[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
H.R. 2336, THE GREEN ACT OF 2009, PART I
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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
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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
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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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