. McCOTTER, Michigan
    CHARLES A. WILSON, Ohio              KEVIN McCARTHY, California
    ED PERLMUTTER, Colorado              BILL POSEY, Florida
    JOE DONNELLY, Indiana                LYNN JENKINS, Kansas
    BILL FOSTER, Illinois                CHRISTOPHER LEE, New York
    ANDRE CARSON, Indiana                ERIK PAULSEN, Minnesota
    JACKIE SPEIER, California            LEONARD LANCE, New Jersey
    TRAVIS CHILDERS, Mississippi
    WALT MINNICK, Idaho
    JOHN ADLER, New Jersey
    MARY JO KILROY, Ohio
    STEVE DRIEHAUS, Ohio
    SUZANNE KOSMAS, Florida
    ALAN GRAYSON, Florida
    JIM HIMES, Connecticut
    GARY PETERS, Michigan
    DAN MAFFEI, New York

            Jeanne M. Roslanowick, Staff Director and Chief Counsel
               Subcommittee on Housing and Community Opportunity

                     MAXINE WATERS, California, Chairwoman

    NYDIA M. VELAZQUEZ, New York         SHELLEY MOORE CAPITO, West
    STEPHEN F. LYNCH, Massachusetts          Virginia
    EMANUEL CLEAVER, Missouri            THADDEUS G. McCOTTER, Michigan
    AL GREEN, Texas                      JUDY BIGGERT, Illinois
    WM. LACY CLAY, Missouri              GARY G. MILLER, California
    KEITH ELLISON, Minnesota             RANDY NEUGEBAUER, Texas
    JOE DONNELLY, Indiana                WALTER B. JONES, Jr., North
    MICHAEL E. CAPUANO, Massachusetts        Carolina
    PAUL E. KANJORSKI, Pennsylvania      ADAM PUTNAM, Florida
    LUIS V. GUTIERREZ, Illinois          KENNY MARCHANT, Texas
    STEVE DRIEHAUS, Ohio                 LYNN JENKINS, Kansas
    MARY JO KILROY, Ohio                 CHRISTOPHER LEE, New York
    JIM HIMES, Connecticut
    DAN MAFFEI, New York

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        June 11, 2009................................................     1
    Appendix:
        June 11, 2009................................................    25

                                   WITNESSES
                            Thursday, June 11, 2009

    Bernstein, Scott, President, Center for Neighborhood Technology..    10
    Gatlin, Doug, Vice President, Market Development, U.S. Green
      Building Council...............................................     7
    Howard, Jerry, President and Chief Executive Officer, National
      Association of Homebuilders (NAHB).............................     5
    Koo, Doris W., President and Chief Executive Officer, Enterprise
      Community Partners, Inc........................................     9
    Mazria, Edward, Founder and Executive Director, Architecture 2030    12
    Willis, Roy, Executive Vice President, Lennar Urban (Southern
      California Division)...........................................    14
    Wluka, David, Director, National Association of Realtors.........    15

                                    APPENDIX

    Prepared statements:
        Bernstein, Scott.............................................    26
        Gatlin, Doug.................................................    51
        Howard, Jerry................................................    61
        Koo, Doris W.................................................    70
        Mazria, Edward...............................................    82
        Willis, Roy..................................................    93
        Wluka, David.................................................   113

                  Additional Material Submitted for the Record

    Waters, Hon. Maxine:
        Written statement of Charles Clevenger, Delphi Corporation...   123
    Perlmutter, Hon. Ed:
        Written statement of The American Institute of Architects
          (AIA)......................................................   127
        Letter from various undersigned organizations in support of
          H.R. 2336..................................................   136

                    H.R. 2336, THE GREEN ACT OF 2009, PART I

                                  ----------

                            Thursday, June 11, 2009

                 U.S. House of Representatives,
                            Subcommittee on Housing and
                                 Community Opportunity,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The subcommittee met, pursuant to notice, at 2:14 p.m., in
    rooms 2220 and 2128, Rayburn House Office Building, Hon. Maxine
    Waters [chairwoman of the subcommittee] presiding.
        Members present: Representatives Waters, Cleaver, Green,
    Clay, Ellison; Capito and Biggert.
        Also present: Representative Perlmutter.
        Chairwoman Waters. I will first apologize for having to
    move this hearing. Unfortunately, it overlapped with the
    hearing that was being held by the chairman in our regular
    Financial Services hearing room, so we had no choice but to
    come to an alternative site. And so for those of you who don't
    have seats, I don't know what else to tell you but to stand.
        Thank you for your patience, members. We just left a
    meeting with Secretary Donovan.
        This hearing of the Subcommittee on Housing and Community
    Opportunity will come to order. Ladies and gentlemen, I would
    like to thank our ranking member and other members of the
    Subcommittee on Housing and Community Opportunity for joining
    me today for this hearing on H.R. 2336, the GREEN Act of 2009.
        Without objection, Representative Perlmutter, the author of
    this legislation, will be considered a member of the
    subcommittee for the duration of this hearing.
        I would like to note that this is our first hearing on this
    legislation. Next Tuesday, we will be joined by the Department
    of Housing and Urban Development, which will share its views
    about this legislation. I would also like to note that H.R.
    2454, the American Clean Energy and Security Act of 2009, is
    not the subject of today's hearing. Whle I understand member
    interest in this legislation, today's hearing is focusing
    solely on the GREEN Act.
        Higher energy costs are felt most acutely by low-income
    families. These families are likely to live in older buildings,
    which are usually less energy efficient. Energy costs for these
    families have increased much faster than their incomes, meaning
    that these households spend 16 percent of their annual income
    on energy. This is 4.4 times more than other families spend. As
    a result, low-income families frequently make hard choices
    between heating their homes and seeking medical care, paying
    rent, or even eating.
        According to one survey of low-income households receiving
    Federal assistance with their utilities costs, 47 percent of
    families went without medical care, 25 percent failed to pay
    their housing costs, and another 20 percent went without food
    for at least one day.
        It is important that green improvements do not result in
    higher upfront costs, especially for low-income families. This
    is why section 27 of the bill establishes a loan insurance fund
    that would help bridge the cost gap between the upfront costs
    of going green and the long-term savings. Mr. Willis will
    expand upon the importance of this provision in his testimony.
        The GREEN Act contains provisions that could lead to energy
    savings for the low-income families served through HUD's
    programs. For example, the bill would address the energy
    consumption of residential and commercial buildings. According
    to the Department of Energy, the building sector is responsible
    for 39 percent of total U.S. carbon dioxide emissions. In
    addition, homes, businesses, and industries consume more than
    70 percent of the natural gas and electricity used in this
    country.
        This bill would also assist HUD, which administers the bulk
    of the affordable housing in this country. The Department
    spends an estimated $4.6 billion annually on energy--more than
    10 percent of its annual budget. Energy savings of about 5
    percent a year over 5 years would generate $1 billion in
    savings for HUD. The bill would allow HUD to achieve these
    savings by making its residences meet the criteria of the 2009
    International Energy Conservation Code.
        In addition, the bill would authorize a demonstration
    through Project HUD which would increase the energy efficiency
    of 450,000 multifamily housing units in urban and rural areas,
    resulting in lower utility costs for residents.
        I am looking forward to hearing from our panel of witnesses
    on the benefits and challenges involved in implementing the
    GREEN Act of 2009.
        I would now like to recognize our subcommittee's ranking
    member to make her opening statement.
        Mrs. Capito.
        Mrs. Capito. Thank you, Madam Chairwoman, for holding this
    hearing. I am going to abbreviate my opening statement because
    we are rushing up against a vote, and I know we have a lot of
    good panelists here.
        The buzz phrase for the decade and those to come will be
    ``going green'' and the innovation and creating and
    manufacturing of more environmentally friendly goods, the
    development of building techniques that will make our homes
    more sustainable are all the hallmarks, I think, of American
    ingenuity.
        I would like to thank Mr. Perlmutter for his efforts on
    this legislation before us today. He has worked tirelessly on
    this bill.
        I, too, have many red flags I would like to raise. I do
    have some reservations about the new incentives for Fannie Mae
    and Freddie Mac in the bill for them to purchase green
    mortgages. While I support the concept, I think everyone in
    this room knows that these two entities are under significant
    duress, and I am not sure now is the time to be adding
    additional missions to their goals.
        Additionally, the FHA will be tasked with insuring 50,000
    mortgages that meet energy-efficient standards by the year
    2012. Again, a very laudable goal. However, the FHA is a major
    market player, and their market is increasing daily, and I have
    concerns they are overburdened with the growing load in the FHA
    insurance program, as well as financial difficulties in
    programs such as Hickam.
        So our goal, I think, should be to restore these inequities
    to full fiscal footing before we tweak their missions and begin
    to put other onuses on them that, while laudable, I want to
    make sure that they are firmly on solid financial footing
    before we go in that direction.
        I also have a bit of concern in terms of representing a
    State like West Virginia. Sometimes we hear from our builders
    and our constituents that materials, expertise, and inspectors
    for new green building standards are not readily available in
    the more rural areas. I don't want to penalize people in rural
    areas to be able to access what I think is, as I said before
    several times, the laudable goal of green building.
        With that, I will enter my full statement into the record.
    Thank you.
        Chairwoman Waters. Thank you very much.
        Mr. Green, for 3 minutes for an opening statement.
        Mr. Green. Thank you, Madam Chairwoman. I will probably
    yield back some time to you.
        I would like to associate myself with the comments of the
    Chair. I am excited about this piece of legislation, and I
    thank you for helping us to move it such that we can get it to
    the Floor.
        I thank Mr. Perlmutter for what he has done. He has been a
    real stalwart on this legislation. It sometimes takes a
    stalwart to get things done.
        Finally, I do believe that Dr. King is right. He says that,
    ``The time is always right to do right.'' This appears to be
    the right thing to do. If it is the right thing to do, the time
    is right to do right, because it is the right thing to do.
        I yield back.
        Chairwoman Waters. Thank you very much.
        Mrs. Biggert for 3 minutes.
        Mrs. Biggert. Thank you, Madam Chairwoman. I would also
    like to thank Mr. Perlmutter for all the work that he has done.
    I am the lead Republican on the GREEN Act. I think it is a
    bipartisan effort to provide incentives for green buildings.
        I think that the bill still needs a little more work, and I
    think we will hear that from the witnesses today. But I think
    it has come a long way from the original version which mandated
    green. That was something that bothered me.
        But, speaking of mandates, I would like to mention the
    provisions in the Waxman-Markey bill that mandates national
    building codes. That is a State and local matter. For example,
    homeowners who don't meet the standard of the code would be
    charged $100 a day. I think that is outrageous. So this bill is
    much different from that.
        And Congressman Moran of Kansas and I have a bill to
    provide grants to State and local agencies to update the
    building codes, which again is an incentive program. It is my
    hope that bill and the GREEN Act will be what Congress wants.
        I think incentives, not mandates, for the green effort, and
    I, again, would like to really thank Mr. Perlmutter for working
    on this and I look forward to hearing from the witnesses.
        Chairwoman Waters. Thank you very much.
        Mr. Clay for 3 minutes.
        Mr. Clay. Madam Chairwoman, I am going to opt out of an
    opening statement. I want to hear from the witnesses.
        Chairwoman Waters. Thank you very much.
        Mr. Ellison for 3 minutes.
        Mr. Ellison. Madam Chairwoman, I am going to follow suit. I
    think that the witnesses have more powerful things to say than
    I do, so I will yield to them--at least this time.
        Chairwoman Waters. I place within the record, without
    objection, that Representative Perlmutter will be considered a
    member of the subcommittee for the duration of this hearing.
        I shall call on him now as the author of this important
    piece of legislation for 3 minutes.
        Mr. Perlmutter. I thank the Chair and I thank all the
    members for allowing me to participate today.
        You have stated a number of the statistics as it applies to
    energy efficiency in housing and other kinds of real estate and
    properties. I am going to keep my remarks short because this
    GREEN Act and the process we have undergone has involved many,
    many different groups, and it has been a bipartisan effort.
        The task force that Chairman Frank put together last year
    was comprised of, I think, six Democrats and five Republicans.
    We were able to meet on a number of occasions.
        I would like the record to reflect and I would like to
    submit a letter signed by 37 different organizations who are
    supporting this bill.
        I would also like to submit, Madam Chairwoman, a statement
    from the American Institute of Architects. They were not able
    to participate in today's hearing, but you may recall, Marshall
    Purnell, the chairman of the American Institute of Architects,
    testified last time.
        Chairwoman Waters. Without objection, is is so ordered.
        Mr. Perlmutter. So I appreciate Mrs. Biggert joining me in
    introducing the GREEN Act, H.R. 2336. This bill incorporates
    bipartisan changes made in the committee last year before it
    passed the House and became part of the Energy Act.
        I would also like to thank my colleague from Connecticut,
    who could not be here today, Mr. Himes, for including a new
    section involving green mortgage guarantees, as well as a
    number of others who have assisted in developing a new section
    on leasing of renewable energy systems.
        This bill has a whole variety of pieces and parts to it.
    One of the parts that I think is very important is upgrading a
    number of multifamily units within the HUD system to energy-
    efficient standards and use those units as a pilot and as a
    comparison to see exactly how cost effective it is to make
    changes, whether it is windows, insulation, maybe adding
    renewable features to the building. I think it will be
    something that will assist low- to moderate-income earners
    because they are disproportionately affected by increases in
    utility costs.
        So I think approaching it--and it is an incentive-based
    piece of legislation that has been something that I think all
    parties wanted to see, and we can really move forward and make
    our housing, our multifamily properties, more energy efficient,
    which will benefit all of us because it will be good for
    national security, good for the climate and good for jobs.
        With that, I yield back.
        Chairwoman Waters. Thank you very much. I thank you very
    much, Mr. Perlmutter.
        I will now welcome our distinguished panel. Our first
    witness will be Mr. Jerry Howard, president of the National
    Association of Homebuilders. Our second witness will be Mr.
    Doug Gatlin, vice president of market development for the U.S.
    Green Building Council. Our third witness will be Ms. Doris
    Koo, president and CEO of Enterprise Community Partners. Our
    fourth witness will be Mr. Scott Bernstein, president of the
    Center for Neighborhood Technology. Our fifth witness will be
    Mr. Edward Mazria, executive director of Architecture 2030. Our
    sixth witness will be Mr. Roy Willis, executive vice president
    of Lennar Urban, Southern California Division. And our final
    witness will be Mr. David Wluka, director, National Association
    of Realtors.
        I thank you for appearing before the subcommittee today.
    Without objection, your written statements will be made a part
    of the record. I will now recognize each of you for a 5-minute
    summary of your testimony, starting with our first witness, Mr.
    Howard.

       STATEMENT OF JERRY HOWARD, PRESIDENT AND CHIEF EXECUTIVE
          OFFICER, NATIONAL ASSOCIATION OF HOMEBUILDERS (NAHB)

        Mr. Howard. Thank you, Madam Chairwoman, Ranking Member
    Capito, Mr. Perlmutter, and distinguished members of the
    subcommittee. I am Jerry Howard, the president and CEO of the
    National Association of Homebuilders. Thank you for the
    opportunity to give our thoughts on the impact of H.R. 2336 on
    green building, energy efficiency, and affordable housing.
        Mr. Perlmutter, Mrs. Biggert, we appreciate the ongoing
    input that we have been allowed to have into the GREEN Act.
    There are some very ambitious and well-intentioned proposals in
    the bill that encourage green building and energy efficiency
    within the government housing programs.
        NAHB appreciates the incorporation of many of our ideas and
    feedback into the final bill, and we believe the bill generally
    promotes green building and sustainability in a manner that is
    reasonable and largely voluntary.
        While there are some areas that NAHB believes would benefit
    from additional clarification, NAHB supports the approach and
    intent of the legislation.
        The GREEN Act proposes many new programs covering
    everything from revamping appraisals to encouraging advanced
    renewal energy systems in housing. The legislation also
    provides much broader flexibility in achieving green building
    compliance for additional credit, and includes the recognition
    of the NAHB ICC National Green Building Standard, which is the
    only national standard to earn approval from the American
    National Standard Institute. It is the technical benchmark for
    green building in the residential arena. NAHB supports
    enhancing energy efficiency and green in both new and existing
    housing.
        As outlined in my written statement, there are some
    provisions in the bill that would benefit from additional
    clarification. For example, it is difficult to determine which
    energy requirements would apply to FHA-insured mortgages. Also,
    section 13 appears to require mandatory energy ratings, again
    with potential implications for FHA, which we believe may
    impair the use of the program during a period of critical
    housing recovery.
        Additional details on those two areas, for example, would
    provide clarity for both the industry and HUD when making
    determinations about appropriate energy strategies for the
    various programs under HUD's discretion and administration.
        Despite our overall support for the direction of the GREEN
    Act, NAHB is very concerned about the implications of other
    legislation and how it will conflict with the goals and
    potential success of this bill. The major climate and energy
    policy bill recently passed by the House Energy Committee, H.R.
    2454, contains building energy provisions that greatly exceed
    the goals and incentives contained in the GREEN Act. In section
    201 of H.R. 2454, new Federal energy code mandates are
    established that would bypass green building entirely and
    increase the cost of housing in a manner that does not consider
    affordability and could impede economic recovery in our sector.
    Because green building is more than energy efficiency alone, it
    is impossible to accommodate the broader sustainability
    framework of green into the narrow energy code mandates.
        Furthermore, section 201 of H.R. 2454 makes it unlawful to
    occupy a home or building that does not meet an aggressive
    energy threshold by a certain date. Buildings and building
    owners would be subject to civil penalties and violations if
    homes and buildings do not meet the Federal mandate. And States
    that choose not to adopt the codes that are equally as
    stringent as the Federal minimums would not only lose their
    emissions allowances and our Federal funding, but will also
    have the new Federal code applied and enforced by DOE within 1
    year.
        As NAHB understands it, the intent is to include the GREEN
    Act as part of the larger climate change bill. It will be
    incredibly important to assess the disconnect between what the
    broader bill is seeking for building efficiency and what the
    GREEN Act is trying to do to promote efficiency sustainability,
    and provide cost-effective ways to help families access
    affordable, energy-efficient housing.
        I am hopeful this committee will be able to restore the
    balance necessary to truly incentivize green building and
    preserve affordability as the debate over climate change
    continues. It would be terribly disappointing to see the good-
    faith effort and collaborative work on the GREEN Act displaced
    with unworkable Federal mandates such as those envisioned in
    H.R. 2454.
        NAHB urges Congress to be consider the negative impacts
    this approach will have on both housing and sustainability and
    work to remove such policies from the legislation.
        Lastly, I would like to mention that I have responded to
    the questions presented to me in the letter of invitation, and
    those responses are detailed in my written statement. We
    appreciate the opportunity to provide this input, and look
    forward to working with you, Madam Chairwoman, Mr. Perlmutter,
    Mrs. Biggert, and Mrs. Capito to see that this bill gets
    through the full committee and to the Floor. Thank you very
    much.
        [The prepared statement of Mr. Howard can be found on page
    61 of the appendix.]
        Chairwoman Waters. Thank you very much, Mr. Howard.
        I am not going to go to the next witness at this point.
    They have called a vote on the Floor. And while normally we
    would stay up until the last 5 minutes or so, I am going to use
    this time to recess so that you can all reconvene in Room 2128;
    it is now free. I can't stand to see these people standing over
    here looking so uncomfortable and this room being so crowded.
        So we will go take the vote. We will see you back down in
    Room 2128. Thank you very much.
        [recess]
        Chairwoman Waters. The subcommittee will reconvene. We just
    heard from Mr. Howard.
        Mr. Gatlin, you are next for 5 minutes.

     STATEMENT OF DOUG GATLIN, VICE PRESIDENT, MARKET DEVELOPMENT,
                      U.S. GREEN BUILDING COUNCIL

        Mr. Gatlin. Chairwoman Waters, Ranking Member Capito, and
    Congressman Perlmutter, on behalf of the U.S. Green Building
    Council's 20,000 company and organizational members, and nearly
    80 local chapters, thank you for the opportunity to testify
    about the role that the Department of Housing and Urban
    Development and the Federal Government overall can play in
    residential building.
        My name is Doug Gatlin and I am vice president of market
    development for the U.S. Green Building Council. It is a
    national nonprofit responsible for healthy and profitable
    building; and our organization and members manage and own the
    LEED green building rating system through which more than
    38,000 spaces have either been third-party certified or are in
    process of achieving certification.
        With the housing crisis, the economic downturn, and climate
    change on the horizon, stakes have never been higher and are
    even more so for low-income communities. Much as our economy
    struggles to retain its footing, the Nation's low-income
    households are paying on average 19.5 percent of their income
    on utilities, while the average median household spends 4.6
    percent. HUD spends more than $5 million annually in direct and
    indirect utility costs.
        The price of inefficient building is significant and the
    need for action is clear. By addressing the whole building,
    from construction materials to cleaning supplies, green design
    and green operations generate opportunities to significantly
    reduce operating costs, emissions, and environmental impacts.
    But sustainability is not limited to environmental performance
    alone. Rather, it hinges on the creation of buildings and
    neighborhoods that are socially and economically sustainable.
    As such, USGBC strives to integrate the practices of social and
    economic justice within those of sustainable building and,
    among other efforts, USGBC is providing education targeted to
    the affordable housing industry about best practices for
    developing green, affordable housing, including a newly
    developed 3-day affordable housing summit at our annual
    Greenbuild Conference.
        Across the country, projects are demonstrating the real
    benefits of green affordable housing. To date, 4,000 affordable
    units have registered with USGBC's LEED for Homes system, and
    affordable housing units account for fully 37 percent of the
    2,200 units that are already certified nationwide through LEED
    for Homes.
        Green building practices can directly benefit
    affordability. This is most clearly demonstrated by a
    particular nonprofit housing development in Michigan where two
    otherwise identical buildings, differing only in that one was
    built to LEED standards and the other was built with standard
    design and construction methods. Over 2 years of operations,
    the owner has documented 26 percent savings on electricity and
    41 percent savings on natural gas for the LEED-certified
    project. Public housing agencies have documented similar
    successes, and often through HUD's energy performance contract
    process this has been made available. Nationally, nearly 200
    energy performance contracts have been undertaken by public
    housing agencies, resulting in savings of approximately $50
    million annually to HUD thus far.
        Importantly, green building can offer health benefits as
    well. Residents of low-income housing are frequently children,
    seniors, and individuals with chronic health problems, some of
    our most vulnerable citizens. With an emphasis on the use of
    nontoxic materials and proper ventilation, green building
    targets improved indoor air quality for residents. HUD is
    undertaking research in partnership with the Centers for
    Disease Control and Prevention to further quantify these links.
        As the administrator of billions of dollars in grant funds,
    HUD plays a critical role in both defining and delivering
    affordable housing nationwide. By leveraging the purchasing
    power of taxpayer dollars to support green efforts, HUD can
    forge a greener, more efficient, healthy and prosperous path
    for our Nation's public and assisted housing.
        The GREEN Act establishes minimum energy efficiency
    standards for HUD-assisted housing and promotes the creation of
    incentives for advanced energy efficiency and green building.
    The Act promises to spur advances by providing needed financing
    mechanisms, supporting States and localities in improving
    energy efficiency of homes and creating jobs through the
    Residential Efficiency Block Grant Program, and providing
    education through green banking centers.
        Additional efforts can help to ensure that the promise of
    the Act is realized. For example, the Act identifies energy
    efficiency in green building standards as tools for improving
    the performance of HUD-assisted facilities. HUD will need to
    take proactive steps to verify these projects.
        Thank you again for your leadership in convening this
    hearing. We look forward to working with the committee and
    others to green our Nation's houses.
        [The prepared statement of Mr. Gatlin can be found on page
    51 of the appendix.]
        Chairwoman Waters. Thank you very much.
        Ms. Doris Koo.

       STATEMENT OF DORIS W. KOO, PRESIDENT AND CHIEF EXECUTIVE
              OFFICER, ENTERPRISE COMMUNITY PARTNERS, INC.

        Ms. Koo. Thank you, Chairwoman Waters, Ranking Member
    Capito, and members of the committee. Thank you for the
    opportunity to testify on the GREEN Act. I want to send an
    especially grateful note to Representative Perlmutter for his
    passion and continued leadership on this issue.
        I am Doris Koo, president and CEO of Enterprise Community
    Partners, a national nonprofit that has invested over $10
    billion to create 250,000 homes in low- and moderate-income
    communities over the last 25 years. We are bringing the
    benefits of green building to low-income people at an
    unprecedented scale through our Green Communities initiative.
        Our Green Communities criteria were developed in
    collaboration with and endorsed by leading environmental,
    energy, green building, affordable housing, and public health
    organizations. In less than 5 years, Enterprise has invested
    more than $650 million to create more than 14,500 Green
    Communities homes in over 350 developments. Our vision through
    this initiative is for all affordable housing in the United
    States to be environmentally sustainable. Greening can and must
    be achieved without compromising and sacrificing affordability.
        The case has been made. In addition to the compelling
    statistics cited by Chairwoman Waters in her opening remarks
    and many of the statistics shared by the previous speaker, we
    want to emphasize that greening affordable housing is
    instrumental in bringing better health to low-income children
    and families who are more prone to suffering from adverse
    health hazards, including exposures to allergens that might
    cause or worsen asthma, lead-based paint hazards, mold, and
    excess moisture and indoor air quality.
        There is a report from the Congressional Black Caucus
    Foundation which cites that African Americans are
    ``disproportionately burdened by the health effects of climate
    change,'' including increased death from heat waves in extreme
    weather, air pollution, and the spread of infectious disease.
        We can and must make progress in all these issues--housing,
    transportation, and climate change--simultaneously, by locking
    in the long-term benefits and investing in green, affordable
    homes.
        Many speakers have cited the benefits of going green. They
    largely fall into three categories: cost savings, as you heard
    from the previous speaker; health benefits--I want to give a
    specific example.
        A recent study was commissioned by Enterprise in
    cooperation with the Seattle Housing Authority and the King
    County Public Health Department and the University of
    Washington. The subject of the study is High Point, a Hope VI,
    green, affordable housing project that was funded and built
    through Hope VI and other funding, including Low-Income Housing
    Tax Credits. We singled out 60 rental housing units and worked
    with the King County Public Health Department to make them into
    breathe-easy housing by screening and giving preferences to
    public housing families with children suffering from asthma to
    occupy these new units.
        We did a long-term study and in less than 3 years we showed
    that the number of emergency room or urgent doctor visits have
    dropped by two-thirds. Children suffering from asthma saw an
    increase of symptom-free days from the old statistic of 7 days
    for every 2 weeks, to 12\1/2\ days in a 2-week period--almost a
    65 percent increase of symptom-free days. And caretakers
    themselves reported an increase in the quality of life, not to
    mention missed days of work and school.
        These findings totally support the initiative under the
    GREEN Act. We applaud the committee for recognizing the cost
    and benefits of green affordable housing and for holding a
    hearing on this legislation.
        We want to cite the three reasons why this bill is so
    important. One, it sets the bar by requiring HUD to go green
    and adopt minimum building standards, with rewards for higher
    performance. Two, it creates a system of rewards, incentives,
    and education by providing resources to help States and
    municipalities to subsidize energy efficiency of single and
    multifamily housing and capacity-building grants to help
    increase the knowledge and know-how of doing energy
    sufficiency, as well as a revolving loan fund for States that
    carry out renewable energy retrofits. This is the kind of
    Federal commitment we need and want to see.
        But we also wanted to stress that these incentives must be
    shared equally with owners and tenants, so that tenants can
    live healthy and live green and access the good jobs that can
    be made available.
        We applaud your effort, Chairwoman Waters and Congressman
    Perlmutter, and we want to work with you and the committee to
    pass this bill this year. Thank you.
        [The prepared statement of Ms. Koo can be found on page 70
    of the appendix.]
        Chairwoman Waters. Thank you very much.
        Mr. Scott Bernstein.

          STATEMENT OF SCOTT BERNSTEIN, PRESIDENT, CENTER FOR
                        NEIGHBORHOOD TECHNOLOGY

        Mr. Bernstein. Thank you very much, Chairwoman Waters,
    Congressman Perlmutter, Ranking Member Capito, and other
    cosponsors and committee members.
        I am Scott Bernstein, president of the Center for
    Neighborhood Technology in Chicago, an urban sustainability
    innovations group; chairman of the Surface Transportation
    Policy Project; and secretary of the Institute for Location
    Efficiency.
        We support the entire bill, but today I want to focus my
    remarks in particular on the important mortgage provisions that
    were referred to earlier by sharing some research that has been
    going on for 20 years, some with Federal support; and it has
    been recently vetted and peer-reviewed by the Transportation
    Research Board of the National Academy of Sciences.
        I also want to directly address the question the chairwoman
    posed on the impact on low- and moderate-income people and
    people of color during this testimony.
        First of all, transportation expenses are often talked
    about, and transportation emissions is number two after
    buildings. From a household point of view, transportation can
    be 3 to 5 times as expensive as the cost of home energy. So it
    is not a favor to low-income people to not include the
    consideration of transportation and energy in these
    considerations.
        This impenetrably dense equation actually allows us to map
    this right down at the census block group level. Nobody will
    get tested on this, but by this curve, it is shown that the
    denser and more convenient the community, the lower the
    transportation demand and, therefore, the lower the expenses.
    And this has now been proven to work for all 337 metro areas in
    the United States. So, the same curve works for carbon.
        Now what it shows is that if you map it as vehicle miles
    traveled, you get a certain pattern. This is Chicago. Those
    light color areas are the places that are transit oriented,
    more densely populated. There is much less travel. Those are
    also the places that, when gas prices spiked last summer, were
    paying as much as $4,000 less per household just on the price
    of gasoline alone.
        If you map it a different way and ask how much would
    somebody save if you had one less car per household, those
    green areas, people are saving--people earning less than
    $50,000 a year are saving 10 to 20 percent of their disposable
    income.
        So we asked, what if you could take that into account in
    mortgage underwriting? We formed a partnership in the 1990's
    with the Natural Resources Defense Council, NSTPP, partnered
    with Fannie Mae, demonstrated something called location-
    efficient mortgages. And what we asked was--and this is to the
    point of your question, chairwoman--what would the impact be on
    lower-income people?
        The green line on the top says that white heads-of-
    households in Chicago right now can easily afford a median-
    income home in Chicago. With no extra energy or location
    benefit at all, they can easily afford a $300,000 household if
    they are a median-income household.
        The median-income home is $247,000, which is more than
    either Hispanic or African-American households could afford.
    Hispanic households earning $46,000 per year--that is the
    median in Chicago--if they can count on $245 a month in monthly
    savings from energy and location efficiency, can afford the
    median-income household. And African-American households, if
    they can count on $515 a month, can afford the median-income
    home. And, importantly, one less car per household saves $475 a
    month after you have paid for 2 monthly transit passes. So
    there is a tremendous potential uptick here.
        We tested this. There were 2,000 mortgages made at about a
    dozen communities under names like ``location-efficient
    mortgages,'' ``smart-commute mortgages.'' I like the Tribune
    comment, ``Skip the car, buy a house.'' It was a safer way of
    lending.
        Whereas some people said--and I won't go through the
    numbers--that this would, as somebody pointed out, stress
    Fannie and Freddie, in fact, out of 2,000 mortgages, there was
    one default. It outperformed the marketplace, and it continues
    to outperform the marketplace. So we think this wasn't
    stressing Fannie and Freddie. This is a possible solution to a
    lot of the foreclosure crisis.
        The second thing we found is the drive-until-you-qualify
    pattern is alive and well in every region of the country; 10 to
    15 miles out from the center of every city, the price of
    housing drops precipitously, but the cost of transportation
    goes up to pay for the extra car or two or three.
        We created a new index of housing affordability that takes
    transportation into account. And the map on the left says that
    in those cream-colored areas, a median-income household can
    afford to spend 30 percent or less for housing. The map on the
    right says that if you add the cost of transportation, that
    cream-colored area shrinks up and you have about 30 percent
    fewer homes that are affordable as a result in Chicago,
    Portland, Washington, Denver, Los Angeles, Columbus, New York
    City, etc.
        And the foreclosure map shows what you might expect from
    this, too. So the bottom line is that the right elements are in
    this Act, and that is why you ought to pass it, but then keep
    improving it. The consumer education stuff in particular is
    extremely important. The demo programs we have show people
    saving money at a rate 5 times as fast due to this.
        I thank you very much for the opportunity to testify and
    look forward to working with you on continuing to improve it.
        [The prepared statement of Mr. Bernstein can be found on
    page 26 of the appendix.]
        Chairwoman Waters. Thank you very much.
        Our fifth witness is Mr. Edward Mazria.

      STATEMENT OF EDWARD MAZRIA, FOUNDER AND EXECUTIVE DIRECTOR,
                           ARCHITECTURE 2030

        Mr. Mazria. Thank you, Madam Chairwoman, Ranking Member
    Capito, and members of the subcommittee. Thank you for inviting
    me to testify.
        I am here to propose an addition to the GREEN Act that
    would dramatically increase its impact. We all know that
    unemployment is now at 9.4 percent, but what most people don't
    realize is that construction unemployment is at 20 percent.
    There are 1.7 million construction workers out of work right
    now. The average income for construction workers is about
    $35,000, so when we put somebody out of work, it puts them into
    the category of poverty.
        What does all this have to do with the GREEN Act? The
    building sector is comprised of two parts: the public building
    sector, which is 7 percent; and the private building sector,
    which is 93 percent. The public building sector, last year, was
    actually up in construction by 2 percent. The commercial part
    of the private sector was down 7 percent, and still going down
    today. The private building sector was down over 40 percent
    from March of this year to March of last year, 66 percent,
    March the year before, and 75 percent, March the year before
    that. It is dramatically reduced.
        The private building sector basically supplies a lot of the
    tax dollars for the public building sector. That has been
    shrinking.
        So the stimulus is meant to do two things: Keep the public
    building sector from exacerbating the situation and driving
    down interest rates to bring back the private building sector.
    But it hasn't done that. We just see a re-fi frenzy, and very
    little construction going on.
        So, the private building sector is essentially driving down
    the entire U.S. economy from steel and metals to glass and
    professional services. We will need a second stimulus if we
    don't bring the private building sector back.
        So what we are here to propose is a plan to do just that,
    to bring the private building sector back, to bring back the
    tax base. The way we see doing that--first, what happens when
    Federal dollars are spent and put into public infrastructure
    projects?
        Let's just take $30 billion. If we put $30 billion in, we
    get $30 billion worth of construction, because it is basically
    supplementing the tax base; we get half-a-million jobs; $2
    billion goes into State and local government taxes; and about
    $6 billion goes back to the Federal Government, about 20
    percent.
        What if we put the money into the private building sector?
    If we take that $430 billion and we leverage it, we get $296
    billion worth of construction. We get 4.5 million new jobs, we
    get $20 billion going into State and local government coffers,
    and the government gets paid back double its investment, $60
    billion.
        So how does it work? We are calling for a mortgage rate
    buydown tied to efficiency performance measures and a minimum
    homeowner investment in construction in those measures. So you
    can't get the buydown unless you build. We are calling for
    existing buildings and location-efficient mortgages down from 4
    percent to 2.5 percent if you meet an energy efficiency rating
    of HERS 70 all the way down to net zero for the best rate.
        If we take a 3 percent mortgage, and you have to reduce
    your energy consumption by 75 percent, we will illustrate how
    lucrative that is: To get a 3 percent mortgage, if you had a
    $250,000 mortgage, you would have to put $40,000 in renovation
    costs in efficiency in your building.
        If you take a $240,000 mortgage at 6 percent, the person,
    let's say, has $30,000 in equity, so he owes $210,000; he is
    paying $1,400-plus a month. He is not going to put $40,000 into
    his building into construction, but if you give him a 3 percent
    rate, if you buy the rate down to 3 percent and he adds the
    $40,000 into his $210,000 what he has left on his mortgage--he
    has to borrow $250,000--he is now at less than just over $1,000
    a month. So he saves over $300 a month, another $158 in energy
    efficiency, so he is saving over $545 a month. That is more
    money in his pocket.
        So by putting money into public infrastructure versus
    private building, if you put it into private building, you get
    $296 billion worth of construction, you get 4.5 million jobs,
    you get $20 billion going into State and local government
    coffers, you get $60 billion coming back to the Federal
    Government, double its investment.
        And so what you have done is, you have brought back the
    building sector; you put people back to work; you have helped
    people stay in their homes, because as Scott said, their
    average outlay is a lot less now; you have reduced their
    monthly mortgage; you have reduced their energy bills; you have
    increased their disposable income; you have brought back the
    Federal and local tax base; and even, importantly, you have
    basically helped a Nation with its energy consumption and
    greenhouse gas emissions.
        Thank you.
        [The prepared statement of Mr. Mazria can be found on page
    82 of the appendix.]
        Chairwoman Waters. Thank you very much.
        Mr. Roy Willis.

    STATEMENT OF ROY WILLIS, EXECUTIVE VICE PRESIDENT, LENNAR URBAN
                     (SOUTHERN CALIFORNIA DIVISION)

        Mr. Willis. Chairwoman Waters, Ranking Member Capito, and
    members of the subcommittee, my name is Roy Willis. I am
    executive vice president of the Southern California Division of
    Lennar Urban, a part of Lennar Homes, one of the Nation's
    largest homebuilders.
        Chairwoman Waters, I sincerely appreciate the opportunity
    to testify this afternoon. In many ways, this hearing and the
    questions you have sent me touch on some of the most important
    aspects of my life's work: urban redevelopment; affordable
    housing; and support for low- and moderate-income families.
        In these capacities, I have worked for the National
    Neighborhood Reinvestment Corporation to bring capital to
    blighted areas. I have also worked 12 years for the Community
    Redevelopment Agency of Los Angeles, where I had the privilege
    of working with you, Chairwoman Waters, and others to help
    revitalize Watts in South L.A. after the civil disturbances of
    1992. I have also worked as a developer for the past 10 years
    with Lennar.
        And I know that you share my hope to bring clean, renewable
    and, most importantly, affordable energy to all neighborhoods.
    To that end I would like to focus my comments in this limited
    time on two areas.
        First, I would like to discuss section 27 of the bill, the
    renewable energy leasing provision; and second, directly
    respond to your questions of how this section of the bill would
    affect low- and moderate-income households and communities.
        Section 27 of the bill will greatly expand the ability of
    Americans to enjoy the benefits of renewable energy such as
    solar in their homes. As we all know, it takes green to go
    green, and in today's trying economic times, many simply cannot
    afford the upfront costs of buying assets like solar panels
    even with the current level of Federal and State incentives.
        At the same time, private investment, both debt and equity,
    have had a difficult time investing and leasing on a large
    scale because there is no established value of those assets
    over time. The result is a delay in the adoption of these clean
    technologies when we need them most. In short, we need to make
    going green cost less green.
        Section 27 can fix this by establishing a loan insurance
    program paid for entirely by user fees. H.R. 2336 would set a
    baseline for a renewable energy system's long-term value,
    laying the foundation for private investment.
        The result would be transformational. Leasing would become
    a reality, clean technology investment would resume, companies
    would sell more, jobs would be created, our environment would
    benefit and all at no cost to the taxpayer.
        To put it in perspective, if just 500,000 homes included
    solar energy systems, that would mean saving the equivalent of
    6.6 billion barrels of oil annually, reducing carbon emissions
    by the same amount as removing 440,000 cars from the road,
    producing the energy equivalent to 3 new nuclear power plants
    and creating 35,000 jobs.
        Chairwoman Waters, with your permission, I would like to
    submit for the record a more detailed analysis of how renewable
    leasing would work.
        I also mentioned earlier in my testimony that the renewable
    leasing provision carries no cost to the taxpayer. Chairwoman
    Waters, with your permission, I would like to submit for the
    record an analysis we commissioned by former Congressional
    Budget Officer Office Director Douglas Holtz-Eakin. He
    concluded, ``This will not be a budget buster.''
        Chairwoman Waters, you asked for a comment on how this bill
    would benefit low- and moderate-income households and
    communities. Section 27 would have a big positive impact in
    these communities for two reasons. First, leasing makes the
    enjoyment of capital-intensive assets affordable for all.
    Leasing has been successfully used in other industries like
    automobiles and satellite television.
        Second, with unemployment at double-digit levels in much of
    the country and low-income people, particularly, feeling the
    impact of the recession, the increased demand for these systems
    would create thousands of green, clean-tech jobs.
        Chairwoman Waters, we believe renewable energy leasing is a
    cornerstone in the next generation of economic development,
    prosperity, environmental stewardship for American families.
    Thank you for the opportunity to testify. I look forward to
    answering your questions and to working with you and the
    committee.
        [The prepared statement of Mr. Willis can be found on page
    93 of the appendix.]
        Chairwoman Waters. Thank you very much. And without
    objection, your submissions will be made a part of the record.
        Mr. Willis. Thank you.
        Chairwoman Waters. Finally, we have Mr. Wluka, director,
    National Association of Realtors, and you may correct me on the
    pronunciation of your name.

      STATEMENT OF DAVID WLUKA, DIRECTOR, NATIONAL ASSOCIATION OF
                                REALTORS

        Mr. Wluka. It is quite correct, Madam Chairwoman. Thank you
    very much. I spend my life pronouncing it for people, and
    getting to hear it right is very nice.
        Chairman Waters, Ranking Member Capito, Congressman
    Perlmutter, and members of the subcommittee, thank you for the
    opportunity to testify on H.R. 2336, the Green Resources for
    Energy Efficient Neighborhoods Act.
        My name is David Wluka. I am a broker-owner of Wluka Real
    Estate Corporation in Sharon, Massachusetts. I am the 2009
    Chair of the National Association of Realtors State and Local
    Issues Committee, a member of the Global Climate Change
    Presidential Advisory Group, and a member of the GSE
    Presidential Advisory Group as well. I am also EcoBroker
    certified, which is a designation that predates NAR's new green
    designation for its members.
        I am here to testify on behalf of NAR's 1.2 million
    Realtors on the Green Act, and then I would like to briefly
    comment on H.R. 2454, the American Clean Energy and Security
    Act, because the possibility of its distraction from our
    undercutting the goals of the Green Act are very real in our
    opinion.
        NAR is extremely committed to advancing energy efficiency
    in homes and buildings across the country. For several years,
    NAR has taken a number of important steps like building the
    first LEED-certified office building in the District. We have
    developed extensive member education programs such as our Smart
    Growth program, which I chaired several years ago and is one of
    the most extensive Smart Growth programs in the Nation, and a
    new Green designation for Realtors, which has enrolled 3,600
    members just since last November, with 1,700 already completing
    the course work.
        Realtors believe the overall mission of the Green Act,
    which is to promote and provide incentives for energy
    efficiency in the housing industry, is smart and right on
    target. While we do have technical concerns with some of the
    Green Act's provisions pertaining to appraisals, establishing a
    secondary market for energy mortgages for the GSEs and how
    ``HUD assistance'' is defined, we do applaud many of the
    provisions in the bill. Let me outline a few.
        First and most importantly, we support section 9, which
    provides for education and outreach to homebuyers and
    homeowners. The GSEs and the FHA have both offered energy-
    efficient mortgages for a number of years, but the programs
    have failed to flourish. We believe increasing public awareness
    of those products will go a long way in promoting their use.
    Realtors are well-positioned to assist in this effort and would
    be happy to be advocates in the campaign.
        Second, NAR supports the incentives in section 3, the
    additional credits provided in section 4, the demonstration
    projects in section 5, and the pilot programs in section 14
    that encourage homeowners to make their property more energy
    efficient. This bill actually facilitates behavior change while
    creating jobs and reducing energy costs for consumers.
        Lastly, we support section 17 which melds housing strategy
    with transportation planning, so residents of affordable
    housing have access to public transportation.
        In addition to discussing the Green Act, I would briefly
    like to comment on H.R. 2454, which has been referred to this
    committee, and we are very much concerned with its revisions to
    create an energy labeling system.
        We believe this system will only impose burdens on
    consumers and on our already troubled housing market without
    actually improving energy efficiency in homes and buildings in
    a timely manner. We feel the label will stigmatize all the
    properties and further reduce property values. This is
    especially troublesome, as a disproportionate share of these
    older and historic properties are owned by elderly and low-
    income Americans who can least afford to make changes to their
    properties.
        We also are concerned with the timing of disclosing an
    energy label. Our members' experiences tell us that labels will
    become just another bargaining chip at the closing to negotiate
    down the selling price without making any energy-related
    improvements to the home or the building. In short, this is a
    stick when we are in desperate need of the kinds of carrots
    that are in the Green Energy Act.
        We respectfully urge the committee to strike this labeling
    section of H.R. 2454 in favor of retaining retrofitting
    incentive programs in section 202 of that bill, along with the
    applicable provision of the Green Act as the most effective
    means to improve energy efficiency in America's home and
    buildings. This is a critical housing issue, this is a critical
    economic development issue for our Nation, and therefore, we
    believe it is worthy of this committee's review and comment.
        In conclusion, NAR believes the Green Act has the capacity
    to encourage a culture of energy efficiency and a conservation-
    minded approach to housing and construction. Realtors are on
    the front lines of the housing and commercial real estate
    business. And we look forward to working with you to help make
    the American dream of homeownership friendlier to the
    environment.
        Thank you for the opportunity to testify today, Madam
    Chairwoman. And I am ready to answer your questions.
        [The prepared statement of Mr. Wluka can be found on page
    113 of the appendix.]
        Chairwoman Waters. Thank you very much.
        I would like to thank all of you for appearing before the
    subcommittee today. And without objection, your written
    statements will be made a part of the record.
        And also, the Chair notes that some members may have
    additional questions for this panel which they may wish to
    submit in writing. Without objection, the hearing record will
    remain opening for 30 days for members to submit written
    questions to these witnesses and to place their responses in
    the record.
        Now, I would like to recognize myself for 5 minutes for
    questions. I want to make sure that I have time for Mr.
    Perlmutter before he has to leave. I simply want to discuss
    funding and what opportunities the average homeowner will have
    to do retrofitting and to place energy systems in their home.
        I was talking with some of my staff, who would like to do
    solar, but the upfront capital cost is just more than they are
    prepared to bear at this time.
        You talked about, it takes green to make green, Mr. Willis;
    and of course, that phrase caught all of our attention. What
    were you talking about? And were you basically referring to the
    upfront cost and the increased cost and what is available by
    way of loans, insurance, etc.?
        Would you explain to us what you were talking about?
        Mr. Willis. Yes, Chairwoman Waters.
        The first part of what I was talking about was, currently,
    in order to have solar, for example, there is that high upfront
    cost. People might have to come up with $20,000 or $25,000; and
    especially in most low- or moderate-income areas, people don't
    have that kind of money up front and therefore they do not take
    advantage of these solar panels which could help them to lower
    their utility costs, for example.
        The second part of what I meant was that you need private
    capital. Oftentimes, the government can just have an initial
    catalytic step in helping to make sure that instead of having
    to put money up front. With a leasing program, homeowners will
    not have to pay that upfront cost and they will pay a modest
    monthly cost. That way they can get the benefits of the solar
    panels. Leasing, whether it is leasing an automobile or, let's
    say, satellite television, you don't have to put up a lot of
    money; you just have a lease and pay a little bit on a monthly
    basis. And that certainly would be very helpful to low- or-
    moderate-income families.
        That was the essence of what I meant. A large number of
    people want it, would benefit from it, but don't have that
    upfront money. And what this section 27 deals with is, let's
    figure out how to get a leasing mechanism that brings in a
    tremendous amount of private capital to get the solar panels
    installed and operating, and people can just pay a small amount
    on a monthly basis that would be less than their present cost
    of utilities.
        Chairwoman Waters. Thank you very much.
        I am going to yield to Mr. Perlmutter, because I know he
    has to be someplace else at 4:30, so that he can, as the author
    of this bill, get in his comments and/or his questions.
        Mr. Perlmutter. Thank you, Madam Chairwoman. And I just
    appreciate the testimony of all the witnesses.
        Thanks. I know some of you traveled from a long way, and I
    just appreciate that. I am just going to make a couple of
    comments and allow the other members to ask questions.
        But to your concern, Madam Chairwoman, there are several
    approaches within the bill. Some of it involves loans, so
    either a first mortgage or a second mortgage loan. And Ranking
    Member Capito focused on one.
        Fannie Mae and Freddie Mac are given an additional credit
    if they buy either an energy-efficient mortgage in the
    secondary market or a location-efficient mortgage in the
    secondary market, the belief being that if a homeowner manages
    their utility costs or their transportation costs, they are a
    better credit risk, so both from--that they have more
    disposable income at their disposal. They have more income at
    their disposal, so there is a lower--potentially lower mortgage
    as part of this.
        Secondly, there is--and it can be either a first or second
    mortgage, there is a piece in the bill that just is a Federal
    program looking at HUD properties to make them energy
    efficient. So both, it would be Federal monies there.
        What Mr. Willis was just referring to was a different kind
    of financing approach, which is to use a lease program which
    would be initially--there would be either the solar company or
    a lease company would keep an easement on the roof of the
    house, would lease the solar system--or it could be geothermal
    or some other kind of renewable energy system within the home--
    would lease that to the homeowner at, say, $40 a month, but
    their energy savings would be $80 a month. So net-net to the
    homeowner, there is--one, they had no upfront cost, but now
    they are saving money on a monthly basis.
        Where the government comes in is, we would ensure towards
    the back end of the lease. That is where the government's role
    would play.
        There is--Mr. Himes has a section in here on loan
    guarantees through FHA and a number of other vehicles, again
    going back to the loan side, to try to use some leverage to
    help folks get into energy-efficient and location-efficient
    housing, because we know in the long run we are all going to be
    better off, particularly the homeowner.
        So those are kind of the purposes and the financing
    vehicles within the bill. And if anybody else wants to jump in,
    but those are the key pieces within it. And then we take into
    consideration landscaping and appraisals and a whole variety of
    other things.
        Mr. Mazria has a much bigger proposal to us, which is, if
    we took some, in effect, stimulus money or something like that
    and really put it down into a buydown of mortgages that then
    include energy-efficient homes, we really can extend that to
    jobs and substantial savings and, ultimately, a bigger tax
    base.
        So I just thank you for having this hearing, for giving me
    a chance to participate, and now I am going to go to the Rules
    Committee. Thanks.
        Chairwoman Waters. Thank you very much. We are very
    appreciative for the work that you have put into this bill and
    we look forward to its message.
        With that, may I call on Mr. Cleaver?
        Mr. Cleaver. Thank you, Madam Chairwoman. I just have one
    question.
        We had one hearing on this issue, and I think it is
    something that most of us are going to find easy to support.
    But I am wondering about a couple of things and have one
    question.
        Number one, would it be of value--and I am thinking now of
    the National Homeowners Association, Mr. Howard--if communities
    did a zoning overlay in certain parts of the city where the new
    building codes would, in fact, require the green construction
    for new and substantially rehabbed properties, understanding
    that there would be some initial expense at the beginning on
    the front end, but that the homeowners are obviously going to
    experience a reduction in their utility costs and so forth?
        That is not a part of the legislation, but I am wondering,
    does that inhibit the efforts that Mr. Perlmutter is presenting
    and does it create problems for homebuilders?
        Mr. Howard. I guess, Congressman, it would depend really
    upon how each locale imposed that sort of a zoning and what
    sort of additional requirements would be adherent to it.
        When you talk about adding mandates in certain
    neighborhoods and not in other neighborhoods, it creates a
    disparity in the market. So I am not sure that we would look
    for it to be in some neighborhoods and not others.
        Moreover, I guess our primary concern with any of these as
    mandates is that it would decrease the affordability. So,
    again, you would have to look at the neighborhood in question,
    determine what the affordability levels are, how much that
    would be impeded by additional mandates for energy requirements
    and look at it from there.
        In short, I think what I am saying to you is, it would have
    to be looked at neighborhood by neighborhood and community by
    community.
        Mr. Cleaver. Yes, Mr. Wluka?
        Mr. Wluka. Besides being a Realtor, I am also a land
    planner and one who writes zoning bylaws. And zoning is not the
    appropriate place for what is a code issue in terms of trying
    to induce energy-efficient construction. If we were to have the
    new stretch codes that are out there now as the benchmark, then
    everyone would have to abide by it.
        One of the problems with the incentives, though, is there
    is an additional cost to the homeowner because they don't get
    any credit for the money they are saving on the mortgage side.
        Mr. Cleaver. But the builder does. The existing law there
    is a rebate for energy-efficient--
        Mr. Wluka. True, under the Energy Star program. I have done
    some subdivisions where the builder does get a credit for it.
        Mr. Cleaver. So the homebuilder passes along the savings to
    the homeowner, to the buyer?
        Mr. Wluka. But that is a voluntary program. It is not a
    mandated program.
        Mr. Howard. Generally, the homebuilder, sir, would check
    with the buyer and determine their willingness and their desire
    to have that.
        And again, as Mr. Wluka says, it really impacts the
    affordability. If the homebuyer can afford it, the homebuilder
    will put it in, get the credit and pass the savings down to the
    homebuyer. But again it all starts and ends with the ability of
    the buyer to afford it.
        Therefore, that is why I said you have to look at it
    neighborhood by neighborhood and city by city.
        Mr. Wluka. And to complete my thought, Congressman, the
    problems I have been having with lenders on energy-efficient
    mortgages, they are not willing to really take the savings and
    give the homebuyer credit for them. Some banks will knock \1/8\
    of a point off, but that doesn't match the difference in the
    savings. So sometimes the additional cost can't be passed
    along.
        The credit doesn't cover everything. There is still an
    additional cost to the builder that he has to pass through to
    the homeowner. It is not 100 percent credit.
        Mr. Cleaver. I am sure those lenders are not recipients of
    TARP funds.
        Mr. Howard. It has as much to do with the appraisers, sir,
    as it does the lenders. The appraisers are not trained in
    school in looking at energy-efficient mortgages as a reason to
    revalue the house, and that is something that I think that
    Congress and industry has to work together to address.
        Mr. Cleaver. That is a question that I hope we can
    ultimately address, the issue of appraisers. I mean, if we are
    talking about launching into this new economy and moving into
    green housing, appraisers are going to have to take that into
    account, and I am not sure whether we can do it legislatively
    or whether it is something that would be done on a State level.
    But I do think that something has to be done, or having those
    kinds of costs will go for naught.
        Mr. Bernstein?
        Mr. Bernstein. Yes. There are thousands of overlay
    districts that have been created in the country for a variety
    of purposes using mechanisms such as business improvement
    districts or special service districts or TIFs, and they have a
    rich history. This how the original street car systems of the
    United States were built, through special service districts and
    joint service sorts of arrangements.
        In Chicago, more recently, I think we have found that the
    creation in our new zoning code of overlay districts for what
    are called transportation zones ended up stimulating investment
    in green housing. Interestingly, that wasn't necessarily
    expected.
        So I think that you ought to keep an open mind about
    experimentation here. You actually are going to do what these
    gentlemen are suggesting, unleash market forces if we pass this
    law. And there should be enough in here to learn from. We
    should try it in different ways in different places.
        Chairwoman Waters. Mr. Clay.
        Mr. Clay. Thank you so much, Madam Chairwoman.
        And thank you all for being here with your expertise. You
    know, I represent St. Louis, Missouri. We have an abundance of
    brick houses, some close to 100 years old.
        Let me ask you, is it more cost effective to greenbuild, to
    build new housing or to rehab? And on a scale of a city like
    St. Louis, how effective would it be to actually rehab those
    old brick structures?
        Anybody. Mr. Gatlin, maybe you can help me?
        Mr. Gatlin. Sure. I will be happy to start off.
        I think in many cases there may be a greater return on
    investment from renovating existing housing. However, I think
    that it is important to have benchmarks for new construction
    because there is still such a wide range of energy and
    environmental performance.
        And, one, to address the issue of valuation, just to bring
    that into this whole discussion, I do think it is important for
    the committee to know that the available research often shows
    that there is not nearly as strong a connection between
    efficient technologies and efficient buildings. So you can put
    in a high-efficiency air-conditioning unit, let's say, and not
    necessarily get the kind of bill savings that you are looking
    for without right-sizing the equipment, so that the air
    conditioner is right-sized to, let's say, the fan and the
    ventilation system.
        The point of that is, there are a lot of variables, which
    is why we actually strongly believe that some kind of voluntary
    labeling program that helps the homeowner understand the energy
    performance in their home is really valuable to the homeowner
    and to those market transactions.
        But back to your question, sir, the number of cost-
    effective energy-saving opportunities in existing homes is
    enormous. And they can be identified through simple measures
    like blower-door testing and infrared scans, where in many
    cases the number one energy-saving opportunity is more
    insulation, air sealing and duct sealing; and those things can
    be done for pennies per square foot, and in many cases, by
    themselves, can yield a 30 percent reduction in home energy
    costs.
        Mr. Clay. Ms. Koo, did you have something to add?
        Ms. Koo. Yes.
        We have tested all housing types--amount of affordable
    housing, all housing types in all regions and all climates, and
    proven that it is possible to achieve energy efficiency and
    green through rehabilitation; and have established a standard
    to guide homeowners. So we would be very happy to provide for
    your constituents that knowledge base.
        And at the end of the day, it is green to preserve existing
    buildings, so that you don't destroy that energy, draw all of
    it to a dump site just to rebuild anew. So I think the intent
    is to do massive retrofitting and rehabilitation.
        Mr. Clay. Do we have any examples of public housing units
    that we can point to that are greenbuilt, and how is that
    working if we do?
        Mr. Gatlin. Well, one-third of the LEED-certified projects
    currently are low-income housing where the median income of the
    family is below $50,000. And what we are finding across-the-
    board is a 28 to 33 percent reduction in energy costs. And in
    many cases, green housing and greenbuilding generally can be
    built for either zero premium or very limited premium, again
    depending on looking at not just the cutting-edge technologies,
    but also good, integrated design and marrying up the equipment
    choices with the overall building as a system.
        So 30 percent energy reduction across-the-board is what you
    are seeing for LEED-certified houses, and that would include
    the low-income.
        Mr. Clay. Okay. And a final question for Mr. Bernstein.
        Do you advocate that we can continue stretching the outer
    reaches of the urban core to suburbia and exurbia all under the
    auspices of greenbuild? I mean, is that what I heard you say in
    your testimony? As long as the housing is affordable and is
    greenbuilt, we can continue stretching the outer limits of our
    urban core?
        Mr. Bernstein. No. What I think I was saying is--and I
    think it says it in here--if we are going to be granting
    incentives in here, we should avoid the phenomenon of driving
    to green housing. It might look green if it is 30 miles out,
    but if it costs you 3 times as much to get there, I will tell
    you it is not a good deal no matter where it is. And that is
    why we support the improved language under the CRA credit
    provision that speaks to location efficiency, not just energy
    efficiency.
        If you only gave credit for energy-efficient mortgages and
    didn't consider location efficiency, you would run the risk of
    incenting more sprawl in the name of being green, and I don't
    think any of us here would support that. And I think, by
    contrast, if you have suburban areas that are location
    efficient--they have the density, the accessibility, there are
    places to shop nearby and you can plausibly keep improving
    them; and we have plenty of it, we have mapped it for every
    region--then that should be where we are targeting these kinds
    of activities, because you will get to do a lot more of it for
    the same money available, and we will all meet the multiple
    goals of this Act and the other things that we are trying to
    do.
        So that is what we are proposing here, and that is why we
    think the bill is much stronger for having strengthened those
    location efficiency requirements. In effect, this bill defines
    location efficiency as part of energy efficiency and the
    earlier drafts did not. And it is a better bill now for it.
        Mr. Clay. Thank you for that.
        Madam Chairwoman, I see that the bell has sounded for
    votes, and my time has expired. Thank you.
        Chairwoman Waters. That is correct.
        Let me thank all of our witnesses who have been so patient
    today. You have sat through the fact that we had to vote.
        It sounds as if, from the testimony that you have given us
    today, you all have high hopes for this legislation, is that
    correct, and that you will certainly submit to the author and
    to the Chair any advice or recommendations that you may have
    for strengthening the legislation and making it possible to
    gain the support.
        We have some statements we are submitting for the record on
    behalf of the National Market Housing Council, the National
    Apartment Association, any others? Without objection, they will
    be submitted for the record.
        I would like to thank you all for your participation today,
    and this committee is adjourned.
        [Whereupon, at 4:39 p.m., the hearing was adjourned.]]

                                A P P E N D I X

                                 June 11, 2009
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