the hearing will come to order this is a very important initiative obviously there's a great deal of concern in the country about energy efficiency much of the discussion has focused on the prospects of conservation i would see what we've done about energy both from the standpoint of additional sources and also  efficiency much of the discussion about conservation increase efficiency has focused on transportation where there clearly is a great deal to be done but the way in which we live physically also has a great deal to do with energy consumption we then among ourselves decided that it really made sense to do this in a carpenter way and abjectly pleased that some of the freshman members of this committee took the initiative in putting this together and we will we will hear from them  now this device there are programs which are federally funded i believe we have the right in those as the landlord as the entity that will be charged with costs going forward in running those properties to do to mandating your mandates in this bill but they are mandates that relate to what we the federal government as a builder and as the entity that has ongoing financial responsibilities with regard to the private sector mandates become less clearly justified some argue for them some against them but incentivizing clearly makes a great deal of sense so this is a bill that differentiates to some extent its treatment based on the level of federal involvement but it is a comprehensive and very thoughtful approach and i this will become law before the end of the year but i would hope that we could go forward we're still going to be around for a couple months and that this could pass the house to put us in a position where come next year we would be ready to move fairly the ranking member i thank the chairman for holding this hearing and i think energy efficiency is very important something that we should be talking about in our federal housing programs for his participation but you know as we examine this legislation we've got to remember that energy efficient buildings and houses are just part of the challenge that we're facing of very high energy cost and what those challenges do to the american consumer and businesses and gasoline prices are soaring past four dollars a gallon and the burden of these unprecedented call just is falling hardest on the low and moderate income families who have no alternative to the economic impact of policies over which they have no control for exam i'm going to take one example in county in my district the average per capita income is sixteen thousand two hundred seventeen dollars that's three hundred twelve dollars a week three hundred twelve dollars a week now some fifty nine percent fifty eight point eight percent of my constituents in that county commute to another county to their to their work they drive to their job in another county here's a recent gas receipt from my district eighty nine dollars to fill up their time now this is of service and the average citizen of this county makes three hundred twelve dollars a week that's what they're facing there spending eighty nine dollars every few days just to get to work that doesn't leave much to take care of their needs of the family people struggling to put food on the table and this is the problem with getting fuel efficiency homes people struggling to put food on the table and gas in their tank aren't going to be able to afford to make sure that their houses many new green standards which are going to be expensive so this is the problem we have to face first people demand and expect answers from congress i haven't heard any of my constituents tell me to make their houses green but i've had plenty of them that have told me to do anything i can to bring gas prices down the u s exports sixty percent of his soul you know imports sixty percent of its oil that's a dangerous level but solutions are available broader exploration of domestic resources is one we consume we import twenty million barrels of oil a day we take nine million of those and refined into gasoline we could increase million which is over ten percent a million a day just by drilling in a small portion of an wa development alternative fuels increased use of nuclear power and that as a slam dunk our remember being on the floor twelve years ago debating the need to build nuclear power plants and people responded by saying it'll take ten years we could have had them two years ago today they're saying that will take ten years we have to start now chana it was in a paper that today thirty two nuclear power plants under contract large ones in china i was just in awe but dobie last week now that they're one of the richest countries the united arab emirates export all kind of old us they're building two nuclear power plants so they can sell us more all but we who have an energy shortage or shortage aren't building nuclear power plant we have got to address this problem and let me stop by saying this mission chairman i'll end with this rising food fuel cost gasoline costs are going to sink our economy and they're doing it as we speak that's the reason why i've signed the discharge petition to bring the no more excuses energy act to the floor for an immediate vote not this bill that needs to be another  drill immediately to develop nuclear power plants put them on the fast track to develop alternative fuels lower and whan coal that's why i'm arguing this committee let's focus on fuel efficiency in this meeting let's go out of this thing let's sign a discharge petition and do something about the rising cost of high energy prices particularly before this when are and closing let me welcome today's witnesses we appreciate you taking the time to discuss energy efficiency and conservation measures as we try to develop a thoughtful approach to the issues raised by mister perlmutter legislation  that the ranking member finds himself on a committee with no jurisdiction over anything he just talked about and i'm sorry that this probably is going to lead to no serious discussion from some people about the important subject under consideration today i guess we have an immediate problem but we have an immediate problem part because we have been thoughtful in the past and the notion that you don't pay a lot of attention to a longer range thinking seems to me to be a mistake obviously members have the right to use this hearing for whatever purpose they  commercial buildings i think what we're going to find today and in response to the ranking members comments really you know by jurisdiction we're limited to certain things that we can do within this committee and one of the things that we're trying through this bill is to reduce housing costs through efficient using efficient measures with respect to housing and other kinds of construction as well as develop renewable sources that might be used with respect to buildings and the i think you're going to hear testimony from a hut in a number of the other witnesses today that are going to talk about the fact that forty percent of our energy consumption in this country comes from buildings and a lot of that from homes and for instance with hud they have about three million homes that they either all on or subsidize in some fashion or another and the largest single housing costs for hud is its utility cost at about four point six billion dollars and sought to the degree we can get haud and others to make their units or homes more efficient we're going to save dramatically on energy costs i think the testimony today will be that between two thousand and two thousand and seven energy costs across the country have gone up about thirty percent so i appreciate the ranking members comments about gasoline prices we're not on the energy and commerce committee we're not on the science committee but we're in financial services where we do have jurisdiction over homes and buildings and real estate and banking and mortgages where we can do our part to try to reduce energy costs for the people that live in this country so i really do appreciate the opportunity mr chairman to bring this bill before you you asked a number of us to serve on an energy efficiency task force both sides of the aisle and we did all serve on his bipartisan committee and we did all get along and representatives had comments pro and con about this particular legislation now first thing i'd like to do mr chairman is submit for the record a letter from a number of organizations that participated in our energy efficiency task force supporting this kind of legislation and among those signing this letter the alliance for community trees the american institute of architects the bank of america the center for american progress center for neighborhood technology the energy programs consortium enterprise community partners the federation of american scientists the green building institute a local initiative support corporation the louisiana pacific corporation the national american indian housing council and stewards of affordable housing for the future this is the the bill that we're going without objection to be made part of the record thank you sir this bipartisan task force that you asked us to participate in involved a number of meetings with all of these organizations and we also dealt with the department of energy and e p a and hud the fannie mae and freddie mac to come up with what we believe is a bill that provides many incentives to the private sector to move our housing and our and our building stock to energy efficient standards i think we also have as you said mandates to the federal government to upgrade fifty thousand of those three million units to use that as a control group to show that utility costs really do go down i think it's common sense that we're going to see that they go down but i think howard will say that they've had good experience in the past in driving down energy costs for low income tenants and people who live in these houses that's where we want to go with this this is a very broad bill when it comes to real estate i think it's something that was started back in the seventy's but then sort of petered out we have for the ranking members concern incentives for location of fish and mortgages so that if somebody were to live near a transit line narrow bus line near their work that they're going to have benefits from that that when when somebody makes a loan a location official mortgage we think will show that it's a less risky loan and as a consequence that person should get a lower mortgage rate same thing with respect to energy efficient mortgages it's less risky because it doesn't cost as much the house doesn't cost as much so we're trying to provide incentives through the mortgage industry through green mortgages to encourage people to buy or build or retrofit their homes to energy efficient standards and with that mr chairman i would yield back and i look forward to the testimony  would like to thank the witnesses coming before us today and i'd like to thank my colleague mr perlmutter for putting forth this this piece of legislation he he and i had numerous discussions in an attempt to be a bipartisan situation and so as this moves along i hope we can continue those discussions i do have a couple of concerns an issue only and i'm sure we'll get into this as we have the witnesses moving forth i think we all have the goal of efficiency and green building is something that we know  we want to achieve and we want to have in our future i do have concerns about some flexible all of the issues in this bill i think that you know innovation is occurring as we speak on this topic what we thought was in or gee efficient or green building fifteen years ago or maybe even five years ago has been far surpassed by what we see now in front of us and and i and i'm concerned i have a concern and a logic concern that we may be losing some of the efficiency by putting in strict  stringent mandates and stringent requirements and losing some of the flexibility that comes about with innovation and creativity in terms of in terms of the legislation the other area of concern i have is the freddie and fann portion of it with the energy efficient mortgages and i'm glad he explained the location efficient mortgages because i wasn't really exactly sure what that meant but i think in this day in time when we when we are now in uncertain we have some uncertainty with our mortgage financing and the the direction that we want to go we're still trying to work through a consensus bill on f h a and all those things so i think that this is an area that i would tread we're talking about energy efficiency and i do think even though we're talking about energy efficiency in our in our own homes we're talking about affordability i think it is right and proper to bring up that we are in an area here with energy efficiency whether it's driving your car  or feeding your tractor it or you know trying to fill up your tractor on the farm the high price of gas is something that we think about every day and i think we should think about this because the cost of heating oil and heating home whether it's energy efficient or green built is something that i admire it's been a terrific experience to work with mr promoter on this bill which is really been the product of a true collaboration between congress and numerous interested parties many of whom are here today  green is the new red white and blue and i can think of no more important issue for the twenty first century in the future of this country and of the world that america's leadership  in dealing with energy efficiency renewable and alternative energy and sustainable building the green act is a comprehensive approach to energy efficiency that will encourage american business and american families to be part of a twenty first century energy solution by using incentives and market mechanisms to inspire the financial community to go green this bill is short on mandates and long on market incentives and goals we recognized early on that there would be a lot of pushback if we were long on mandates and we sought to follow the philosophical bent of this committee which the chairman exemplifies so well in making sure that our mandates were tailored careful and narrow i've found that while many people express intense interest in a new direction on energy most folks don't appreciate how significantly our built environment is to the issues of our energy consumption and carbon emissions this legislation is a step in a new direction for our nation it is essential for the financial services community to help lead the way on this reidel challenge for nature nation's future the time for obsolete thinking about our energy past is over we need to move aggressively towards our new energy future we'll need time to transition from fossil fuels energy efficiency and conservation in buildings is a critical component available now it's the low hanging fruit especially as energy costs soar i look forward to hearing the witnesses testimony because mr promoter and i are resolutely not doctrinaire in our approach to this i'm sorry did you say two minutes three i'd like to thank the chairman for holding today's hearing on the bill to promote greener energy efficient buildings i'm especially pleased that our committee is beginning a dialogue about this issue because another committee on which i serve the science and technology committee has been working diligently in recent years to support the development and deployment of greenville building technologies to further advances cause i've partnered with my colleague from missouri congressman carnahan to establish a high performance buildings caucus and many of the outside groups that are testifying today and were involved in crafting h r s sixty seven eight are members of the conscious of the coalition that supports our caucus at the start of this congress i introduced h r eighty four the energy efficient building tax legislation designed to offset the cost of designing green buildings so i certainly  understand and appreciate the importance of promoting green can start construction and energy efficient buildings but when americans are paying in a crisis in the mortgage market in a crisis at the pump it's critical that we address those issues by crafting policies that promote both affordable energy and affordable housing certainly high performance or green buildings are critical to addressing climate change and should save their owners money over the long run but green buildings cost more up front sometimes considerably more and which means our federal dollars to may not go as far so i think that that that this is a good starting point to discuss the best ways to promote energy efficient buildings and so i look forward to working with my colleagues to strike the right balance in this bill between its goal to promote green buildings and the first and overriding overarching goal of federal housing programs which is to facilitate affordable housing for american families i have a couple questions about  about the bill that i hope our witnesses will address number one i'd like to better understand the rating system prescribe for federal housing programs in the bill and how it measures up against other green building standards and second i'm concerned about the limited number of green building raiders around the country that there may not be enough of them to meet the demand created by the bill and i believe one state that mandated green assessments had to really repeal this requirement because of a lack of qualified energy efficient raters and three i would like to better understand how a green building would reduce the risk of a mortgage borrower and therefore i therefore justify reducing the mortgage insurance premiums which the bill does incentives to encourage green buildings are good as long as they factor in the risk of the mortgage power and don't jeopardize the financial stability of the federal housing programs violate such a time of volatility in the housing market it today's testimony and these issues and i would yield back the balance of my time i want to thank the young woman in particular not just for the comments and raising the precisely the kind of questions that we have to address but for mentioning the work of  science committee i think one of the shedding sins of this institution has been excessive concern over turf and jurisdiction we've tried very hard to work cooperatively with other committees so and i'm glad that she is on both committees and will help us promote that we will look forward to working with the science committee so that we can have a joint effort here because that you put up your spine so i appreciate that and i know what will go on the gentlewoman's joint membership as one of the things that will help us members joining the house and coming on this committee and i have not had the taking the chance yet for me to introduce them so let me do that i q we have freshmen members of this committee who now find themselves with five members if you are to them there are people climbing want to welcome them to the committee and i also want to just as united center put into the record first there was a member statement a gentleman from california another reason to go to the chair of the housing subcommittee he has a statement for the record and we have statements  now recognized for three minutes thank you for air time in history energy is the number one economic issue number one that shal security issue and the number one environmental issue all simultaneously what we do today will not only help individual homeowners or apartment owners but will also have an effect on the economy especially because energy is highly alas as to price that is to say if we can reduce demand nationwide by five or ten percent we can reduce price by far more than that now our ability to reduce world price for oil may  not may not achieve that goal but there is a dome espec market for natural gas and if we can act today to reduce demand for natural gas by only a few percentage points we can help bring the price down  finally there is the issue of which shade of green these homes should be there are international standards or voluntary standards that the home builders subscribe to it cetera and i haven't picked my favorite shade of green  those on the task force may have a better better palate but i do know one thing and that is whatever we do here we should provide electric outlets that will allow for the recharging of plug in vehicles and whether that has to be to twenty volt or regular voltage leave to the experts but what we do on housing should relate to what's being done on vehicles i don't know whether plug in electric car future chairman and also the witnesses for being here today i appreciate what the sponsor is trying to do on this bill but i must say that we need to have concerns about the unintended consequences we also need to look at the timing we all know that the housing market has been rocky unpredictable and unreliable and is still sitting in a virtual quicksand congress has forced homeowners to absorb skyrocketing gas and food prices mortgage arm recess and in florida significant property tax significant property insurance and tax increases are not blaming the tax increases on congress but individual states have individual problems and all of this is happening where homes actually are losing value we've demanded that fannie and freddie come to the aid of our housing market by taking on more risk with higher conforming loan limits and expanding their affordable housing olds and congress is passing bills that dramatically expand f h a as role in stabilizing the housing market now we're going to demand that homes be built to a lofty and somewhat unproven and perhaps overly ambitious environmental standards it's almost like we're putting passengers back on a sinking titanic so why would we put these additional regulatory weights on a housing market that's still teetering on a very tight rope th requires fannie and freddie to purchase five percent of energy efficient mortgages and location efficient mortgages with the intent to go as high as twenty five percent by requiring we may be diverting the very important resources is all been quite honestly since my colleagues on the other side of the aisle have taken control of the house and the senate americans are taking more money from their savings their discretionary spending their children's education and their health care plans are taking it wherever they can find it to to make ends meet today and continue to fall into a black hole americans we're asking them to spend more this is not the time to pass the bill mr chairman but i do urge the committee members to listen to the witnesses that we have today and we need to focus on the eroding dollar and what is doing very much mr chairman i too want to join with you in welcoming our new members of this committee this is the most influential committee committee dealing with the infrastructure of our economy and this is very timely that i have a few  concerns about the bill first let me commend my distinguished colleagues from colorado mr perlmutter because i believe that there are some very very important reasons why we need to move far with the bill however i do have some concerns my first concern is the impact on low and moderate income individuals we got to move with caution as we put five hour these new energy requirement because energy bills fall disproportionately on the poor and the moderate income so we have to make sure that in this energy bill that the policies will not fall disproportionately and impose additional costs on low income and poor people as we put these requirements in place so we need to examine that and then secondly i have some concerns about manufactured housing as we move  into this very difficult time in our economy manufactured housing plays a bigger role especially targeted towards low and moderate income individuals and my key concern is that in the bill apparently and i could stand to be corrected but it requires that manufacturing manufactured homes have to comply with two separate building codes and it could prove overly burdensome and expensive and could very well dr manufacturers from the marketplace and the result being hurting the very people that we're trying to help which are low and moderate income families so in our rush to do what is right we've got to look out to make sure that we're not hurting the low and moderate income people in terms of energy policies in the bill and terms of those stresses being placed with this double standard manufactured housing let me just be specific manufactured housing in this bill would have to comply with these two separate building codes the hud code and and f p a five zero one four additional credit now this land this latter standard is not even used to construct manufactured homes and does not provide green building guidance now finally i think we have to very carefully at these requirements on fannie and freddie simply because my concern is that it may distract fannie and freddie from their primary responsibility of providing liquidity into the market which is in line and is needed for more affordable housing so so as you know i certainly commend my good colleague but those are three very important concerns that we should make more to make sure we address make sure we're not putting that burden on the lower income that we're not driving manufactured housing out of the marketplace with this bill and that described the housing market is in a virtual depression we don't need to increase their costs and we have government facilities that are intended to help low income people get housing provide stable mortgages we want to don't want to take their eye off the ball on those primary missions second i don't want the bill to be overly perspective prescriptive we have all seen the situation where someone comes into our office and says i've got the greatest energy efficiency product there is please mandate it because there's nothing better for businesses margin than to have the government mandate the purchase of their product so we don't want to be doing that third was talked about mandates versus incentives and i agree we want to go more towards incentives and mandates but as i count this about half of the provisions in here start with the require or mandatory and that is too much forth we all on this committee are sometimes for federal preemption and sometimes against federal preemption i don't think any of us is totally clean on that but one thing we do have to remember when it comes to housing housing don't move and so if there's one thing for which she we have to be careful not to set federal standards that try and apply in newport beach california in florida in seattle in montana and in palm springs where the housing is very different and it doesn't move and i have a concern about that and then my fifth concern and the chairman is correct my fifth concern is not the jurisdiction of this committee but there is a point here that we can do all this that we want to what we really need to be doing is producing more green cheaper energy like nuclear like japan sweden italy france and all these other countries that are now producing a lot of very clean very cheap nuclear one i want to stop this mandate talk because there are no mandates except those that mr scott mentioned with respect to manufactured housing we can talk about that with respect to home builders basically what happens is if somebody builds a house to certain green standards and the hud secretary will choose those green standards we've set two in the bill but it's it's very flexible as to what they could be one is a consensus standard from the heating and air conditioning people and the other is the international energy conservation code of two thousand and six so those if those are met it triggers and fannie mae buys a mortgage from a house that meets those standards fannie mae gets a credit towards its affordable housing goals so let's say eight hundred billion dollars worth of mortgages in the secondary market each year they're affordable housing goal is fifty percent of that so four hundred billion dollars of fannie mae's mortgages should be unaffordable housing zero to four hundred twenty thousand dollars if every one of those were green and affordable fannie may well have met its goal of three hundred billion dollars now i'm i think the testimony is going to be that people are better off and their costs are lower in energy efficient homes so it helps people of low and moderate income levels number one number two with respect to the manufactured housing you're right one is they must meet energy star levels as well as national fire protection act levels i'm happy to talk about that and we're certainly as paul said available and amenable to working this out so that it works to move this country towards  minutes thank you mr chairman i've found these opening statements actually be really insightful and helpful i want to affiliate myself with the gentleman from georgia mr scott who i think articulated well some of the increased pressures as did ms brown weight about increasing mandates that at a time of uncertainty mrs biggert mentioned the seeming disconnect between the mortgage insurance provision of the bill that is unrelated to unrelated to stability in the financial element of it and i also sense mr perlmutter is open and and has really sensed a willingness to listen and and so forth  you know i am always nervous when i hear someone say there's no mandates except and that's what the sponsor said to me minute ago and i know that that will be will be given more and more of an opportunity to hear about that but whenever there's qualifying language simply the declaration of no mandates of course doesn't mean that there is no mandates and i think we need to be very careful in how we characterize things i come from the midwest and i know that i wasn't here for the original my district mrs bigger district and other districts in the chicago area are dissipating a some of the some of highest energy prices in the country energy and its supply is clearly a part of this debate and i think what the gentleman from colorado is trying to do is to cast a longer vision will have the conversation about whether the the solution is a good one or not i appreciate the fact that he's casting a longer vision but in the short run there also has to be an answer to the supply question i thank the chairman for calling this this hearing and i'd like all the people on panel one look forward to their presentation but i specially wanted to recognize marshall colonel of the american institute of architects because i want to hear what he has to say about the environmental design of homes and also i look forward to gerry howard president of the national association of home builders and tell us if it's feasible to experience with energy efficient housing rehabilitation and that experience demonstrated conclusively that relatively low investments in energy efficiency can yield substantial energy savings in older housing stock simple paybacks and returns on investment can be very rapid over the past few years how does initiated a comprehensive department wide effort to address the key role that energy plays in housing affordability we also have begun an active partnership with the department of transportation to expand affordable housing opportunities near transit which will in part address the rising cost of gas i mean that some of the members of already addressed we have made some modest progress in this area and are beginning to build a broader affordable green agenda as well and they are some exciting green initiatives that we have started that i have described in my written testimony our commitment to energy efficiency has been driven by five key factors rising energy costs the age of the existing inventory of public and assisted housing the disproportionate burden of rising energy costs on low and moderate income families as mrs scott alluded to the impact of energy costs on hides own budget and new opportunities for increasing energy efficiency and public housing through asset management let me touch on those briefly as has already been alluded to according to the energy information administration from two thousand and one to two thousand and seven the cost of home heating nearly doubled or more than doubled in many parts of the country with oil at more than one hundred thirty dollars a barrel these costs of obviously continue to rise especially for home heating oil uses in the northeast combined with a four dollars gasoline cost on average across the country both housing and transportation energy costs are becoming a critical household expenditure with regard to the age of the housing stock about sixty five percent of public housing units were built prior to nine hundred seventy and the majority of those are in climate zones two and five which is some of the colder and hottest areas of the country the assisted housing stock is also older built at the time with less attention on energy efficiency we are especially concerned about the impact of high energy bills on low and moderate income families as noted in the president's national energy policy the energy burden on low income households as a proportion of income is four times greater than for other american households and of course has already been alluded to had zone budget is directly impacted by utility costs had spent more than four billion dollars on energy related utilities in direct operating grants to ph says and through section eight dollars project and tenant based u tility allowances housing authorities report utility expenditures of one point seven billion dollars fully twenty two percent of operating costs and we also spend an additional three point two billion dollars in utility allowances for seven requires us to raise the standard for certain public assisted or insured properties to meet or exceed the two thousand i e c c and we will be initiating rulemaking on that front very in august two thousand and six mr chairman we submitted a twenty five point energy action plan to congress the act requires us to provide congress with a two year update on our progress and we will be submitting that report to congress in august of this year and will provide you a lot more detail on how much progress we're making our goal is to provide information incentives and technical assistance to has customers and partners to make informed decisions to reduce energy costs in their buildings either in the development or design of new housing or in the management maintenance or operation of the existing stock the benchmark that we have adopted is the energy star label for new homes and products this is a well recognized standing in the marketplace and there is an excellent infrastructure to support it through the e p a and d o b our written testimony goes into some details on some of these issues and some of the actions mr chairman we will be happy to provide more detailed comments on the bill itself once we've had a chance to review it but in the meantime i'm happy to answer any questions on technical issues or related subjects and we stand willing to work with the committee on any or all issues related to the two thousand and eight i'm the chief economist of the office of housing federal housing enterprise oversight the safety and soundness supervisor for fannie mae and freddie mac fail supports the broad goal of enhancing energy efficiency in american homes so we have some reservations about diverting the enterprise's focus from their current responsibilities the legislation would among other things broaden the mission of fannie mae and freddie mac to encompass the promotion of energy efficiency and conservation improved energy efficiency is a longer national priority and many opportunities for energy savings and housing exist recent increases in the prices of oil price of oil are strong reminders of the desirability of conserving energy and reducing dependence on fossil mac's have had energy efficient mortgage programs for a number of years these programs expand their underwriting standards in two ways first energy efficiency improvements being made to  property when alone as originated can be added to the appraised value or purchase price of the house this allows for the financing of the improvements with the funds held in escrow until you prove ment's are complete second the reduced energy costs associated with documented energy saving features of the house may be taken into account in assessing borrowers ability to pay by adding the in to supported monthly savings to the borrowers income for the purpose of determining that to income ratio as these programs have met with little success the underwriting modifications do not often have a significant effect on whether a loan is approved and the cost of obtaining documentation of energy savings may often offset the benefits this legislation seeks to dramatically increase the enterprise's efforts by using both incentives and requirements associated with the housing goals currently administered by hud section four of the green act would provide extra credit toward any goal for which a loan was otherwise qualified if the properties alone finances meets energy efficiency standards because the legislation specifies that the availability of this credit cannot be used by the regulator to increase their goal the purchase of additional energy efficient loans would mean easier to meet standards for affordable housing loans section six of the bill would create new goals for energy efficient and location efficient mortgages for this purpose energy efficient means loans underwritten to take into account energy savings of alterations or new construction when can sit around the adequacy of a borrower's income and location efficient means loans underwritten by augmenting by our income to account for decrease transportation costs associated with the property in both cases a broad range of loans could be included designing definitions that provide attractive  qualify while also providing meaningful energy savings could prove difficult a third section directly affecting the enterprises section five it would expand the enterprises purchase and guarantee authority to include energy efficient and location efficient mortgages as drafted it would appear that the new authority would include loans in excess of the conforming loan limits and loans in excess of eighty percent of property value that are not covered by mortgage insurance or other credit and hansen's such authority would create considerable safety and soundness concerns if energy and location efficient loans are broadly defined this could constitute a significant expansion of enterprise charter authorities into areas with much more risk going to is currently permitted the size of the loss of the enterprises have absorbed over the past year and their current importance to the successful function of our residential mortgage market recommend against substantial expansion of their risk taking authority at this time however as director lockhart a said many times these turbulent mortgage markets highlight the critical need for g s t reform legislation such as that passed by the house and the senate banking committee with strong bipartisan support both bills would combine ofelia with the federal housing finance board to create a new stronger regulator to oversee fannie mae freddie macin the twelve federal home loan banks this new regulator would be for funded entirely by these entities separate from the annual appropriations process be given the authority to set new capital standards for the entity that regulates and otherwise have important powers of bank regulators including independent litigating authority and the power to establish a receiver the bill would also combine and one agency the safety and soundness and mission oversight that are now divided between fail and hud fail greatly appreciate the strong sustained support for this legislation shown by the fried one of the things we've been talking about is standards and there are certain standards for new homes that would that would be considered green which would trigger the incentive to fann mae and within the bill the secretary has a right to establish the standards every six months or so but we've set for two of them one is an eye e c c standard international energy conservation code and the other is asher a which is american society of heating engineers air conditioning and something else and i apologize to the ash people what is your opinion of including those standards in this bill congressman  have we are following the direction of congress under the energy act of two thousand and seven to develop a rule that would set the standard at the i c c two thousand and six level either meet or exceed that and there is a rule making process that we're undergoing i should say that i mentioned that we have adopted a voluntary standard through our various programs and through our competitive grants awards and so forth that has set the set the standard that energy star for new homes which is fifteen percent over the two thousand and four  believe that is also higher than the energy code of two thousand and six and i don't want to take a position as to whether that would be an appropriate mandatory standard or not but all of our experience with energy star shows that the added cost of meeting the energy storage standard was fifteen percent of the two thousand and four i see standard is typically about a maybe a thousand dollars over and above standard construction if that  can be lower and that those are very cost effective from the point of view of energy savings they are very fast paybacks so we have been very comfortable at least as a voluntary standard setting the energy star label which is  questions about not wanting to harm low to moderate income families with respect to making homes or or hud units or whatever energy efficient i made in your experience do the people that own these homes or reside in these apartments as a benefit them if their homes are energy efficient or not and i'm sure my question sort of answers that but please expand on that but i think you i think you and i as my comments indicated in my in my opening remarks we're dealing with older housing stock generally quite relatively inefficient relative to the the new stock that's coming online and there's no question that we need to do more to upgrade those units from an energy efficiency point of view all of the reports that we're getting i have an example just to retrofit that was done in a thirty four unit multi family building in california for example and the cost of the  rehab was six hundred forty three thousand according to this project the green premium was about one hundred thousand which is would be typically higher but the annual savings were about eleven thousand three hundred seventy five dollars in that case so a very good very good payback but i do i do think that if had were to be looking at green standards we would obviously pay attention to the affordability aspect that is the bottom line we want to be sure that whatever goes in at the friend and at very least pays for itself over time and that would certainly be one of the considerations that we would apply in your statement you say strengthen rewards and incentives for energy efficiency although requirements vary from program to program in general hud's incentives for encouraging energy efficiency are relatively modest what do you mean by that  meant by that is that we do have some incentives in some of our programs i think public housing in particular provides what we call the frozen rolling base subsidy which allows housing authorities to capture some of the savings in the short term and through energy performance contract to retain fully one hundred percent of the savings for the duration of an energy performance contract there are also other subsidies such as the add on subsidy which would allow you to pay for the i had an improvement my question is the relatively modest and then i think my time's up and we'll have to see which but it was a relatively modest component i would say that if you looked at the programs across the board the incentives relatively modest in terms of the number of points for example that we provide for competitive grant programs on the other hand we have found that even providing a small incentive in terms of just a couple of points with some of those grants we've seen a pretty big break big impact but they are some programs such as the assisted and insured stock where there are no real obvious incentives for for energy efficiency in taking these mortgages does that create obviously creates some incentive to take these mortgages over another mortgage does that create any safety and soundness problems does it create is it also maybe have any effect on the green mortgages you're taking and when i say all that and i don't know the backdrop of as safety and soundness we're concerned that they that this not be a mechanism for allowing them to buy very large mortgages that otherwise would not meet their  conforming loan limits or the new authority does include authority for them to take these loans above the conforming loan limits it would appear to that would be that would be i think be obviously a risky those those are both rigidly those especially the latter be quite risky loans compared to loans or they're allowed to buy so we would be concerned about that the energy efficient loans within those limits is no particular reason to believe that they would be riskier than other loans i think a fair argument could be made that taking account of energy savings in underwriting  could be appropriate could be beneficial it's not as not always that straightforward exactly how to do that i think in particular with energy and with location efficient current efforts to reduce energy cost and all for those products we have had an energy efficient mortgage product on the books i think congress actually created that product back back in ninety two so we've had quite a bit of experience with that and again i'm not going to talk to the specifics of the bill most of the references to the energy efficient in location efficient mortgages are of referring to the fannie and freddie products which is separate from the f h a product that we have minister i will say though that our requirement is that any additional investment in energy mass pay for itself so that you can underwrite the added cost of this the investment through the savings and we do require that they be an expert report and i believe the billed as address that as well so we're very comfortable that the product that we have offered has actually provided a benefit to the consumer without added cost well now it is as i read the bill this would  and what i think i've just heard you say this would actually require f h a to insure another one billion dollars worth of these new energy efficient long i believe there is a section of the bill that  volume but even at that level we've found that the energy efficient mortgage product has been a somewhat underutilized product in part because i think lenders have found it difficult to sydney when it comes to an existing homes product to get the work done and set up the escrow fund and so forth and i think those issues would need to be addressed in order to make the energy efficient mortgage valuable product whether any suggestion that you have  somehow we would do that in this legislation would be appreciated and we'd be happy to get you some suggestions thank you but i think here they are saying the potential for saving money on more energy efficient homes as they are now to be rising energy costs on low and moderate income people the disproportionate you made a very startling observation that is four times as great among low and moderate income as the rest of the levels now if you could answer give us an assessment of that and specific relationship to your understanding of this bill and where in the bill and how in the bill would complying with the energy efficiency he's with then this bill as well what have an impact on the energy costs for this group of people can we talk about that first and then my second part of the question still does relate to the low and moderate income people and that is this issue which hopefully will get a little bit later and as mr pearl maher said we will address this double whammy this being placed on manufactured housing which targets which is basically low and moderate income and we're putting to building codes on what impact that has and driving manuf our manufactured home builders out of the marketplace and then adding that costs  and moderate income so we could examine that as well as you mr lawlor so going forward as we move far with this bill that we've done diligence on this specific issue that we have a clear understanding of what this bill the impact on low and moderate income people will be and are there areas in which we can move to fix it so that it doesn't disproportionately fall on moderate income are two two big questions congressman and i think you said his zeroed in on the essential issue here which is to the extent that we're talking about affordable green or affordable energy efficiency  what distinguishes affordable green from other kinds of green building and the obvious thing is obvious factor is it's affordability and i will tell you that has always been concerned about defining green in a way that it is affordable to the constituency that we serve low and moderate income families and my expectation would be that to the extent that the secretary is given the authority to stablish green guidelines or other standards if that were the case then that would certainly be the first screen that we would be looking at there is no question that this reason many years at the first green wood i didn't understand would be the first criteria for determining any appropriate green guideline or standard would be its affordability but by definition now i do think that we need to be moving towards perhaps a more perhaps different view of housing which is lifecycle  cost of the housing which is both the front end and the operating cost over time particularly when how it is footing the bill for the utilities in those in in the housing through one of more of our subsidy programs it is important that we look at both the front end and the long term operating cost over time but i do understand the concern that they may be frontin costs that don't pay back  sufficiently or in a fast enough time period and indeed where you have a limited amount of money for particularly subsidized affordable housing that somebody is going to have to pay some additional costs in at the front end but i guess the point i'm making is that we would it's hard with given the authority and i'm absolutely confident that we would be looking at water what parts of green are affordable both at the front end and over time through the operating costs and then it would absolutely be the judgment of the secretary as to how to balance front and cost this is the operating costs over time not speaking to the specifics of the bill but i would think that would be the operating procedure we have a program now speaking of green through the mark to market program it's a pilot project or a model program we've got about fifty buildings that are being going through what we call a green remodelling initiative and we're giving owners the option of doing some add on green measures and providing them an incentive with the reduced owner contribution at the front end from twenty percent to housing market would it in fact drives could it drive some of those people home manufactured home builders out of the marketplace thereby denying that option to lower income people i'm actually going to actually differ on responding to that question i would be happy to get our manufactured housing office to give you a response on that because they deal with this issue all the time with regard to implementing the hard code and this i know is a concern of the manufactured housing industry that any additions to the code would be an add on frankly thank you material they should but that for the record we would appreciate that the general no noise recognize chairman you talked a little bit about the the requirement of the bill to pay for f h a to ensure that one billion dollars worth of energy efficient homes yesterday in the new york times there's been the projected lost to the home program since two thousand and four has required f h a to withdraw four point six billion dollars from its twenty one billion dollar capital reserve fund and made to cover the costs my concern is that one of the big issues that i had in my opening statement about the  green building to reduce the risk of a mortgage by our lower the mortgage insurance premiums and my concern is are we are we putting too much pressure on  we don't know really where the bottom of this mortgage crisis is and then to come along where we're going to reduce the premiums which i think you know where we need the risk is this something that that is important or not as as i say i think we've had experience with the f h a product obviously the energy efficient mortgage product that's been a very modestly used product less than a thousand mortgages a year are being reported at this point and we do have a provision to ensure that the add on cost is paid for with the energy savings but i'd be happy to again get back to you with a more extensive response from our f h a people clearly risk is something that we write all the time and we would have to look at that but the problem is with there's so few of these type of mortgages we don't really have you know the day to do  determine whether there will be an additional foreclosures but we i don't think we've seen any evidence that the energy efficient mortgage the mortgages that we have insured have a higher default rate at least historically but i'd be happy to get you going to details on that as well thank you then  actions so energy efficient loans that meet some of the energy efficiency standards when talking about i would get at least twenty five percent more credit that additional credit because persons who purchased these fuel efficient cars many years ago are reaping great benefits today they at the time they made the purchase probably had an outlay of capital that was questionable so the question becomes not only is it affordable at that in the current market but you have to look through the vista of time to some extent and ascertain whether of what ability is something that is foreseeable  given that oil is a finite resource given that we are having the price of oil continually escalate hardtail controls the price more so than the marketplace so given this could you kindly factor that into the equation what i've just called your attention if the price of oil let's say it doubles in the next five years that we will have done this what we'd be all the better for having done these things in with this kind of afford is absolutely no question congressman that if oil prices continue to rise that initial investment in the more fuel efficient car would be increasingly be a better better deal  and investment now in a fuel efficient home will become a better deal as oil prices escalate indeed and frankly the practice when when the experts to energy audit and  the front end energy assessments they tend to be rather conservative in projecting future oil or energy cost increases so that to the extent that they are increases that would certainly add to the benefits to the to the consumer i should say that i think you'll be hearing in your second panel some of the experience that the enterprise community's program has had with about two hundred fifty buildings and many thousands of units and i think they are coming up with some very perhaps helpful data as to the costs and benefits of investing in green and my office the policy office is certainly going to be taking a look and hopefully working with groups like the enterprise community partners in the n h p to actually take our time to really look at you know what makes sense and what doesn't make sense and then learn from the experience of people like enterprise thank you continuing with this but in a different light it seems that we all agree that this is an appropriate thing to do what was the promoter  has suggested that we start to look at this for obvious reasons this is genesis that he's introduced us to and you can you can't get to revelations if you don't have genesis so just kind of makes sense that we would start now and so that we can get there many times we seem to want the crops but we don't want the the rain and the thunder and the lightning to get the crops sometimes you have to go through this process so i want to commend mr prometa for what he's done to to get us started with this process that maybe some changes in legislation always evolves but you don't have evolution if you don't start at some point with that in mind why would we not develop some small portion of the the stock that we have he has used a number of fifty thousand i think fifty thousand of three million units fifty thousand of three million units is that a is that number t large fifty thousand of three million units again i'm not going to answer to the specifics of the bill well let's not assume that we have a bill let's just talk about it to have the of three million do it if the thousand very small share of the total portfolio that you'd be talking about yes with that said mr chairman and i must say the the chair looks good on you going into other enterprises does do either of you know exactly how much green building is going i know when i spoke to a builder and this happen to be a builder in florida he said grange mean i can't sell either of you have any comments i think you i think that would be a good question for the for the second pat down can't be here  and i will have hard numbers for you on that clearly the housing market is in a downturn at this point but you know all the anecdotal evidence seems to point to rising demand for green building now one marker of that is what i was referring to earlier which is energy star which is energy efficient homes and after and and the national slow start up we've seen an exponential  increase in the penetration of energy in many markets i'm not sure it's a big deal in florida but certainly in arizona and some other places we've seen a big escalation and i think that's a required to originate possibly through a new c r a requirement that's that would be one possibility certainly there are the people i think the thrust of the bill is to get them to encourage others to make these loans by saying that they will pay a premium for them in order to meet their goals  same kind of issue arises with respect to affordable housing loans and that's essentially how that has worked fannie and freddie have occasionally paid additional amounts to acquire loans that meet  but but beyond paying more there are other ways that they can stimulate demand they can make more information available they can help lenders make more information available about different types of loans  that they're interested in buying different types of cost savings that would give them an incentive to participate in expanding education about the possibilities so there are a variety of ways that they could lenders actually have this data on how many would qualify and are there any do you anticipate any new costs these regulatory requirements will have on the mortgage industry well there are in acquiring information about energy efficiency for any particular property and someone would pay them they would normally that would be paid by the b and its environs got larger there might be efficiencies so far those costs have deterred borrowers from wishing to participate but that the incentives of higher goals haven't been there either so thank you and mr chairman i would like to submit the question about the green buildings to the next and i can't say i have another meeting but i will be submitting it to their ability to submitting the questions for the record certainly and without objection it will be part of the record and say like any of us to ask your question for you we were happy to do that to thank you i yield back about a gentle lady yells legislation i apologize i'm running ironically back and forth when this committee and the select committee on energy independence and global warming which is holding a hearing  at this very same time on the future of all well and i don't want to violate what chairman frank said earlier about jurisdictions and i think we did have some comments that  if you if you ask pastors who are in churches particularly on the eastern seaboard what is the number one request they receive and it is help on utilities number one as well as the social agencies and so  piggybacking on what my colleague mr green said it just seems practical for us to make some dramatic changes now that we won't have to pay a heavier cost for them in the future  and so i i mean i may not have been here as her official position this legislation is too costly is that we do not have an official position on this bill and we we will be working with the committee to provide any responses if we do not an official position on the bill yet mr mr cleaver i'm here to say that this issue has been and is extremely important to the department both from the point of view of the impact of rising energy costs on our residents and homeowners who u our mortgage insurance programs i think i indicated we are already doing quite a bit probably not enough in some people's view to address the issue and we're also concerned about the impact that that has on our own operating costs which are now in the billions in terms of expenditures for utilities through utility allowances and other programs so this is a critical issue and i think it's clear that wh we've made some modest steps in the right direction we have more to do the department leadership has been quite supportive of our efforts to increase energy efficiency and assist our customers and our  legislation that we even almost consider and it is the the the desire by many to say that we don't need any new regulations i mean no matter what what the issue is we don't need it why are you would you suggest that we do not need to the congress should not become involved in this issue because  i'm not i'm not big on the question i'm asking a question we support the broad goals of increasing energy efficiency and energy conservation in in homes and freddie mac involves some trade offs they have some really critical missions right now and mortgage markets are are have been somewhat disturbed over the past year so we have we have some reservations about using them for that purpose at the present time at the same time we recognize that this is an important national priority so we have some specific safety and soundness concerns that we raised and more broadly we have some reservations but we recognize that this is an important priority to the gentleman yield back the gentleman from new hampshire mr hodes thank you mr chairman gentlemen thank you for your presentations which i found helpful and constructive up in new hampshire things get pretty cold and traveling around my district people i represent are afraid that they're going to freeze to death next winter because they're not going to be able to afford the oil or gas or whatever it is that most of them heat their homes with and they are eager to see a national policy that reflects the reality that for the past thirty years we've had our head in the sands about where we ought to be moving on energy efficiency which is a large contributor to where we are today so i'm coming at this by telling you that my sense is we can't afford to wait any more and moving aggressively towards these directions first mr lawlor are there benefits in this bill fannie mae and freddie mac i don't think there are benefits to fannie mae and for well yes there's one benefit that they could it could help them meet their affordable housing goals and isn't that a significant benefit that could be a significant benefit it's been very difficult to meet those goals and past few years so this is a help to fannie mae and freddie macin meeting their affordable housing goals yes it will also have or have some other effects on them that they might consider not beneficial and sort of some other goals that they would have to meet as well i understand it it's a balance here you have to live with what congress tells you to do and that's always tough it's a tough tough job you said in your  testimony i forget whether it was written or all that your existing energy efficiency mortgage programs have met with little success over the years and on our programs where we regulate fannie mae and freddie mac so the programs for energy efficient mortgages over the years have met with little success according to your testimony why i believe that borrowers they haven't been heavily publicized but they haven't met with great response either borrowers find it relatively expensive to go through the process of establishing savings and it just hasn't it hasn't been worth it to them that hasn't made enough of a difference in getting loan approval the kinds of savings that borrowers have been interested in acquiring at the same time they get the loan in the process if it's an existing home you've got to be promising to make some improvements typically you can't make them until you have actually taken possession of the home and so there's there's a delay involved there after the fact that you have in fact achieved a certain level of savings and so forth so it's been a cumbersome process for borrowers think so does the bill go far enough in its present form in addressing those issues or do you think it could do more i think it should probably it needs to do more either the bill or the regulator in implementing this would have to try and design something that works a little bit more efficiently and i think would be a difficult thing to do and i'm not sure exactly what the right solution would be but i think it would need some help there and isn't one of the other reasons that you haven't seen great success in energy  mortgages is because the cost the cost benefit ratio is simply not been there i think that's been the case the idea behind them is to try and prevent the lack of immediate cash from being bar to being able to make some effective energy investments but still you have to convince the these are effective investments that will save them money over and as fuel specifically addressing retrofit projects for existing stock where homeowners come in want want to take a second mortgage in order to make the kind of changes that would be  beneficial to their energy efficiency that's an interesting question the research variance of course with second mortgages has been very unfortunate as a general proposition understudies might be a little bit different they might have somewhat different risk characteristics not having specifics about the bill but having taken the time to try to understand what we're doing and for your comments today and so thank you very much and we'll now call up our second panel and move forward  any members of the committee may submit additional questions for the record or any of their statements for the record  good morning everyone thank you for being here and like to start with the testimony of mr cooper and without objection your written statements will be made a part of the record and you will each be recognized for five minute summary of your testimony ms cooper thank you ms thank you mr chairman and members of the committee i'm doris school president and chief executive officer of and a price community partners we thank you for the opportunity testified today enterprises the national nonprofit organization that has invested more than nine billion dollars to create more than two hundred forty thousand units of affordable homes throughout this country most of them  and moderate income communities we are bringing the benefits of green building to low income people to build and we have all the tate for sale homes and rental apartments that i healthy a more energy efficient and better for the environment we call that the triple bottom line green communities is a three year experiment where homes are built according to a national criteria and is the only framework for green affordable homes texas today the criteria were developed in collaboration with and endorsed by leading environmentalists energy green building affordable housing and public health organizations in the last three years and apprise has invested more than five hundred seventy million dollars to create more than eleven thousand green communities homes in more than two hundred fifty developments in twenty eight states and since we launched the initiative we can count with pride twenty states haven't embraced similar criteria by the adding bonus points or making it a requirement for affordable housing developers to seek local and state funding we share this initial progress because it's our practice to advocate for public policy changes based on real experience so my comments today are not based on theory or idea ideology but practical experience in housing development and a growing body of research we know housing energy and transportation needs follow income families are interconnected and they are getting worse we can make progress on all these fronts and lock in long term enviro mental benefits by making green affordable homes a national priority we want to believe that green and affordable can be one and the same community organizer sation homebuilders financial institutions mayors and governors across the country have increasingly recognize this and are taking action now it's time for federal leadership we need a national commitment to bring home the benefits of green building to the residents of affordable housing the green act is a major step toward that commitment we really commend congressman perlmutter for your vision and your bonus in taking this leadership the impacts of a national commitment to green affordable homes would be profound to adjust congressman scott's question green community the developments generate substantial cost savings from low energy and water usage and hundreds of dollars per unit on an annual basis in many cases can accrue to both low income tenants and the operators of low income housing we're also starting to demonstrate significant health benefits from green affordable homes especially with people for people with asamoah most of them a predominately low income green affordable homes at scale can also significantly reduce carbon emissions and the construction and rehabilitation of green affordable homes can be the basis for creating large numbers of green jobs especially in home building and renovation and this will be particularly effective in communities that might be hardest hit by the full closure crisis where we of some of those vacant homes can generate both environmental benefits and economic benefits out data show that highly sustainable homes for low income families can be created for only marginally high development costs so contrary to the notion that it would cost you and pit affordable and green against one another we showing that cost might be only two to four percent high on the average and appeared to come down with experience this host true for virtually every form of housing in every type of climate in every kind of communities we have tested around the country and based on this experience in light of the major benefits that would follow  strongly supports raising the bar on environmental performance and affordable housing it's not about picking a program but it's about establishing clear minimum benchmarks for better building performance that are widely understood and easily measured in closing we must act with urgency because the important thing is not to debate the nuances but to move forward with the commitment and the national leadership we pledge our knowledge our expertise and out  energy efficiency to low income households as part of the test let me thank you without objection the bringing home the green will be made part of the record thanking the school mr p motor perlmutter members of the committee good morning i am marshall president of the american institute of architects on behalf of our eighty four thousand members and the two hundred eighty one thousand americans who work for architectural firms nationwide i would like to thank you for the opportunity to appear today to share some of our nation's architects thoughts on the green resources for energy efficiency neighborhoods act this landmark legislation will promote energy efficiency in our nation's residential building sector providing direct benefits to the environment our economy and especially to the millions of americans who are struggling to cope with rising energy prices i therefore offer mine and the sincere support for this vital legislation as an architect i work every day to design spaces that maximize energy efficiency buildings are one of the largest consumers of energy in this nation the department of energy reports that the building sector accounts for thirty nine percent of the total energy consumption more than both the transportation and industry sector buildings and their constructions are responsible for nearly half about forty six percent of all greenhouse gas carbon emissions produced in the united states every year and seventy one percent of the u s electricity consumption in order to make significant reductions in the energy used by our nation's buildings the federal government architects builders and financial institutions must work together to promote energy efficiency across the country the green act will encourage this collaboration this bill includes a careful carefully balanced mix of incentives and requirements to achieve energy efficiency in the residential sector providing direct benefits to the environment the economy and homeowners and renters across the country the bill will also help create jobs in the struggling design and construction and real estate markets the legislation under consideration by this committee is the most comprehensive attempt to promote energy efficiency at the residential level to emerge from congress  strongly supports this legislation as it applies energy efficiency standards for new residences and existing houses under the jurisdiction of the department of housing and urban development this legislation requires new or renovated structures to comply with the most widely accepted energy standards currently in existence the legislation rightfully perscribe energy efficiency standards that were developed under an open consensus based process and by offering additional credit to projects that achieve even greater energy efficiency the legislation truly incentivizes green design and construction in the most practically applicable manner energy costs are soaring across the country and many citizens are being pushed to their financial limit designing and constructing energy efficient homes will provide an immediate financial benefit to homeowners and renters through reduce utility costs while establishing new energy standards for some residences will make great strides  promoting residential energy efficiency it is only one part of the overall strategy to achieve in an economy wind energy savings to truly encourage energy efficiency a multifaceted approach is necessary the green act right philip colleges this and includes important policy ideas that will promote energy efficiency by providing incentives to lenders and financial institutions to provide lower interest loans and other benefits to consumers who buil buy or remodel their homes and to businesses to improve their energy efficiency specifically the bill will promote the use of energy efficient and local and location efficient mortgages e m c and l e m ems are effective financial twos that provide incentives to homeowners to purchase energy efficient homes or renovate existing homes to make them more energy efficient the a i a is especially pleased by provisions in this bill that was that will resort result in more energy efficient mortgages and and location and efficient mortgages in the marketplace and educate borrows borrowers and lenders of their benefits as this bill moves forward we would like to work with the committee and the bill supporters to ensure that homeowners have access to the best design information x and expertise as they embark on energy efficient upgrades that means working with licensed design professionals like architects and landscape architects to maximize sustainable design opportunities like orientation natural day lighting and surrounding landscaping it means ensuring that renovations and retrofits are overseen by qualified licensed professionals specially trained to address all aspects of building and its sites performance and safety and it means ensuring that the public knows where to turn for the best and most reliable information about who is probably qualified to design green residence we strongly support the members of this committee and their efforts to make the nation's housing stock more energy efficient this legislation will reduce energy costs for americans reduce our demand on foreign sources of oil and preserve our natural environment thank you mr chairman and members of the committee i welcome any questions that you may have thank you mr purnell and now mr howard you recognize for five minutes mr chairman members of the committee money was gerry howard i'm the c e o and executive vice president of the national association of homebuilders thank you for the opportunity to testified today on h r sixty seventy eight the green act and the efforts of our industry is making in building energy efficiency and supporting affordable housing we preceded the opportunity to continue in good faith to provide comments and input on h r sixty seventy eight there are some very ambitious and well intentioned proposals in the bill and there are some very very solid points in the bill that we support and age be currently has no position on this legislation however as i mentioned we do support many of the provisions first we support incentives for green building in energy efficiency including efforts to provide grants for builders to offset some of the upfront costs associated with incorporating more green features into the homes they build we are pleased to see that the legislation offers grants to state and local governments to help improve residential energy efficiency via the energy efficiency block grants we also support provisions that allow for reductions in the amounts that owners are required to contribute for energy efficient mortgages however we remain concerned that the bill does not provide enough energy enough resources to achieve these goals that in visions and in instances appears to conflict with the overall housing mission of h s e's the legislation creates many new programs but it does not provide adequate staffing were just general appropriations to ensure that these programs are implemented successfully because of the establishment of these new programs and the goals for the g s e's related to energy efficient mortgages in location efficient mortgages we are worried that the primary goals of providing safe decent and affordable housing may be subjugated to the goals of this new energy efficiency policy also we are similarly concerned with the aggressive new energy efficiency requirements in the bill which although well intentioned may not achieve true energy savings proving energy savings from the building envelope with mandatory energy ratings for f h a insurance for example could have the unintended consequences of limiting f h a because of the infrastructure to support energy ratings is limited itself we believe that these hurdles must be overcome before the goals of h r sixty seventy eight can be realized and h p s into your unique position to comment on this legislation because we are true pioneers in green building as much as we are champions of affordable housing as you may know any h p is currently in the process of a groundbreaking effort to produce the first and only national green building standards they'll be approved by the american national standards institute by richmond right written statement details the efforts our members have taken on building green homes for nearly three decades long before many green organizations existed let alone embraced green building our industry is fully committed to promoting green building across the broad spectrum of residential construction single family multifamily remodeling and land development i also want to take a moment sir to highlight one of the most important aspects of green building efforts and this legislation energy efficiency i want to reiterate our support for improving energy efficiency in homes in all markets including affordable housing however while energy efficient features can be built into a structure from the initial construction it is possible that no meaningful energy savings will be achieved if the home is operated inefficiently the majority of the energy consumed in a home is the result of independent resident behavior that is lighting electronics appliance use laundering and cooking habits lack of energy conversation conservation by the resident has the potential to subvert the efficiency or green features built into the home that is why an h p is committed to  greater consumer education within the context of our green building program and standards and we hope the congress can match this commitment with support for better consumer ation the consumer education on green building in lieu of simply endorsing potentially costly construction mandates that may not achieve the savings and visions i appreciate the ongoing dialogue on this very important issue and i appreciate the opportunity that we've been afforded to comment on h r sixty seventy eight and i'm prepared to answer any questions thank you mr howard mr hicks you're now recognized for five minutes thank you thank you chairman frank ranking member baucus and congressman perlmutter and for members of the committee for the opportunity to discuss the green act my name is tom hicks vice president with the u s green building coun a nonprofit five hundred one c three organization comprised of more than fifteen hundred private nonprofit and government organizations our vision is to deliver a sustainably built environment within a generation and our mission is quite simply market transformation toward this vision that like to thank congressman promoter and other members for their leadership in drafting and introducing this important bill and for providing us the opportunity to speak with you today as we work to transform the built environment in which we live and work we are mindful that to market transformation requires that the advantages of green building be made available to all individuals the residential sector represents a unique opportunity to make this vision a reality representing twenty one percent of the nation total energy the residential sector presents a tremendous opportunity to address climate change create jobs and make our homes healthier and more environmentally responsible in time of rising energy prices green homes also offer the promise of greater energy savings putting money back into the pockets of american families green homes both affordable and market rate are now entering the marketplace as an example of more sunny homes which you'll see on the easel to the right and there to my right is an affordable housing project in the south bronx it's a project that earns a lead silver rating makes use of recyclable carpeting one hundred percent energy star appliances low flow water fixtures and low v o c paints and finishes in addition to these benefits the rich residents of the more sunny homes in the bronx expect to save over thirty percent of their annual utility bills the result is a community of homes that people can afford and allow the city to grow in an environmentally responsible way bringing the benefits that she'd buy more sun it into the mainstream though requires a two pronged approach involving both new and existing homes while the greening of new homes is essential to advancing professional capacity for green building ensuring that the green building practices are integrated into new housing projects existing homes provide a unique opportunity to achieve great energy savings on a wide scale provisions of the bill that provide a minimum threshold for energy reduction to really rehabilitate rehabilitate existing housing as well as residential energy efficiency block grant program will make energy efficient green home renovations more available to all homeowners the green act also takes important strides toward increasing awareness of the benefits of energy efficiency and green building as an earlier early adopter of green building a provider of affordable housing the federal government is well positioned to assist in the transformation of the housing sector the green act harnesses this potential by marshalling public funds to bring the financial benefits of green building to the people who can most benefit from the operational savings they generate in addition through government backed financial institutions this bill provides numerous financial incentives for an energy efficient buildings when our green building rating system was first introduced into the commercial marketplace it was the first national green building sort of cation program the majority of the early projects using lead certification were going green not because of evidence based business case but because of values oriented commitment since then the market for green buildings has grown to a projected twenty billion dollars annually and first cause premiums for green buildings have gone down to as low as zero to two percent the business is the business case has been our well let's check our ticket lated from cost savings to increased property values and market demand continues to grow leaders in both the private and public sectors were critical in getting green building to where it is today federal agencies were some of the us to be seen as first members in many need to lead by example by requiring lead for their own facilities finally i'd like to state our commitment to making green building affordable accessible and available to everyone us u b c is dedicated to making the case for affordable green housing we are now working with partners in an affordable housing sector to ensure that individuals of all income levels can experience the benefits of healthier more environmentally responsible and energy efficient living spaces the extraordinary work of enterprise community partners the commitment of the home depot foundation the work of habit it habitat for humanity and many others are all all demonstrate that green building is possible without big cost premiums and equally important that the benefits to families with the greatest financial needs are tremendous while lead for homes was just released in december of two thousand and seven case results indicate low or no cost first premiums first c premiums with strong operational cost savings to date more than eight hundred affordable units have registered with lead and nearly three hundred have already completed the sort of cation process through a generous grant from the home depot foundation us to see the able to offset the survey cation costs  housing project stinkingly sort of cation in conclusion of i'd like to thank the financial services committee for the opportunity to discuss this important measure i look forward to working with the committee as it deliberates on this important legislation and look forward to answering any questions  thank you mr hicks and mr george are now recognized for five minutes thank you chairman frank ranking member baucus and distinguished members of the committee i'm allen george executive vice president chief investment officer of equity residential and s and p five hundred company focused on the acquisition development and management of high quality apartment properties throughout the u s equity residential has investments in or owns five hundred sixty four properties totaling nearly one hundred fifty thousand units and twenty three states and the district of columbia the largest publicly traded apartment company in the country and employ more than four thousand people i'm here today on behalf of the national multi housing council and the national partner so see asian representing the nation's professional multifamily housing industry the multifamily housing sector is committed to increasing energy efficiency and overall sustainability of our buildings in a way that does not jeopardize the availability and affordability of housing for more than ten years equity residential is actively sought out opportunities to improve the efficiency of our apartment properties which are both meaningful and cost effective equities investments in energy and efficiency include improved lighting efficiency using high performs fluorescent bulbs and l c d fixtures improving the performance of mechanical systems through systems upgrading equipment in the installation of programmable thermostats throughout our properties upgrading building envelopes by installing high performance windows installing white roofs upgrading installation and conserving water through the efficient use of plumbing fixtures whether based irrigation systems and zero scaping the incentive based approach embodied in the bill can assist of elevators and owners in improving sussed the sustainability of their properties however we do have some specific suggestions for improving the bill which fall into four broad categories first we believe the incentives will continue to provide our firm and others with the tools necessary to make meaningful improvements to the performance of america's housing stock however our experience suggests that certain perspectives mandatory prescriptive mandatory building requirements like some of those in the hope six section of the bill may negatively impact the supply of affordable housing we are committed to increasing the sustainability of low income housing as well as keeping housing affordable in all markets we believe the mandatory green requirements in the hope six program may have unintended consequences and cost that may far outweigh possible gains secondly we believe that is important that any minimum efficiency standards of state ability benchmarks be tied to the nationally recognized codes and standards like those of the international code council or asherah these organizations follow a time tested protocols forces compliance with non consensus based documents can lead to implementation problems in compatibility with local business code codes and standards uncertainty and enforcement and unnecessary costs in relation to that and animate has participated in the development of the national green building standards along with a diverse group of stakeholders include building code officials the u s green building council the real estate industry product manufacturers and other experts in green building and energy efficiency the national green building standard is the first standard to address all green dress eventually buildings including multifamily single family and mixed use development unlike other green building programs it is written to be seamlessly incorporated into existing building codes and is followed the strict standards setting procedures established by the american national standards institute third we support the federal programs that help property owners understand which technologies products and practices will be most practical and cost effective in improving energy efficiency and federally assisted housing recognizing that there was a lack of industry specific data and another real estate groups recently commissioned a study examining the feasibility and cost implications of making large increases in energy efficiency in a typical apartment building the bill's energy efficiency demonstration project is absolutely a right to step in the right direction but should be expanded to include all sorts of federally assisted housing we believe finally we support the provisions of the bill that would include incentives for borrowers to receive more favorable terms on f h a mortgage insurance for multifamily properties how are we are concerned about the potential impact this may have on the integrity of the program when implementing regulations are developed the f h a program plays an important role in the continued provision of affordable housing in the country any changes to the program however well intended could create an imbalance that will negatively affect the strain supply  we would suggest that the hud secretary convene a blue ribbon taskforce that would include representatives from federal agencies the real estate industry the g s t and affordable housing advocates the task force will develop policy recommendations regarding the most effective way for the f h a to in uses of this program and in conclusion the multifamily housing multifamily housing supports the goals of this bill through dented on the practices inherent efficiency efficiencies in energy and water use and effective use of infrastructure and building materials apartment homes or the central element for meeting our nation's affordable housing needs and policy makers practical mandates on the sector the cost to develop these properties within practical mandates will spiral and which would add further stress to our housing thousands fordable stock thank you thank you mr george and now mr bernstein you are recognized for five minutes thank you very much my name is scott bernstein i'm president of the center for neighborhood technology in chicago which is a thirty year old group that actually works to bring home the benefits of sustainable development inclusively and i'm also chairman of the surface transportation policy partnership coalition of organizations in forty two states i thank the chairman the ranking member and the members for the privilege to testify today we endorse this bill and my written testimony says why i would like to show some slides quickly that illustrates why we support it and highlight some things that haven't been spoken to by the previous speakers first of all i'd like to talk about the cost of transportation in light of not only for dollar gasoline cost but how it compares to the cost of energy the average american household uses one hundred million british thermal units of energy per year which is the amount used by a household driving seventeen thousand miles in a year at twenty five five miles to the gallon or more realistically fifteen thousand miles a year at twenty miles to the gallon so american households are using as much or more energy and the household level for transportation as they are for heating cooling and lighting and therefore this is extremely important also paying more for that they're paying about three thousand dollars a year right now on average for transportation costs in two thousand for the other items and therefore this is of critical importance we spent time at the request of the brookings institution the center for housing policy and the national academy of sciences to derive this impenetrably dense formula that describes the relationship but it's a little easier to understand if you look at the graph as density  accessibility goes up vehicle miles traveled for households goes down that's six million datapoints three chicago san francisco and los angeles and there was peer reviewed by over one hundred academics and it's been shown that a work in fifty two regions thirty seven japanese cities in london paris the same view of car if you convert that to carbon we find that is density inaccessibility goes up carbon emitted for household goes down as well now if you look at the map on the left this is chicago and the white collar areas are the ones where households are driving less than fifteen thousand miles in a year the red ones are the ones where they're driving more the map on the right shows that households in those yellow areas are spending thousand nine hundred dollars a year for gasoline and by the way this is real time data calculated this week one hundred dollars gasoline in the red areas between four and six thousand dollars a year right now and rising so there's a big savings to be had by promoting what we call location efficiency now if we convert that to dollars and cents in the green areas those households are spending five to six thousand dollars a year less than in the tan areas because they have the location efficiency that's money in the bank the equivalent for low and moderate income households have a ten to fifteen percent increase in income tax free to support to address congressman scott's question you can have it both ways now if we calculate a standard affordability index where the household housing units in chicago that are thirty percent of income or less is the map on the left but if you say where are the household working households live where they spend less than forty eight percent on the sum of housing and transportation it's the map on the right we've done this now for fifty two regions the united states comprising half of the population and we always get this pattern and therefore if we don't take these costs into account we're burdening these households so again when you put this story together we find that in the red areas households earning less than fifty thousand dollars a year across the united states working families are now spending almost two thirds of their income on the summer housing and transportation transportation and energy costs double the cost of housing and therefore that's why this bill is compelling now if you asked the same question about carbon emissions which i was asked to address the map on the right is color coded blue is good red is bad then the dark blue areas that's the lowest carbon emissions the light blue the next lowest cetera again where there is high density good transportation choices and good accessibility carbon emissions are much much lower you can also make that work for the architects and urbanists in the room using a transect that you get out to the ex urban areas you have very high emissions of between nine and fifteen t per household for transportation as you get to the more urbanized areas whether they're in the city or the suburbs down in the two to four times range and so forth location efficient mortgages i'm proud to be a call inventor of this it's a product that was  introduced to the marketplace as a joint product with fannie mae by organizations in the one nine hundred ninety s based on research supported by foundations and the federal government it's a mortgage that counts the savings from transportation which i've just demonstrated as an offset to the assumed sex class of housing usually principal interest taxes and insurance it was tried in over forty regions of the united states with these colorful brochures illustrating  things like take the t home in boston i'm sorry chairman frank isn't here to hear that location efficient mortgages in four areas and smart commute mortgages in several others to summarize what we found when we pulled in the last week the loan officers who conducted the original demonstrations and these are very low volumes are only a few thousand mortgages put out the liberally but no foreclosures in seattle no foreclosures in chicago one out of fifty the definition of energy efficiency in this bill that's adopted include location efficiency for the reason stated i think that location efficient mortgages should take this into account i think that in defining geographically under served markets these costs can be taken into account quite simply and i think that in all of the federally assisted housing programs whether vouchers tax credits or direct project subsidies if we don't take these costs into account we're going to a burden american households and frankly we're going to increase the foreclosure rate the last map here simply shows that closures have risen the fastest in the least efficient parts of  the of the region costs keep going up this is likely to get worse therefore i think this actually meets both the mission and the safety and soundness goals of the g s e's and that's why i strongly urge you to move forward with this legislation thank you very much thank you mr bernstein and i'll recognize myself for five minutes to ask a few questions and i'll start with you sir we heard from mr freberg that and the federal government have had some programs really on the books since the one nine hundred seventy s what location official mortgages or energy efficient mortgages in your opinion why haven't they been  you know more widely utilized there's been a lack of clarity in the statutory declaration of purpose the legislation that had operated some of these early programs and has lapsed notably after the carter administration they've been treated as experiments instead of asics essential features of the market so in fannie and freddie's case look they're doing ten mortgages a minute we calculate between the two of  them but location and energy efficient mortgages aren't features you can't push the button on the automated underwriting software and get these up for all of them if they're not offered to people how they know that there is a choice so you have to commit to taking them to scale and you have to commit to do it doing what the banks once they do are experience was lenders came out of the woodwork to offer these but it was hard to get a commitment to take it to scale from the g s e's and i think you can correct that by direction and that's by stimulating a secondary mortgage market in these in these particular that's correct and i think there's been a misunderstanding and it was reflected in earlier testimony that we're asking people to take extra risk here we're asking people to not borrow as much for cars spend a little more on their homes and come out way ahead ok mr george like to ask you a question with respect to the the up that's within the bill the fifty thousand units you said that was you know appropriate approach  do you think that should be expanded do you think that's a good pilot program how would you look at that i think that is a i'm sorry i do think that that is a program that should be expanded i think there are tremendous number of alternatives out there today with respect to energy efficiency clearly as oil and other energy energy costs have risen there are new alternatives that then become cost efficient and actually give you a good return on investment for those kinds of investments and this question is for you and mr howard in your comments both of you have talked a little bit about the international code conference green building standard can can the two of you tell me where we are in that process whether it's been approved by the consensus group yet or whatever because the within the bill the hud secretary can certainly you know make that one of the standards that would trigger a green mortgage which would allow fannie mae a credit so if you took  comment as i understand it mr chairman that it was in the final approval process at the answer you were going to do and it should be done in a relatively short timeframe and then while i still have some time for the whole panel and particularly mr hicks and you mr personality and misc who with the current housing stock that we have both multifamily as well as single family residential how can what in your opinion would be the best way to get those homeowners or those building owners to reduce energy consumption and it's just that open ended the question mr hicks i think that some of the measures that are in the bill by providing opportunities for second mortgages for energy retrofits i think would be go a long way a think i along with that we need to focus in on education awareness making sure these opportunities are very well known to the homeowners is another area mr chairman there's  there's a major starting point where we have to look at how the federal government allows taxpayer funds to support subsidized housing and twenty five million units of twenty five million americans live in low income and subsidized housing and we heard the hud gentleman talk about one point two million ph public housing units that were built before one nine hundred seventy so  are absolutely supportive of creating incentives but we also urge the federal government to take national leadership to create a minimum benchmark in terms of requiring better performance on energy it is a leadership role that the federal government should play outside of that of course you need incentive of course you need education and modeling that we have done in the last three years really show that the benefits will pay for the initial investment of two to four percent the federal government as one of the biggest supporters of the housing can alter the market by bringing buying power into the market invites of fitting and in incentivizing both the homeowner side and rental side so this is about taking a commitment through practice to scale and transform the market through a variation of incentives and also expectations so that the tax payers investment would bring back taxpayer benefits in the long run thank you mr pradelle if you had a comment and then my time's expired and i have to recognize mr king well i would just like to echo the remarks from the last two panelists is that education awareness and the incentives that are there for the secondary mortgage market you could even go as far as tax credits at some point to make sure that people are aware there's this slide we just we just saw basically demonstrate that if you were to cut the energy usage in an average home by fifty percent something that architects today know is quite doable it's almost like getting fifty percent more gas mileage on that vehicle in that household if you cut the energy usage and fifty percent in all buildings in the country it's like doubling the gas mileage on every vehicle in the united states so it's not a function of should we do this we're about where we were when we were talking about reducing gas mileage on the automobile back in the early seventy's it wasn't a function of should we do it it was how do we do it and how quickly should we start it and how broadly can we can we apply this today the people who have taken advantage of that are really reaping the benefits so it's not a function today of should we do something like this as far as the architects are concerned we know we should be doing this we know that there's no reason why people should not be able to move into a home that has a thirty to forty percent energy advantage over a home that was built to  statement you said and i quote designing constructing energy efficient homes complete with energy efficient appliances as well as heating air conditioning lying systems will provide an immediate financial benefit to homeowners and renters to reduce utility costs if that's the case why do we need this bill at all why won't people just do it because there is a financial incentive to do so i think incentivizing people and you have to incentivize the builders this bill also address his new construction and it also addresses the homeowner who is investing there are people who are taking out second mortgages to make their homes more energy efficient i think the education and loving low and moderate income people know that this is something that should be done as well and then providing the opportunity for them to do california in two thousand and one we had big energy crisis people may remember and there are some of these incentive things put in which and allowed people to game the system and allowed people to get the incentive without actually doing what they were supposed to do and there was a lot of that that went on and it was and it was you know it ended up not being good for anybody but now if i can move to mr howard mr hicks and mr george and basically the same question taking aside some concerns that i have about the whole thing we're doing here in about whether we're taking our  referred to in this testimony congressman with respect to the answer process and those standards when they come out will be supported by the national association of homebuilders mr hicks and question in addition to those we also are working we promoted the lead for homes rating systems as a way to further drive leadership in the which i'm sorry lead for homes leadership in energy environmental design to further dr leadership in benefits  which is specifically designed for apartment housing high density apartment housing which has many of the components of lead in several of the reference centers referenced is it fair to say the three of you have three different standards that you support not much so this isn't about my district necessarily but it looked to be pretty clear that this efficiency occurs in urban areas and doesn't in rural areas where my neighbors are across the street in other people's neighbors or a mile down the road or in a different town twenty five miles down the road how do you do something like you're talking about to make it equitable for people who are not in high density living in high density areas if i'm not mistaken right now  approximately eighty two percent of the population does live in metropolitan location efficient areas another six point seven percent of rural americans do as well rural america a lot more dense actually than most people realize so the other half of that question has to do with the local amenities if what the charge shows is you get the location of the one or both two ways either because  mass transit or transportation choices because the stuff you do is close to you like a grocery store if you have lot woods when you have very low density and no amenities at all that you're traveled i mean it's going to be very high and too much of suburban america is like that and i think we need to start retrofitting it to provide better choice so i'm the balances would be extremely equitable it would count the savings that people are getting from making smarter choices and when they go to realtor dot com server or google dot com or zillow dot com right now unfairly you don't get the transportation costs in with the housing cost so they make a bad choice now they would know how to do it thanks i just want one more question before i perhaps mr howard mr george just kind of about what people are thing out there i was before i lost my mind i'm going to politics i was in the retail car business for twenty five years and there were times when people really interested in energy feel economy like now and there were times when a few years ago people didn't even look didn't care couldn't what is what is the the market what is the buyer what is the the the renter what is their concern and interest  in in this area in green houses or green energy efficiency i would say for the renting public that there's a tremendous and increasing interest in green technology and that buildings that have green housing right now the marketplace isn't as active as we'd like it to be but prior to the downturn it was a significantly growing element in the industry ok thank you very much thank you gentlemen yields back mr scott was going to be recognized for five minutes but it will now be your next mr scott is recognized five minutes  pass the impact of energy costs on low and moderate income as we mentioned before this is a very serious issue are you all see anything within what we're doing here that might have a a a negative effect on the low income and moderate income housing developers around the country in all housing types in rental in for sale and we have found a unconditional conclusion that the payback both in terms of utility savings for either the residents and for the operators of low income housing as well as an increase in health benefits outweigh definitively the initial investment that needs to go in which could have a between two and three percent asked a question about manufactured homes earlier and we have limited experience with that it was building the modular homes in pass christian mississippi after the storm and what we learned was that the technique of making the whole homes green is more about how to put the modular pieces together so that it's the caulking in the ceiling and the fresh air intake and the exhaust and the ventilation that would make the house clean is not the manufacturing altering the panels to make them green even though the the use of nontoxic pain and you know cabinetry and stuff all add to the health quality and we are not seeing a tremendous increase of costs that would be prohibitive to the manufacturers of this type of housing but it's the skill set and the knowledge with which you put them together well so you know and  in return the home buyers the homeowners that live in those homes are realizing tremendous utility savings and of much more healthier home how do you address the issue of the the two separate code that the manufactured home industry is concerned about in terms of feeling that this would be overly burdensome expensive and would drive many of these manufacturers out of the marketplace that is their concern do you see that i'm not an expert in the codes and i would defer them a soprano to address that but i can assure you that the initial concerns existed when congress was going to introduce a da code compliance for american disabilities act it would cost to retrofit but it's the right thing to do and in time we need to find out if this is a serious concern what i what i hear from those in the industry as that the actual complying with these two co they feel will mean less competition higher home prices for the moderate and low income persons and a feeling that it could drive them out of the market is that true in your opinion in my opinion no it's not true would be some additional cost i'd have to know what aspects of the codes giving the man your module manufacturers some concern typically a local building code in a state or a city is more restrictive than these national codes are you speaking up so most manufacturers are sometimes kept out of market places because of the local codes for instance or in the district of columbia we have a very strict local code that basically in addition or i should say amendments to national codes that are quite restrictive on manufacturers in many respects so i'd have to know what the specifics are and  congressman scott i lived in a manufactured home as an architect i lived in one that i designed for about eighteen years and some of them are not necessarily for just low and moderate income people and they have an opportunity to manufacturers really have the best opportunity to address this issue of green green home and green design i don't think we're that far away from having hybrid homes like we have hybrid cars and the manufacturing industry is probably the best way to address it congressman you asked about the impact on affordable housing and housing affordability and i would suggest to you sir that absent appropriations increase appropriations there could be a concern about the number of units that the federal government could subsidize if are increased cost per unit that only only makes sense likewise with respect to fannie and freddie if they're given credit for doing or cheating their affordable housing goals and it's fewer units because they get extra credit for for for doing a green housing then there was less incentive for them to do more affordable housing so it's sort of like you can accomplish what you want to accomplish but it's going to it could end up costing more appropriations and i think with the scarcity of a federal resources right now  committee needs to make decisions about balancing that do you think amending the charters of freddie and fannie mae to promote green building would distract them from their primary that could distract them as i say the bill the way the bill is written right now it gives them extra credit as i understand it you know cheating their affordable housing goals for doing green housing which would mean they would do potentially less of a smaller number of units of affordable housing so the answer is depending upon how it's done it could very easily and very well distract them yes or no thank you mr congressman i want to say that if if that charter amendment was defined to very clearly delineate of focus on making the house saying that they're ultimately purchasing the mortgages for more affordable for the borrower it would not only not be a distraction it would certainly be less of a distraction than having to deal with the foreclosure crisis right now the two are directly linked this is about performance the unsoundness not just mission and what the bill does is bring the two together quite nicely i'm unaware of any cap on the amount of affordable housing that fannie and freddie can be credited for there's minimum and what they can sell in the market determines how much they can do a total so if in fact you give them a focused that allows them to do more they're going to do more of it mr green from texas is now recognized for five minutes thank you  after hearing the testimony of the witnesses it seems to me that if we fail to act now at some point in the not too distant future when oil prices have escalated greatly somebody or somebody else someone some folk are going to say why did they knowing what they knew then fail to act when they could have it's fairly clear to me that we are in a position where we must act we are in a position where we made a will to act but we really must act this is bigger than just simply thinking of reducing the amount that people are paying for energy today it may very well mean that people will be able to afford to live in a home tomorrow we already have energy costs that exceed the cost of the mortgage payment and some places with some homes we absolutely have to reduce the cos that person's up paying to cool and heat their homes we really do and i i greatly appreciate the testimony from the witnesses today so let me ask this with reference to appraisals will the value of homes has increase once these energy conservation efforts have been perfected within the homes let's start with mr personnel how would this impact the appraisal process or they should increase that probably will make the home more desirable to the average buyer if it follows what is happen in the commercial building market commercial office building owners have built in green and environmentally sensitive efficiencies in office buildings and as a result have been able to become an higher risk and there are some corporations and and commercial enterprises that will insist on going into a building that has  that is sustainable and i would imagine that you would have home buyers with that same mindset and would this not cause other builders builders in the marketplace understanding that these homes are desirable to start to make the adjustments such that they will be able to market their products to the extent that they can compete with these products that we we have introduced into the marketplace i think you see it now and just about everything you see it in the foods in the way advertising for food is in our food that is organic clothing that we have organic fibers and fabrics you see that there is a premium that people are willing to pay in some cases and the manufacturers of these are taking advantage of it and same with home buyers i think that once you decide that energy efficiency is something that people want it is something that's going to be desirable it is going to drive demand and and it's sort of an ironic thing but as you move and demand to have more you finish energy efficient homes and cars and and just the lifestyle you drive demand for oil down and when is there anyone who is of the opinion that these institutions will have to enforce some sort of building code or building standard because it's my belief that the legislation won't require them to enforce but what they will do is accord loans to homes or person purchasers who have homes that come up to a certain standard they don't they don't get out into the marketplace and start the business of deciding that some homes must be brought up to standard those that are will benefit from what they do which is lend money and soundness if you think it will does anybody think that it will f h a guaranteeing a home that is energy efficient yes or it should reduce the risk it should reduce the risk and mortgages when my time is up as the chairman you have been most generous i do want to thank the witnesses again it seems to me that we have a choice of leading following getting out of the way of being overrun but my hope is that we will lead to on this issue thank you mr chairman thank you mr green and the gentleman from texas yells back the gentleman from new hampshire mr hodes is recognized for five minutes thank you mr chairman i want to thank the panel i appreciate the effort that you've made in your remarks and the work you have done all on the development of sustainable buildings as i see it we're at a watershed moment there is no going back i know that change is not easy as humans we have a chemical in our brain that wants to hang on to the status quo and you need to make a decision when new information comes in to move forward so anybody who's lived through the past three days in the past couple of summers knows where now at one hundred degrees up and down the eastern seaboard gas is skyrocketing past four dollars a gallon change is upon us and we must accept it adapt and innovate and i want to explore the ways in which this bill will help unleash the entrepreneurial spirit of this great country to do what we need to do to give us real security a thriving economy and jobs in a sustainable planet mr pradelle i just you know i've heard a lot from the other side of this bill does not have course address the production of energy it talks about energy conservation  why is energy conservation in buildings the low hanging fruit in terms of what we can do for our energy use in this country something that the everyday citizen can basically control to a large measure we can change the gas mileage in our cars as we drive them except that we can ease down on the seller rater and not travel at the posted speeds and maybe say five to ten percent of the gas mileage but we can go into our homes we can enter we make our homes more energy efficient and the point is that we use in the types the way we heat and cool our homes we can use and we can say forty fifty percent of energy in our homes without really going to active systems such as wind and solar which could take it down even further and most americans realize that they don't know how they can contribute and they don't know how they'll get a payback and they don't know exactly what that payback is because they're not quite educated they don't know if they can get a second mortgage just to do these kinds of things so i think this is a way that if it's if if the education is there in the awareness of this bill is made to the general public i think it has a tremendous potential for energy savings across the board in the united states because most people want to do something they want to do their fair share you see people now  basically looking to buy a hybrid automobile you look at people now they want to take their trash and they want to separate the bottles and the cans and they want to recycle and they don't have to you know have to be told to do this this is something that people want to do i  further discussion about some of your ideas i just want to clarify one thing as of today the national green building standard that you have been working hard on is not yet approved is that correct that's correct ok and you understand that we are putting in this bill the ability to secretary do include new standards as they come along yes or right talk to me about the benefits to the jobs that your members are so concerned with and the jobs in the economy that are going to flow from the benefits of this green act well where we see enhanced job growth mostly sort of would be in retrofitting existing housing in the remodeling sector which is a very important component particularly at a time when the new home construction sector tends is in a downward cycle remodeling sector tends to go up so it could be a very counter cyclical opportunity for builders and in that regard now i just generally like to ask the panel do you think the bill goes far enough in its current form in dealing with the issues of retrofitting  existing homes or do you see areas where we could do more to make sure that that market is addressed mr howard mr parnell anybody else on the panel i think it probably takes you out of the responsibility of this particular committee but tax incentives would be a go a long ways to ensure that people took advantage of this bill well we can't do that here but you can work with the folks who can you know we can mr howard i agree with mr pradelle right now the bill goes fairly far in terms of what the jurisdiction of the committee is mr bernstein there's one hundred twenty six million homes in america are adding one point eight million a year or so clearly the more we can do to strengthen the excellent point that was just  made better will be most people homes or most of the homes we're going to see in thirty years from now or are here already so if we don't make those energy efficient as possible we'll lose twice first on the energy efficiency of those homes and secondly we're going to induce more sprawl and you saw from my slides what the effect of that is so we have a we have an opportunity here by focusing on existing homes to strengthen at least two major cost saving centers and get the innovation utility subsidies a year and that's how it was mentioned about appropriations if you can save twenty five to forty percent of that utility allowance and put back just two to four percent in the increased cost to retrofit and buildings d we look forward to working with you on as we go forward to make this a better act and i will just remind you that some time ago a noted world leader said the only thing we have to fear is fear itself we cannot look  have to look forward on where we're going so i thank you i thank you mr chairman and i know i speak for the committee and for chairman frank for all of the time you all put in your statements and for your comments today chair notes that some members may have additional questions for you and they may submit these in writing and so without objection hearing record will remain open for thirty days for members to submit written questions to these witnesses and to place their responses in the record and with that this hearing is a i'd like to hear about how well you know