[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



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