A Senate bill that would allow energy-saving retrofits to be factors in mortgage underwriting has quickly attracted a diverse set of enthusiastic supporters that range from the conservative U.S. Chamber of Commerce to the liberal Center for American Progress.
The "Sensible Accounting to Value Energy Act," or SAVE Act, which is expected to be introduced this fall by Sen. Michael Bennet (D-Colo.), would require federal loan agencies to include projected energy costs when financing a house, essentially offering better mortgage values on properties that are more energy efficient.
The U.S. Chamber says the relatively simple bill stands a chance in a tight-fisted and bitterly divided Congress.
"The chamber supports energy efficiency. More importantly, we realized that with the new Congress and political dynamic, it was important to figure out policies and bills that we thought were not only good, but realistic given the fiscal constraint," said Ross Eisenberg, environment and energy counsel at the U.S. Chamber.
This bill, he said, "promotes efficiency and transparency while not costing the taxpayers anything."
Currently, property appraisers consider identically sized residences the same, regardless of whether one might offer significant savings on energy bills, said Bob Sahadi, director of energy efficiency finance policy for the nonprofit Institute for Market Transformation (IMT).
"Right now, [appraisers] don't know how to evaluate the energy efficiency of a home because it's not something they can feel and touch," said Sahadi, whose group is spearheading the bill. "We have come up with something that's really an old concept, which is adding the net present value of energy savings to the appraisal. If a home has energy savings of $200 a month, that's income that's available and ... added to the appraised value."
According to IMT data, the average U.S. homeowner spent more than $2,200 on energy in 2008, far more than the average cost of the property taxes (almost $1,900) and homeowners insurance (nearly $800). More importantly, Sahadi said, energy costs are more volatile than other factors currently included in an appraisal, so they can have an even greater impact on the overall value of the home.
Under the SAVE bill, energy costs could be calculated through average utility costs as determined by a Department of Energy survey or through an independent energy inspection that is already done on 40 percent of new homes. It would only apply to loans controlled by the Federal Housing Administration or other government bodies, which would include mortgage giants Fannie Mae and Freddie Mac.
So while the number of homes affected by the bill is huge, Sahadi said, its impact is relatively small.
In essence, he said, the bill is a regulatory tweak that could in turn spur more home-energy retrofits or new green construction.
Lining up behind the bill are the U.S. Green Building Council, Natural Resources Defense Council and American Society of Heating, Refrigerating and Air Conditioning Engineers.
Bennet is trying to lure Republican co-sponsors to the bill, which his spokesman, Adam Bozzi, called "a common-sense solution that will help the housing market work more efficiently."
The U.S. Chamber's Eisenberg said there would likely need to be adjustments for energy-efficiency calculations, as well as possibly changing the bill's start date. But on the whole, he said, the bill is likely to attract supporters on both sides because it is a simple change that improves transparency and could spur job growth.
Eisenberg added that the U.S. Chamber is looking to smaller solutions like this one to promote its energy efficiency goals. For example, it is also backing a program that allows private contractors to make green adjustments to federal buildings, a program that has no taxpayer cost that could provide energy savings.
Eisenberg said similar low-impact bills, rather than "a couple of hundred pages that radically change things," appear to be the best way to promote efficiency this Congress.
"This isn't going to be the cure-all for America's energy policy, but it's a very good step in the right direction," he said. "It's a small piece of the puzzle. We're just talking about a few thousand dollars on top of a mortgage, but for a homeowner, that can be very real."
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