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H.R. 6078, THE GREEN RESOURCES 

FOR ENERGY EFFICIENT 

NEIGHBORHOODS ACT OF 2008 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 11, 2008 

Printed for the use of the Committee on Financial Services 

Serial No. 110–119 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

DON CAZAYOUX, Louisiana 

TRAVIS CHILDERS, Mississippi 

SPENCER BACHUS, Alabama 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

DEAN HELLER, Nevada 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

June 11, 2008 .................................................................................................... 1 

Appendix: 

June 11, 2008 .................................................................................................... 53 

WITNESSES 

WEDNESDAY, JUNE 11, 2008 

Bernstein, Scott, President, Center for Neighborhood Technology ..................... 39 

Freedberg, Michael, Co-Chair, HUD Energy Task Force, and Director, Division of Affordable Housing Research and Technology, Office of Policy Development and Research, U.S. Department of Housing and Urban Development ...................................................................................................................... 14 

George, Alan W., Executive Vice President and Chief Investment Officer, 

Equity Residential, on behalf of the National Multi Housing Council 

(NMHC) and the National Apartment Association (NAA) ............................... 37 

Hicks, Tom, Vice President, International Programs and Leadership in Energy and Environmental Design for Neighborhood Development, U.S. Green 

Building Council ................................................................................................... 35 

Howard, Jerry, Executive Vice President and Chief Executive Officer, National Association of Home Builders ................................................................... 33 

Koo, Doris W., President and Chief Executive Officer, Enterprise Community 

Partners ................................................................................................................ 30 

Lawler, Patrick J., Associate Director and Chief Economist, Office of Federal 

Housing Enterprise Oversight (OFHEO) ........................................................... 16 

Purnell, Marshall E., FAIA, President, American Institute of Architects .......... 31 

APPENDIX 

Prepared statements: 

Carson, Hon. Andre .......................................................................................... 54 

Putnam, Hon. Adam H. .................................................................................... 56 

Waters, Hon. Maxine ........................................................................................ 59 

Bernstein, Scott ................................................................................................ 62 

Freedberg, Michael ........................................................................................... 113 

George, Alan W. ................................................................................................ 131 

Hicks, Tom ........................................................................................................ 185 

Howard, Jerry ................................................................................................... 212 

Koo, Doris W. .................................................................................................... 230 

Lawler, Patrick J. ............................................................................................. 243 

Purnell, Marshall E. ......................................................................................... 248 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Frank, Hon. Barney: 

Written statement of Fannie Mae ................................................................... 258 

Written statement of Freddie Mac .................................................................. 262 

Written statement of Ward Hubbell, President, Green Building Initiative 272 

Letter to Chairman Frank and Ranking Member Bachus from the Manufactured Housing Institute ........................................................................... 285 

Letter to Chairman Frank and Ranking Member Bachus from the National American Indian Housing Council .................................................... 288 

Written statement of Stewards of Affordable Housing for the Future ........ 289 

Page

IV 

Perlmutter, Hon. Ed: 

Letter from various organizations in support of H.R. 6078 .......................... 295 

(1) 

H.R. 6078, THE GREEN RESOURCES 

FOR ENERGY EFFICIENT 

NEIGHBORHOODS ACT OF 2008 

Wednesday, June 11, 2008 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10 a.m., in room 2128, 

Rayburn House Office Building, Hon. Barney Frank [chairman of 

the committee] presiding. 

Members present: Representatives Frank, Waters, Sherman, 

Hinojosa, Baca, Scott, Green, Cleaver, Hodes, Klein, Wilson, 

Perlmutter, Carson, Speier, Cazayoux, Childers; Bachus, Biggert, 

Shays, Capito, Brown-Waite, Barrett, Campbell, Roskam, and Heller. 

The CHAIRMAN. The hearing will come to order. 

This is a very important initiative. Obviously, there is a great 

deal of concern in the country about energy efficiency. Much of the 

discussion has focused on the prospects of conservation. Obviously, 

we’re talking about energy both from the standpoint of additional 

sources and also efficiency. 

Much of the discussion about conservation increased efficiency 

has focused on transportation where there currently 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. Earlier last year when 

we were debating the regulation changes and the Government 

Sponsored Enterprises, specifically Fannie Mae and Freddie Mac, 

some members came up with the notion of incentivizing them further to incentivize people in turn to do more energy efficiency. 

We also heard from our colleague who is the chair of the Appropriations Subcommittee that covers HUD, Mr. Oliver, my Massachusetts colleague, about his concern about energy efficiency and 

HOPE VI. We then, among ourselves, decided that it really made 

sense to do this in a comprehensive way. I am particularly pleased 

that some of the freshmen members of this committee took the initiative in putting this together, and we will hear from them later. 

Our colleague from Colorado, Mr. Perlmutter, has been a lead in 

this, and other freshmen have joined in, as well. What we want to 

do is to go forward with legislation that maximizes our ability to 

improve energy efficiency. Now, this divides. 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 some mandating. 

2 

There are mandates in this bill, but they are mandates that relate to what we, the Federal Government, as the builder and as the 

entity that has ongoing financial responsibilities does. With regard 

to the private sector, mandates become less clearly justified. Some 

argue for them, and some argue 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 can say that without an ego, because I was not involved 

in the drafting. The task force, Mr. Perlmutter, Mr. Hodes, and 

others were, and they have done an excellent job. It is late in the 

year, so there appears to be little likelihood that 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 of months, so this 

could pass the House to put us in a position where come next year, 

we would be ready to move fairly quickly on it. Because from the 

standpoint of energy efficiency, a great deal can be accomplished 

with regard to the way in which people live. And, so, I regard this 

as a very important initiative from this committee. 

I should say that some areas in the housing field become somewhat partisan, which to me is not a bad thing. I think partisanship 

is an essential part of democracy in fact as well. This is one where 

I think we have a chance for a great deal of bipartisan cooperation. 

I think this is a goal and a deficiency that’s broadly shared. 

That doesn’t mean everybody will agree with all of the specifics, 

but I think this is a very hopeful initiative by this committee to 

make a contribution to resolving a great national problem. 

And with that, I will now recognize for 5 minutes the ranking 

member. 

Mr. BACHUS. I thank the chairman for holding this hearing and 

I think energy efficiency is very important, something we should be 

talking about in our Federal housing programs. 

I commend the gentleman from Colorado, Mr. Perlmutter, for his 

participation, but as we examine this legislation, we have to remember that energy efficient buildings and houses are just part of 

the challenge that we are facing of very high energy costs and what 

those challenges do to the American consumer and businesses. Gasoline prices are soaring past $4 a gallon and the burden of 

these unprecedented costs is falling hardest on the low- and moderate-income families who have no alternative to escape the economic impact of policies over which they have no control. 

For example, in Bibb County, in my district, the average per cap- ita income is $16,217; that is $312 a week. Some 59 percent, 58.8 

percent of my constituents in that county commute to another 

county for their work. They drive to their job in another county. Here is a recent gas receipt from my district: $89 to fill up their 

tank. Now, this is a citizen. The average citizen in this county 

makes $312 a week. That’s what they are facing. They are spending $89 every few days just to get to work. That doesn’t leave much 

to take care of other needs of the family. 

People are struggling to put food on the table, and this is the 

problem with getting fuel efficiency and our homes. People strugVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
3 

gling 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 meet 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 had any of my constituents tell me to make their 

houses green, but I have had plenty of them tell me to do anything 

I can to bring gas prices down. The United States imports 60 percent of its oil. That’s a dangerous level, but solutions are available. 

Broader exploration of domestic resources is one. 

We import 20 million barrels of oil a day. We take 9 million of 

those and refine it into gasoline. We could increase that by a million, which is over 10 percent, a million a day, just by drilling in 

a small portion of ANWR, developing alternative fuels, and increasing use of nuclear power, and that is a slam dunk. 

I remember being on the Floor 12 years ago debating the need 

to build nuclear power plants and people responded by saying it 

will take 10 years. We could have had them 2 years ago. Today 

they’re saying that it will take 10 years. We have to start now. 

China—it was in the paper today—has 32 nuclear power plants 

under contract, large ones, in China. 

I was just in Abu Dhabi last week. Now, they’re one of the richest countries in the United Arab Emirates and export all kind of 

oil to us. They’re building two nuclear power plants so they can sell 

us more oil, but we, who have an energy shortage, aren’t building 

nuclear power plants. 

We have to address this problem, and let me stop by saying this, 

Mr. Chairman. I’ll end with this. Rising fuel costs, gasoline costs, 

are going to sink our economy and they’re doing it as we speak. 

That is the reason why I have signed a discharge petition this 

week to bring the ‘‘No More Excuses Energy Act’’ to the Floor for 

an immediate vote. 

If not this bill, it needs to be another one authorizing us to drill 

immediately, to develop nuclear power plants, to put them on the 

fast track, and to develop alternative fuels such as solar, wind, and 

coal. That’s why I’m urging 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 winter. 

In 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 Mr. Perlmutter’s legislation. 

Thank you. 

The CHAIRMAN. I want to recognize Mr. Perlmutter for 6 minutes, and I ask him to yield me 1 minute, if he would, because I 

just want to apologize. 

When I’m wrong, I do admit it. I had said that I thought this 

could be a bipartisan subject. Apparently, I was wrong. I’m sorry 

that the ranking member finds himself on a committee with no jurisdiction over anything he just talked about, and I’m sorry that 

this apparently is going to lead to no serious discussion from some 

people about the important subject under consideration today. 

4 

I guess we have an immediate problem, but we have an immediate problem in part because we haven’t been thoughtful in the 

past. And the notion that you don’t pay a lot of attention to longer 

range thinking seems to me to be a mistake. So, obviously, members have the right to use this hearing for whatever purpose they 

want. 

Mr. BACHUS. Mr. Chairman? 

The CHAIRMAN. No. I will not yield to the gentleman. 

Mr. BACHUS. I want to associate myself with your remarks. 

We do need a bipartisan solution; energy efficiency is important. 

The CHAIRMAN. I will take back my time. I’m sorry. The gentleman had his time, and he chose not to talk about that. Well, 

things are what they are. 

If members want to make this a partisan debate about issues not 

before this committee’s jurisdiction, they are fully entitled to do so. 

I was hoping we could have a focused discussion on the merits 

of this bill with its long-range advantages. If we have to have that 

only on one side, that’s what we’ll have. 

I thank the gentleman from Colorado, and I recognize him for 

the remainder of his 6 minutes. 

Mr. PERLMUTTER. Thank you, Mr. Chairman, and I want to 

thank you for the opportunity to talk about energy efficiency in 

housing and in commercial buildings. 

I think what we’re going to find today, and in response to the 

ranking member’s comments really, you know, by jurisdiction, 

we’re limited to certain things we can do within this committee. 

And one of the things that we’re trying to do through this bill is 

to reduce housing costs 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. 

I think you’re going to hear testimony from HUD and a number 

of the other witnesses today that are going to talk about the fact 

that 40 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 

own or subsidize in some fashion or another. 

The largest single housing cost for HUD is its utility cost at 

about $4.6 billion. And so to the degree we can get HUD and others 

to make their units or homes more efficient, we are going to save 

dramatically on energy costs. I think the testimony today will be 

that between 2000 and 2007, energy costs across the country have 

gone up about 30 percent, so I appreciate the ranking member’s 

comments about gasoline prices. 

We are not on the Energy and Commerce Committee. We are not 

on the Science Committee, but we are on the Financial Services 

Committee where we do have jurisdiction over homes, buildings, 

real estate and banking, and mortgages, where we can do our part 

to try to reduce energy costs for the people who 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, from both sides of 

the aisle, to serve on an energy efficiency task force. We did all 

serve on this bipartisan committee and we did all get along. And 

Representatives had comments pro and con about this particular 

legislation. 

5 

Now, the first thing I would 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. Among those signing this letter are the Alliance for Community Trees, the American Institute of Architects, the Bank of 

America, the Center for American Progress, the Center for Neighborhood Technology, the Energy Programs Consortium, Enterprise 

Community Partners, the Federation of American Scientists, the 

Green Building Institute, the Local Initiative Support Corporation, 

the Louisiana Pacific Corporation, the National American Indian 

Housing Council, and Stewards of Affordable Housing for the Future. 

The CHAIRMAN. Without objection, that will be made a part of 

the record. 

Mr. PERLMUTTER. 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, the EPA, HUD, 

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 building stock to energy efficient standards. 

I think we also have, as you said, mandates to the Federal Government to upgrade 50,000 of those three million units to use as 

a control group to show that utility costs really do go down. I think 

it is common sense that we’re going to see that they go down, but 

I think HUD will say that they have 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 is something that was started back in the 1970’s, but 

then sort of petered out. We have for the ranking members concerned incentives for location efficient mortgages so that if somebody were to live near a transit line, near a bus line, near their 

work, they will have benefits from that, that when somebody 

makes a loan, a location efficient mortgage, we think we will show 

that it’s a less risky loan; and, as a consequence, that person 

should get a lower mortgage rate. 

It would be the 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 yield back, and I look forward 

to the testimony. 

The CHAIRMAN. The gentlewoman from Illinois is recognized for 

3 minutes. 

No. I’m sorry. The gentlewoman from West Virginia is first on 

the list I was given; I guess it’s her subcommittee. So the gentlewoman from West Virginia is recognized first for 3 minutes. 

Mrs. CAPITO. Thank you, Mr. Chairman, and I would like to 

thank the witnesses for coming before us today and I would like 

to thank my colleague, Mr. Perlmutter, for putting forth this piece 

of legislation. He and I have had numerous discussions in an atVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
6 

tempt 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, initially, 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 flexibility issues in this bill. I 

think that innovation is occurring as we speak on this topic. What 

we thought was energy efficient or green building 15 years ago, or 

maybe even 5 years ago, has been far surpassed by what we see 

now in front of us. And I have a concern that we may be losing 

some of the efficiency by putting in stringent mandates and stringent requirements and losing some of the flexibility that comes 

about with innovation and creativity in terms of the legislation. 

The other area of concern I have is the Freddie Mac and Fannie 

Mae 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 and age 

when we now we have some uncertainty with our mortgage financing in the direction that we want to go. 

We are still trying to work through a consensus bill on FHA and 

all those things, so I think this is an area where I would tread 

lightly, and I would like to see, before we put mandatory requirements onto Fannie and Freddie, that we make sure that they are 

in the safest and soundest position to take on another mandate. 

Again, we’re talking about energy efficiency. And I do think, even 

though we are talking about energy efficiency in our own homes, 

we are 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 or trying to fill up 

your tractor on the farm. The high price of gas is something that 

we can think about every day. And I think we should think about 

this because the cost of heating oil and heating a home, whether 

it’s energy efficient or green built, is something that I think is 

going to impact particularly those in the lower- and mid-lower-income areas as it will impact all of us. 

So, again, I would like to thank Mr. Perlmutter. I would like to 

thank the chairman for this hearing, and I look forward to the testimony of the witnesses. 

Thank you. 

The CHAIRMAN. The gentleman from New Hampshire, Mr. Hodes, 

a very active member of the task force, is recognized for 3 minutes. 

Mr. HODES. Thank you, Mr. Chairman. 

Thank you for empaneling the energy task force and having me 

serve on it. And I want to thank my colleague, Ed Perlmutter, 

whose leadership I admire. It has been a terrific experience to work 

with Mr. Perlmutter on this bill, which has 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 21st Century and the future of this 

country and of the world than America’s leadership in dealing with 

energy efficiency, renewable and alternative energy, and sustainable building. 

7 

The Green Act is a comprehensive approach to energy efficiency 

that will encourage American businesses and American families to 

be part of the 21st 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 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 vital challenge for our 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 will 

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. 

Perlmutter and I are resolutely not doctrinaire in our approach to 

this bill. We want to make sure that we produce legislation that 

is practical and effective. 

Thank you very much. 

The CHAIRMAN. The gentlewoman from Illinois, Ms. Biggert, is 

recognized for 3 minutes. 

Mrs. BIGGERT. I’m sorry. Did you say 2 minutes? 

The CHAIRMAN. Three minutes. 

Mrs. BIGGERT. Three minutes. I would 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 green building technology. 

So to further advance this cause, I have partnered with my colleague from Missouri, Congressman Carnahan, to establish a highperformance buildings caucus. And many of the outside groups that 

are testifying today, and were involved in crafting H.R. 6078, are 

members of the coalition that supports our caucus. 

At the start of this Congress, I introduced H.R. 84, the Energy 

Efficient Buildings Act of 2007, legislation designed to offset the 

cost of designing green buildings. So I certainly understand and appreciate the importance of promoting green construction and energy efficient buildings, but when Americans are facing a crisis in 

the mortgage market and 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 

8 

considerably more, which means our Federal dollars may not go as 

far. I think that this is a good starting point to discuss the best 

ways to promote energy efficient buildings. 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 overarching goal of Federal housing programs, which is to facilitate affordable housing for American families. 

I have a couple of questions about the bill that I hope our witnesses will address. First, I would like to better understand the 

rating system prescribed for Federal housing programs in the bill 

and how it measures up against other green building standards. 

Second, I am concerned about the limited number of green building raters around the country. There may not be enough of them 

to meet the demand created by the bill; I believe that one State 

that mandated green assessments had to repeal this requirement 

because of a lack of qualified energy efficient raters. 

And, third, I would like to better understand how a green building would reduce the risk of a mortgage borrower and 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 borrower and don’t jeopardize the 

financial stability of Federal housing programs. 

Finally, it’s such a time of volatility in the housing market, it 

may be inappropriate to require FHA programs and GSEs, Fannie 

Mae and Freddie Mac, to focus significant resources on green mortgages ahead of all other mortgages. So I look forward to today’s testimony on these issues and I yield back the balance of my time. 

The CHAIRMAN. I want to thank the gentlewoman, in particular, 

not just for the comments in raising precisely the kind of questions 

that we have to address, but for mentioning the work of the 

Science Committee. 

I think one of the besetting sins of this institution has been excessive concern over turf and jurisdiction. We have tried very hard 

to work cooperatively with other committees, and I am glad that 

she is on both committees and will help us promote that. 

We will look forward to working with the Science Committee, so 

we can have a joint effort here. That is the appropriate response. 

So I appreciate that, and we will draw on the gentlewoman’s joint 

membership as one of the things that will help us facilitate a cooperative result. 

I neglected to do something earlier, so let me just take a minute 

now. This committee has benefitted on our side from a number of 

new members joining the House and coming to this committee. I 

have not taken the chance yet to formally introduce them, so I will 

do that now. Actually, we have freshman Members of this committee with five members junior to them. There are people climbing 

up the aisles here. 

Our colleague from California, Jackie Speier; our colleague from 

Louisiana, Don Cazayoux; and our colleague from Mississippi, 

Travis Childers, have all joined us. I want to welcome them to the 

committee. 

I also just want to ask unanimous consent to put some statements into the record. First, the gentlewoman from California, the 

9 

chair of the Housing Subcommittee, had another meeting to go to, 

and she has a statement for the record. We also have statements 

from: Fannie Mae; Freddie Mac; the Stewards of Affordable Housing for the Future; the Manufactured Housing Institute; the National American Indian Housing Council; and the Green Building 

Initiative, all of which I ask to be submitted for the record, and 

without objection, they will be. 

The gentleman from California, Mr. Sherman, is now recognized 

for 3 minutes. 

Mr. SHERMAN. Thank you. 

For a rare time in history, energy is the number one economic 

issue, the number one national 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 in effect on the economy, especially because energy is 

highly elastic as to price. That is to say if we can reduce demand 

nationwide by 5 or 10 percent, we can reduce price by far more 

than that. 

Now, our ability to reduce world price for oil may not achieve 

that goal, but there is a domestic 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 national standards. There are voluntary 

standards that the home builders subscribe to, etc., and I haven’t 

picked my favorite shade of green. Those on the task force may 

have a better palate, but I do know one thing, and that is, whatever we do here should provide electric outlets that will allow for 

the recharging of plug-in vehicles. And whether that has to be 220- 

volt or regular voltage, I 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 electrics are our future, but I do know that 

it’s a lot cheaper to put the plug in when you build the house than 

it is to go try to put it in later. 

And, finally, Mr. Hodes, I look forward to appropriating and 

using without your permission your colorful line about green being 

the new ‘‘red, white, and blue.’’ 

I yield back. 

The CHAIRMAN. I now recognize the gentlewoman from Florida 

for 2 minutes, from the list given to me by the leadership. 

Ms. BROWN-WAITE. I thank the 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 sky-rocket gas and 

food prices, mortgage ARM recess, and in Florida significant property insurance and tax increases. Now, I’m not blaming those tax 

increases on Congress, but, you know, individual States have individual problems. And all of this is happening while homes actually 

are losing value. 

10 

We have demanded that Fannie Mae and Freddie Mac come to 

the aid of our housing market by taking on more risk with higher 

conforming loan limits in expanding their affordable housing goals. 

And Congress is passing bills that dramatically expand FHA’s role 

in stabilizing the housing market. Now we’re going to demand that 

homes be built to lofty, somewhat unproven, and perhaps overly 

ambitious environmental standards. 

You know, it’s almost like we are putting passengers back on the 

sinking Titanic. So why would we put these additional regulatory 

weights on a housing market that is still teetering on a very tight 

rope? This bill requires Fannie and Freddie to purchase 5 percent 

of energy efficient mortgages and location efficient mortgages with 

the intent to go as high as 25 percent. 

By requiring this, we may be diverting very important resources 

from Fannie’s and Freddie’s primary goal of purchasing affordable 

housing loans. As anyone can see, this could have a drastic and 

negative affect on our current housing woes. 

Additionally, the Green Act requires appraisers to consider renewable energy sources, energy efficiency or energy improvements 

in homes. This would be all at the same time that we’re paying 

over $4 a gallon for gas, and it is anticipated to go to $5 a gallon. 

And this has 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 

healthcare plans. They’re taking it wherever they can find it to 

make ends meet today. As home values continue to fall into a black 

hole, we’re asking Americans to spend more on them. 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 it is doing to oil 

prices worldwide. 

Thank you, Mr. Chairman, and I yield back the balance of my 

time. 

The CHAIRMAN. The gentleman from Georgia is recognized for 3 

minutes. 

Mr. SCOTT. Thank you very much, Mr. Chairman. 

I, too, want to join with you in welcoming our new members to 

this committee. This is in my opinion the most influential key committee dealing with the infrastructure of our economy, so this is 

very timely. I do have a few concerns about the bill. 

First, let me commend my distinguished colleague from Colorado, 

Mr. Perlmutter, because I believe there are some very, very important reasons why we need to move forward with the bill; however, 

I do have some concerns. My first concern is the impact on lowand moderate-income individuals. We have to move with caution as 

we put forward these new energy requirements, because energy 

bills fall disproportionately on the poor and those with moderate 

income. 

We have to make sure that in this energy bill, the policies will 

not fall disproportionately and impose additional costs on low-income people as we put these requirements in place. So we need to 

examine that. I also have some concerns about manufactured housVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
11 

ing. 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. 

My key concern is that in the bill apparently, and I could stand 

to be corrected, but it requires that manufactured homes have to 

comply with two separate building codes. That could prove overly 

burdensome and expensive and could very well drive manufacturers from the marketplace, 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 have to go look out and 

make sure that we are not hurting the low- and moderate-income 

people in terms of the energy policies in the bill and in terms of 

the stresses being placed with this double standard on 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 NFPA 501 for additional credit. Now, this lighter standard is not even used to construct manufactured homes and does not 

provide green building guidance. 

Finally, I think we have to look 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, as you know, I certainly commend my good colleague, but 

those are three very important concerns that we want to make sure 

we address and make sure we’re not putting that burden on the 

lower-income people; that we’re not driving manufactured housing 

out of the marketplace with this bill, and that we’re sensitive to 

putting additional stresses on Fannie Mae and Freddie Mac that 

would take their mind and their attention away from their primary 

goal of putting liquidity into the market. 

I yield back. 

The CHAIRMAN. We have only three more speakers, working on 

the list given by both sides. 

The gentleman from California, Mr. Campbell, is now recognized 

for 2 minutes. 

Mr. CAMPBELL. Thank you, Mr. Chairman. 

I am going to add to the chorus of concerns about this bill and 

I will just try to discuss 5 of them in the 2 minutes here. First is 

the effect on the market, which has been described that 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 and provide stable mortgages. 

We don’t want to take our eye off the ball on those primary missions. 

Second, we don’t want the bill to be overly prescriptive. We have 

all seen the situation where someone comes into our office and 

says, ‘‘Oh, I have the greatest energy efficiency product. There it 

is. Please mandate it.’’ Because there is nothing better for businesses’ margins than to have the government mandate the purchase of their product. So we don’t want to be doing that. 

12 

Third, it 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 either required or mandatory, and that is too much. 

Fourth, we all in 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 we have to be careful not to set Federal 

standards to 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. I have a concern about 

that. 

And them my fifth concern, and the chairman is correct, my fifth 

concern is not in the jurisdiction of this committee, but there is a 

point here that we can do all this that we want, but 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 

power. 

I yield back. 

The CHAIRMAN. The final speaker on that side is the gentleman 

from Texas for 2 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

I greatly appreciate you holding this hearing and I will yield to 

Mr. Perlmutter. 

Mr. PERLMUTTER. Thank you, Mr. Green. 

Just a couple of things. 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 have set two in 

the bill, but it is 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 2006. So if those are met, it triggered and Fannie Mae 

buys a mortgage from a house that meets those standards, Fannie 

Mae gets a credit towards its affordable housing goal. 

So let’s say Fannie Mae buys $800 billion worth of mortgages in 

the secondary market each year. Their affordable housing goal is 

50 percent of that, so $400 billion of Fannie Mae’s mortgages 

should be in affordable housing, zero to $420,000. 

If every one of those were green and affordable, Fannie Mae will 

have met its goal at $300 billion. Now, 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- to moderate-income levels, number one. 

Number two, with respect to, pardon me, 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 certainly as Paul Hodes said, available and amenable to working this out, so that it works to move this country towards energy 

efficiency in an affordable and healthful way. 

13 

And I think the testimony today is going to tell you that this bill 

generally does it. It’s not perfect, and we will fix it. 

The CHAIRMAN. The gentleman from Illinois for 2 minutes, Mr. 

Roskam. 

Mr. ROSKAM. Thank you, Mr. Chairman. 

I found these opening statements actually to 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-Waite, about increasing mandates at a time of uncertainty. 

Mrs. Biggert mentioned the seeming disconnect between the 

mortgage insurance provision of the bill that is unrelated to stability in the financial element of it. And I also sensed Mr. 

Perlmutter is open and has really sensed a willingness to listen, 

and so forth. You know, I am always nervous when I hear someone 

say there are no mandates ‘‘except,’’ and that is what the sponsor 

said a minute ago. I know that that we will be given 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 are no mandates, 

and I think we need to be very careful in how we characterize 

things. 

I come from the Midwest, and I wasn’t here for the original 

drama of the opening statements between the chairman and the 

ranking member, but I sense a little bit of aggravation on the part 

of the chairman of other jurisdictional issues coming into this committee, but they’re sincere in the fact that my district, Mrs. 

Biggert’s district, and other districts in the Chicago area have some 

of the 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 was trying to do is to cast a 

longer vision. We will have the conversation about whether 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 that I have not heard from the majority so 

far. 

I yield back. 

The CHAIRMAN. The gentleman from Texas has asked unanimous 

consent to speak for 30 seconds, Mr. Hinojosa, without objection. 

Mr. HINOJOSA. Thank you very much, Mr. Chairman. 

I have 44 students in the Rayburn cafeteria from my congressional district, and I told them to please wait. 

The CHAIRMAN. Are you buying? 

[Laughter] 

Mr. HINOJOSA. I wish they could all vote! 

The CHAIRMAN. Then you better not buy. 

[Laughter] 

Mr. HINOJOSA. But I wanted to simply commend Congressman 

Perlmutter for introducing H.R. 6078, and know that I strongly 

support your effort. 

I also want to say that I thank the chairman for calling this 

hearing. I like all the people on Panel One, and I look forward to 

their presentation, but I especially wanted to recognize Marshall 

Purnell of the American Institute of Architects, because I want to 

14 

hear what he has to say about environmental design of homes. And 

I also look forward to Jerry Howard, president of the National Association of Home Builders, to tell us if it is feasible to do what the 

architects are recommending. 

With that, Mr. Chairman, I yield back. 

The CHAIRMAN. I thank the gentleman and we will now proceed 

to the witnesses. 

Our first witness is Mr. Michael Freedberg, the Co-Chair of the 

HUD Energy Task Force and the Director of the Division of Affordable Housing Research and Technology at the Department of Housing and Urban Development. 

All witnesses’ written statements and any other material will be 

made a part of the record. 

Mr. Freedberg. 

STATEMENT OF MICHAEL FREEDBERG, CO-CHAIR, HUD ENERGY TASK FORCE, AND DIRECTOR, DIVISION OF AFFORDABLE HOUSING RESEARCH AND TECHNOLOGY, OFFICE OF 

POLICY DEVELOPMENT AND RESEARCH, U.S. DEPARTMENT 

OF HOUSING AND URBAN DEVELOPMENT 

Mr. FREEDBERG. Thank you, Mr. Chairman, Congressman 

Perlmutter, and other members of the committee. 

I do appreciate this opportunity to appear before you today on 

behalf of our new Secretary. This is an important hearing on an 

important issue. In my capacity as Co-Chair of HUD’s Energy Task 

Force, I have had the opportunity to work with every program office at HUD on this topic. And before coming to HUD, I had extensive 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 investments can be very rapid. 

Over the past few years, HUD has initiated a comprehensive, Department-wide effort to address the key role that energy plays in 

housing affordability. We also have begin an active partnership 

with the Department of Transportation to expand affordable housing opportunities near transit, which will in part address the rising 

cost of gasoline that some of the members have already addressed. 

We have made some modest progress in this area and are beginning to build a broader, affordable, green agenda as well. And there 

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 in public and assisted housing; the 

disproportionate burden of rising energy costs on low- and moderate-income families, as Mr. Scott alluded to; the impact of energy 

costs on HUD’s own budget; and new opportunities for increasing 

energy efficiency in public housing through asset management. 

Let me touch on those briefly. As has already been alluded to, 

according to the Energy Information Administration, from 2001 to 

2007, the cost of home heating nearly doubled or more than doubled in many parts of the country. With oil at more than $130 a 

barrel, these costs have obviously continued to rise, especially for 

home heating oil uses in the northeast. Combined with the $4 gasoVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
15 

line 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 65 percent of 

public housing units were built prior to 1970, and the majority of 

those are in climate zones two and five, which are some of the colder and hottest areas of the country. The assisted housing stock is 

also older, built at a 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 is a proportion of income 4 times grater than for other American households. And, of course, it has already been alluded to that 

HUD’s own budget is directly impacted by utility costs. 

HUD spends more than $4 billion on energy-related utilities and 

direct operating grants to PHAs and through Section 8, both 

project and tenant-based utility allowances. Housing authorities report utility expenditures of $1.7 billion, fully 22 percent of operating costs. And we also spend an additional $3.2 billion in utility 

allowances for Section 8, tenant-based vouchers and project-based 

Section 8 assistance. These are significantly high numbers and 

they are on the increase, unfortunately. 

In the policy and regulatory environment, the Energy Independence Act of 2007 requires us to raise the standard for certain public-assisted or insured properties to meet or exceed the 2000 IECC, 

and we will be initiating rulemaking on that front very shortly. 

In August 2006, Mr. Chairman, we submitted a 25-point energy 

action plan to Congress. The Act requires us to provide Congress 

with a 2-year update on our progress, and we will be submitting 

that report to Congress in August of this year, and we will provide 

you a lot more detail on how much progress we are making. 

Our goal is to provide information incentives and technical assistance to HUD’s 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 standard in the market place and there 

is an excellent infrastructure to support through the EPA and 

DOE. 

Our written testimony goes into some details on some of these 

issues and some of the actions. 

Mr. Chairman, we would be happy to provide you more detailed 

comments on the bill itself once we have had a chance to review 

it, but in the meantime, I am 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 bill. 

[The prepared statement of Mr. Freedberg can be found on page 

113 of the appendix.] 

The CHAIRMAN. Our next witness is Patrick Lawler, the Chief 

Economist and Associate Director of the Office of Policy Analysis 

and Research at the Office of Federal Housing Enterprise Oversight. 

Mr. Lawler? 

16 

STATEMENT OF PATRICK J. LAWLER, ASSOCIATE DIRECTOR 

AND CHIEF ECONOMIST, OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT (OFHEO) 

Mr. LAWLER. Chairman Frank, Ranking Member Bachus, Congressman Perlmutter, and other members of the committee, thank 

you for the opportunity to testify on the Green Act of 2008. 

I am the Chief Economist to the Office of Federal Housing Enterprise Oversight, the Safety and Soundness Supervisor for Fannie 

Mae and Freddie Mac. OFHEO supports the broad goal of enhancing energy efficiency in American homes, but we have some reservations about diverting the Enterprises’ 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 has 

long been a national priority and many opportunities for energy 

savings in housing exist. Recent increases in the price of oil are 

strong reminders of the desirability of conserving energy and reducing dependence on fossil fuels. 

Both Fannie Mae and Freddie Mac have had energy efficient 

mortgage programs for a number of years. These programs expand 

their underwriting standards in two ways. First, energy improvements being made to a property when a loan was 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 the improvements are complete. 

Second, the reduced energy cost associated with documented energy-saving features of a house may be taken into account in assessing a borrower’s ability to pay by adding the anticipated 

monthly savings to the borrower’s income for the purpose of determining debt to income ratios. 

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 Enterprises’ 

efforts by using both incentives and requirements associated with 

the housing goals currently administered by HUD. Section 4 of the 

Green Act would provide extra credit toward any goal for which a 

loan was otherwise qualified if the property of the loan finances 

meets energy efficiency standards. Because the legislation specifies 

that the availability of this credit cannot be used by the regulator 

to increase the goal, the purchase of additional energy efficient 

loans would mean easier to meet standards for affordable housing 

loans. 

Section 6 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 considering the adequacy of 

a borrower’s income. And location efficient means loans underwritten by augmenting borrower income to account for decreased 

transportation costs associated with a property. In both cases, a 

broad range of loans could be included. Designing definitions that 

17 

provide attractive incentives to qualify, while also providing meaningful energy savings, could prove difficult. 

A third section directly affecting the enterprise is Section 5. It 

would expand the enterprises’ purchase and guarantee authorities 

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 80 percent of property value that are not covered by mortgage 

insurance or other credit enhancements. Such authority would create considerable safety and soundness concern. 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 than is currently permitted. 

The size of the loss 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 the risk-taking authority at this time. However, as Director 

Lockhart has said many times, these turbulent mortgage markets 

highlight the critical need for GSE reform legislation, such as that 

passed by the House and the Senate Banking Committee, with 

strong bipartisan support. Both bills would combine OFHEO with 

the Federal Housing Finance Board to create a new, stronger regulator to oversee Fannie Mae, Freddie Mac, and the 12 Federal 

Home Loan Banks. This new regulator would be funded entirely by 

these entities, separate from the annual appropriations process, be 

given the authorities that new capital standards for the entities it 

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 in one agency the safety and soundness and mission oversight that are now divided between OFHEO and HUD. 

OFHEO greatly appreciates the strong, sustained support for 

this legislation shown by Chairman Frank and the members of this 

committee. 

Thank you. 

[The prepared statement of Mr. Lawler can be found on page 243 

of the appendix.] 

The CHAIRMAN. Thank you. 

I’m going to begin the questioning with the main author of the 

bill, the gentleman from Colorado. 

Mr. PERLMUTTER. Thank you, Mr. Chairman. 

I would like to first direct my questions to Mr. Freedberg. One 

of the things that we have been talking about is standards, and 

there are certain standards for new homes that would be considered green, which would trigger the incentive to Fannie Mae. And 

within the bill, the HUD Secretary has a right to establish the 

standards every 6 months or so. But we have set forth two of them: 

One is an IECC standard, International Energy Conservation Code; 

and the other is ASHEAE, which is the American Society of Heating Engineers, Air Conditioning, and something else; I apologize to 

the ASHEAE people. 

What is your opinion of including those standards in this bill? 

18 

Mr. FREEDBERG. Congressman, I’m not going to take a position 

on the specifics of the bill, but I can give you some idea of what 

we’re doing now and how— 

The CHAIRMAN. In fairness to HUD, I appreciate their coming to 

testify. You know, we did get this and the other thing, so I think 

it’s entirely appropriate to get these general comments. As we go 

forward, we’ll be looking for HUD to be more specific, but at this 

point I just want to be clear; we’re perfectly happy with that level 

of comment. And so go ahead. 

Mr. FREEDBERG. Well, thank you, Mr. Chairman. 

We are following the direction of Congress under the Energy Act 

of 2007 to develop a rule that would set the standard at the IECC 

2006 level, either meet or exceed that. And there is a rulemaking 

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 grant awards, and so forth, that has set the standard at Energy Star for new homes, which is 15 percent over the 2004 IECC. 

I believe that is also higher than the energy code of 2006. 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 Star 

standard, which is 15 percent over the 2004 IECC standard, is 

typically about maybe $1,000 over and above standard construction, if that—it can be lower; and that those are very cost-effective 

from the point of view of energy savings. They’re very fast paybacks. 

So we have been comfortable, at least as a voluntary standard 

setting the Energy Star label, which is probably above the IECC 

label. And we have not taken a position on whether that would be 

a mandatory standard. 

Mr. PERLMUTTER. Right. Well, given your experience at HUD and 

in your prior experience, you heard Mr. Scott’s questions about not 

wanting to harm low- to moderate-income families with respect to 

making homes or HUD units, or whatever, energy efficient. In your 

experience, do the people who own these homes or reside in these 

apartments, does it benefit them if the homes are energy efficient, 

or not? And I’m sure my question sort of answers it, but please expand on that. 

Mr. FREEDBERG. Well, I think you—and as my comments indicated in my opening remarks, we’re dealing with older housing 

stock that is generally quite inefficient relative to the new stock 

that is coming on line. And there’s no question that we need to do 

more to upgrade those units from an energy efficiency point of 

view. 

All of their reports that we’re getting—I have an example of just 

a retrofit that was done in a 34-unit multi-family building in California, for example. The cost of the rehab was $643,000, according 

to this project; the green premium was about $100,000, which 

would be typically higher. But the annual savings were about 

$11,375 in that case, so a very good payback. 

But I do think that if HUD were to be looking at green standards, we would obviously pay attention to the affordability aspects. 

That is the bottom line; we want to be sure that whatever goes in 

19 

at the front end at the very least pays for itself over time. And that 

would certainly be one of the considerations that we would apply. 

Mr. PERLMUTTER. 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? 

Mr. FREEDBERG. What I 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 contracts to retain a 

full 100 percent of the savings for the duration of an energy performance contract. There are also other subsidies, such as the addon subsidy, which would allow you pay for the added improvement. 

Mr. PERLMUTTER. My question is the ‘‘relatively modest,’’ and 

then I think my time is up, and we’ll have to switch. 

Mr. FREEDBERG. Yes. 

Mr. PERLMUTTER. But it was the relatively modest component. 

Mr. FREEDBERG. I would say that if you looked at the programs 

across-the-board, the incentives are 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 for some 

of those grants, we have seen a pretty big impact. 

But there are some programs, such as the assisted and insured 

stock, where there are no real obvious incentives for energy efficiency in that stock. 

Mr. PERLMUTTER. Thank you. 

The CHAIRMAN. The gentleman from Alabama? 

Mr. BACHUS. Thank you. 

Mr. Lawler, I think your testimony is that Fannie and Freddie 

are buying these energy efficient or green mortgages today? 

They’re— 

Mr. LAWLER. They have programs, but they are not greatly used. 

Mr. BACHUS. Okay. If you add—you know, these credits as one 

of the incentives for taking these mortgages, does that create—obviously it creates some incentive to take these mortgages over another mortgage. Does that create any safety and soundness problems? Does it also maybe have any effect on the green mortgages 

you’re taking? And I say all that under the backdrop of, you know, 

our lending industry is stressed right now; we’re asking Fannie and 

Freddie to do more and more. The financial stability of our GSEs 

is something that we’re all very concerned about. 

How does this affect that? 

Mr. LAWLER. Well, their primary missions are the stability and 

affordability of the mortgage markets. The more additional responsibilities you give them, there is some potential for dilution of their 

efforts. As far as safety and soundness, we’re concerned that this 

not be a mechanism for allowing them to buy very large mortgages 

that otherwise would not meet their conforming loan limits, or— 

Mr. BACHUS. And the new authority does include authority for 

them to take these loans above the conforming loan limits? 

20 

Mr. LAWLER. It would appear to. That would be, I think, a fair 

reading of it. 

Mr. BACHUS. Which— 

Mr. LAWLER. And also— 

Mr. BACHUS. Loans in excess of 80 percent of the— 

Mr. LAWLER. —would appear to allow the high LTV loans that 

are not backed by mortgage insurance or other credit enhancements. 

Mr. BACHUS. Which would be obviously risky. Those are both 

risky. 

Mr. LAWLER. Especially the latter would be quite risky loans, 

compared to loans they’re allowed to buy. So we would be concerned about that. The energy efficient loans within those limits, 

there’s 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, and could be 

beneficial. It’s not always that straightforward exactly how to do 

that. I think in particular with location efficient loans, trying to ensure that what you’re measuring actually contributes to borrower 

savings in a particular mortgage may be somewhat difficult. So 

there are some challenges in defining some of these things. 

Mr. BACHUS. Thank you. 

Mr. Freedberg, you have testified that presently HUD is offering 

some programs, energy efficient mortgage products. So does this 

legislation have any impact on your current efforts to reduce energy costs and offer those products? 

Mr. FREEDBERG. We have had an energy efficient mortgage product on the books. I think Congress actually created that product 

back in 1992, so we have had quite a bit of an 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 and location efficient 

mortgages are referring to the Fannie and Freddie products, which 

are separate from the FHA product that we administer. 

I will say, though, that our requirement is that any additional 

investment in energy must pay for itself, so that you can underwrite the added cost of the investment through the savings, and we 

do require that there be an expert report, and I believe the bill 

does 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. 

Mr. BACHUS. Well now, as I read the bill, and what I think I 

have just heard you say is that this would actual require FHA to 

insure another $1 billion worth of these new energy efficient loans? 

Mr. FREEDBERG. I believe there is a section of the bill that does 

address that, yes. 

Mr. BACHUS. Fine. 

Mr. FREEDBERG. There is. 

Mr. BACHUS. Are those available? Is the lending market producing that number of loans today? 

Mr. FREEDBERG. The number in the bill is actually quite low, 

frankly, given the volume. But even at that level, we have found 

that the energy efficient mortgage product has been a somewhat 

21 

under-utilized product, in part because I think lenders have found 

it difficult—certainly 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 a valuable product— 

Mr. BACHUS. Any suggestions you have for us on how we would 

do that in this legislation, I think would be appreciated. 

Mr. FREEDBERG. We would be happy to get you some suggestions. 

Mr. BACHUS. Thank you. 

But I think you are saying the potential for saving money on 

more energy efficient homes is there and ought to be utilized, particularly as energy prices escalate. 

Mr. FREEDBERG. Absolutely. As long as you ensure that the investment up front is done well and done correctly, and that you 

have some reasonable assurance that you’re going to get the savings. 

Mr. BACHUS. Thank you. 

The CHAIRMAN. The gentleman from Georgia? 

Mr. SCOTT. Thank you very much, Mr. Chairman. 

First, Mr. Freedberg, let’s see if we can’t get our arms around 

this whole issue of the impact of rising energy costs on low- and 

moderate-income people. The disproportionate—you made a very 

startling observation that it is 4 times as great among low- and 

moderate-income people as the rest of the levels. 

Now if you could answer or give us an assessment of that in specific relationship to your understanding of this bill, and where in 

the bill and how in the bill would complying with the energy efficient policies within this bill, as well, would have an impact on the 

energy costs for this group of people. Can we talk about that first? 

The second part of the question still does relate to the low- and 

moderate-income people. And that is this issue, which hopefully we 

will get to a little bit later, and as Mr. Perlmutter said, we will address, this double whammy that is being placed on manufactured 

housing, which targets basically low- and moderate-income persons. 

We are putting two building codes on them—what impact does that 

have in driving manufactured home builders out of the marketplace and then adding that cost to low- and moderate-income people? 

So we could examine that—as well as you, Mr. Lawler—so going 

forward, as we move forward this bill, that we have done diligence 

on this specific issue, that we have a clear understanding of what 

this impact, 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 people of low and moderate income? 

Mr. FREEDBERG. Those are two big questions, Congressman. And 

I think you have certainly 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? The obvious factor is the affordability. I will tell you that HUD has always been concerned about 

defining green in a way that 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 authorVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
22 

ity to establish 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— 

Mr. SCOTT. Excuse me. You said the first screen? I didn’t really 

understand. 

Mr. FREEDBERG. Would be the first criteria for determining any 

appropriate green guidelines or standard would be its affordability, 

by definition. Now I do think that we need to be moving towards 

perhaps a different view of housing, which is life cycle cost of the 

housing, which is both the front end and the operating cost over 

time, particularly when HUD is footing the bill for the utilities in 

the housing through one or 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 there may be front-end 

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 

a particularly subsidized affordable housing that somebody’s going 

to pay some additional cost at the front end. 

But I guess the point I’m making is that if HUD were given the 

authority, I’m absolutely confident that we would be looking at 

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-end costs 

versus the operating costs over time. I’m 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 Markto-Market program. It’s a pilot project or a model program. We 

have about 50 buildings that are going through what we call a 

green remodeling initiative. And we’re giving owners the option of 

doing some add-on green measures and providing them an incentive with a reduced owner contribution at the front end from 20 

percent to 3 percent. And— 

Mr. SCOTT. Mr. Freedberg, my time is—I want to get to the other 

part of that, that double, the two separate different building codes, 

what impact that will have on the manufactured housing market. 

Would it in fact drive—could it drive some of those people, manufactured home builders, out of the marketplace, thereby denying 

that option to lower-income people? 

Mr. FREEDBERG. I’m actually going to defer on responding to that 

question. I’ll 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 HUD code. And this, I 

know, is a concern of the manufactured housing industry that any 

additions to the code would be an add-on front-end cost. 

The CHAIRMAN. Thank you, Mr. Freedberg. If they could submit 

that for the record, we would appreciate that. 

The gentlewoman from Illinois is recognized. 

Mrs. BIGGERT. Thank you, Mr. Chairman. 

You talked a little bit about the requirement of the bill for FHA to insure the $1 billion worth of energy efficient homes. Yesterday 

in the New York Times there was an article where Commissioner 

23 

Montgomery said, ‘‘Let me repeat, FHA is solvent.’’ But he did say 

that the projected loss to the home program since 2004 has required FHA to withdraw $4.6 billion from its $21 billion capital reserve fund, made to cover the cost. 

My concern is that—and one of the issues that I had in my opening statement about the green building to reduce the risk of a 

mortgage borrower and lower the mortgage insurance premiums. 

And my concern is, are we putting too much pressure on FHA? 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 is important, or not? 

Mr. FREEDBERG. As I say, I think we have had experience with 

the FHA product, obviously the energy efficient mortgage product. 

It has been a very modestly used product; less than 1,000 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 would be happy to again get back to you with a more extensive response from our FHA people. 

Mrs. BIGGERT. Right. 

Mr. FREEDBERG. Clearly, risk is something that we do all the 

time, and we would have to look at that. 

Mrs. BIGGERT. The problem is that there are so few of these type 

of mortgages. We don’t really have the data to determine whether 

there will be additional foreclosures based on this, do we? 

Mr. FREEDBERG. I don’t think we have seen any evidence that 

the energy efficient mortgages that we have insured have higher 

default rates, at least historically. But I would be happy to get you 

some details on that, as well. 

Mrs. BIGGERT. Okay. Thank you. 

Mr. Lawler, if the bill seeks to increase Fannie Mae’s and 

Freddie Mac’s efforts by using both incentives and requirements associated with its housing goals, what is the effect that this provision would have on the current affordable housing goals structured 

and administered by HUD? 

Mr. LAWLER. Well, it would diminish the focus on affordable 

housing somewhat, because it specifically says that the regulator, 

the HUD Secretary, can’t change the goals to account for additional 

credit in the incentive portion. So energy efficient loans that meet 

some of the energy efficiency standards we have been talking about 

would get at least 25 percent more credit. That additional credit 

would be goal space that wouldn’t need to be met by affordable 

housing loans. So, it would mean some reduction in the requirements for affordable housing. 

Mrs. BIGGERT. Okay. Thank you. I yield back. 

The CHAIRMAN. The gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman, and I thank Mr. 

Perlmutter for associating the color green or the name Green with 

the title of his legislation. As you know, Mr. Perlmutter, I am quite 

fond of green. 

[Laughter] 

Mr. GREEN. And I thank the witnesses for appearing today. 

24 

I would like to visit briefly with Mr. Freedberg on the question 

of affordability. Mr. Freedberg, this question of affordability can 

sometimes be relative, because persons who purchased these fuelefficient cars many years 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 in the current market, but you have to look through the 

vista of time, to some extent, and ascertain whether affordability 

is something that is foreseeable, given that oil is a finite resource, 

given that we’re having the price of oil continually escalate—cartel 

controls the price more so than the marketplace. 

So given this, could you kindly factor that into the equation, 

what I have just called to your attention. If the price of oil, let’s 

say it doubles in the next 5 years, if we have done this, won’t we 

be all the better for having done these things, with this kind of affordability in mind? 

Mr. FREEDBERG. Well, there’s absolutely no question, Congressman, that if oil prices continue to rise, that initial investment in 

a more fuel-efficient car would increasingly be a better deal. 

Mr. GREEN. Hence, an investment now in a fuel-efficient home 

will become a better deal, as oil prices escalate? 

Mr. FREEDBERG. Indeed. And frankly, you know, the practice 

when the experts do energy audits and do 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 there are increases that would certainly to the benefits to the consumer. 

I should say that I think you’ll be hearing in your second panel 

some of the experience that the Enterprise Communities Program 

has had with about 250 buildings and many thousands of units, 

and I think they’re 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 

and the NHB 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. 

Mr. GREEN. Thank you. Continuing with this, but in a different 

light, it seems that we agree that this is an appropriate thing to 

do, what Mr. Perlmutter has suggested, that we start to look at 

this, for obvious reasons. This is Genesis that he has introduced us 

to, and you can’t get to Revelations if you don’t have Genesis. So 

it just kind of makes sense that we would start now, so that we 

can get there. 

Many times we seem to want the crops, but we don’t want the 

rain and thunder and the lightning. To get the crops, sometimes 

you have to go through this process. 

So I want to commend Mr. Perlmutter for what he has done to 

get us started with this process. There may be some changes. 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 stock that we have? I think he used the number 50,000 of 

3 million units. Is that number too large, 50,000, of 3 million units? 

25 

Mr. FREEDBERG. Again, I’m not going to answer as to the specifics of the bill. 

Mr. SCOTT. Well, let’s not assume that we have a bill. Let’s just 

talk about 50,000 of 3 million units. 

Mr. FREEDBERG. Fifty thousand is certainly a very, you know, 

small share of the total portfolio that you would be talking about, 

yes. 

Mr. SCOTT. With that said, Mr. Chairman—and I must say the 

chair looks good on you—I will yield back the balance of my time. 

Mr. PERLMUTTER. [presiding] The Chair now recognizes Ms. 

Brown-Waite. 

Ms. BROWN-WAITE. Thank you very much, Mr. Chairman. 

Coming from Florida, but also traveling to where my daughter 

lives, I see that there’s a tremendous amount of stagnant building. 

I mean it is just not happening. Many people are going into other 

enterprises. Do either of you know exactly how much green building is going on? I know when I spoke to a builder, and this happened to be a builder in Florida, he said, ‘‘Green, shmeen. I can’t 

sell.’’ Do either of you have any comments? 

Mr. FREEDBERG. I think that would be a good question for the 

second panel, and I don’t— 

Ms. BROWN-WAITE. And I can’t be here for the second panel. I 

will— 

Mr. FREEDBERG. I don’t have 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 a 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 an initial slow start-up we have seen an exponential increase 

in the penetration of Energy Star in many markets. I’m not sure 

it’s a big deal in Florida, though, but certainly in Arizona and some 

other places, we have seen a big escalation. I think that is a reflection of growing interest in this topic. 

Ms. BROWN-WAITE. My next question is, if the GSEs are going 

to be required to purchase the green loans, should banks be required to originate them?, possibly through a new CRA requirement? 

Mr. LAWLER. That would be one possibility. Certainly there are 

a variety of originators from whom Fannie Mae and Freddie Mac 

buy, not just commercial banks, but also mortgage banks, so that 

there are a variety of venues. Clearly they can’t originate loans. 

They have to buy loans that are made by other 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. 

The 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 goals. 

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. It would give them an incentive to participate 

26 

in expanding education about possibilities. So there are a variety 

of ways that they could work to meet such a goal. 

Ms. BROWN-WAITE. And my last question is, to meet these new 

goals, the GSEs will need to collect data from the lenders who sell 

them the loans. Will the lenders actually have this data on how 

many loans would qualify? And do you anticipate any new costs 

these regulatory requirements will have on the mortgage industry? 

Mr. LAWLER. Well, there are costs in acquiring information about 

energy efficiency for any particular property, and someone would 

pay them. Normally that would be paid by the borrower, except 

that the goals would incent Fannie Mae and Freddie Mac to pay 

up for these loans, and ultimately it might mean that Fannie Mae 

and Freddie Mac implicitly were paying for some of these costs. 

Certainly somebody would have to pay for it. And if the volumes 

got larger, there might be efficiencies. So far those costs have deterred borrowers from wishing to participate. But the incentives of 

higher goals haven’t been there either. 

Ms. BROWN-WAITE. Thank you. And Mr. Chairman, I would like 

to submit the question about the green buildings to the next panel. 

I can’t stay; I have another meeting, but I will be submitting it to 

them, and also submitting the questions for the record. 

Mr. PERLMUTTER. Certainly. And without objection, it will be 

made a part of the record— 

Ms. BROWN-WAITE. I yield back. 

Mr. PERLMUTTER. And if you would like any of us to ask your 

question for you, we are happy to do that too. 

Ms. BROWN-WAITE. Thank you. I yield back the balance of my 

time. 

Mr. PERLMUTTER. Mr. Cleaver from Missouri? 

Mr. CLEAVER. Thank you, Mr. Chairman. Let me also express appreciation to you and the other freshmen members on the committee who put forth this legislation. I apologize. I’m running, ironically, back and forth between 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 oil. I 

don’t want to violate what Chairman Frank said earlier about jurisdictions, and I think we did have some comments that by being 

on that committee, I would naturally have a propensity to react, 

but I will suppress that and get into a couple of issues. 

First of all, for Mr. Freedberg, HUD deals with poor people. Do 

you have any idea of what the number one issue is that negatively 

impacts poor people? I used to be one of your tenants. I lived in 

public housing. So I’m just— 

Mr. FREEDBERG. Well, in terms of housing, fundamentally it’s the 

cost of housing or other household expenses. 

Mr. CLEAVER. Yes. Utilities. I’ll ask and then answer it. Utilities. 

That’s the utility cost. And if you talk to pastors, like Reverend 

Green, who just left—he’s coming back in from Genesis to Revelation—but if you ask pastors who are in churches, particularly here 

on the eastern seaboard, what is the number one request they receive? And it is help on utilities. 

And so in piggy-backing on what my colleague, Mr. Green, said, 

it just seems practical for us to make some dramatic changes now 

so that we won’t have to pay a heavier cost for them in the future. 

27 

And so I may not have been here—is HUD’s official position that 

this legislation is too costly? Is that— 

Mr. FREEDBERG. We do not have an official position on this bill. 

We will be working with the committee to, you know, provide any 

responses. But we do not have an official position on the bill yet, 

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 on homeowners who use our mortgage insurance programs. I think I indicated that 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 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 while we have 

made some modest steps in the right direction, we have more to 

do. The Department’s leadership has been quite supportive of our 

efforts to increase energy efficiency and to assist our customers and 

our tenants to address energy costs. 

Mr. CLEAVER. Okay. 

Mr. FREEDBERG. So it’s a critical issue, and in general we commend the committee for, you know, putting together— 

Mr. CLEAVER. So HUD is almost for this legislation? 

Mr. FREEDBERG. We’re not taking an official position on the bill. 

Mr. CLEAVER. Okay. All right. 

Mr. FREEDBERG. But we are saying that this— 

Mr. PERLMUTTER. I did hear ‘‘commend.’’ I’m going to use that 

‘‘commend’’ for a long time now. 

[Laughter] 

Mr. CLEAVER. Mr. Lawler, this is something that comes up in 

this committee on every piece of legislation that we even almost 

consider, and it is the desire by many to say that we don’t need 

any new regulations. I mean no matter what the issue is, we don’t 

need any. Why? Would you suggest that we do not need to—that 

Congress should not become involved in this issue? Because approving Mr. Perlmutter’s bill is putting regulations where they are 

not needed? 

Mr. LAWLER. I didn’t say that— 

Mr. CLEAVER. I’m not begging the question. I’m asking a question. 

Mr. LAWLER. I certainly didn’t say that. 

Mr. CLEAVER. Yes. I’m not begging the question. I’m asking a 

question. 

Mr. LAWLER. We support the broad goals of increasing energy efficiency and energy conservation in homes. Using Fannie Mae and 

Freddie Mac involves some trade-offs. They have some really critical missions right now. And mortgage markets have been somewhat disturbed over the past year. So 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 too. 

Mr. PERLMUTTER. The gentleman yields back. 

28 

The gentleman from New Hampshire, Mr. Hodes. 

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. 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 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 30 years, we 

have had our heads in the sand 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 on moving aggressively towards these directions. 

First, Mr. Lawler, are there benefits in this bill to Fannie Mae 

and Freddie Mac? 

Mr. LAWLER. I don’t think there are benefits to Fannie Mae 

—well, yes, there is a benefit in that it could help them meet their 

affordable housing goals. 

Mr. HODES. And isn’t that a significant benefit? 

Mr. LAWLER. That could be a significant benefit. It has been very 

difficult to meet those goals in the past few years. 

Mr. HODES. So this is a help to Fannie Mae and Freddie Mac in 

meeting their affordable housing goals? 

Mr. LAWLER. Yes. 

Mr. HODES. Okay. 

Mr. LAWLER. It would also, however, have some other effects on 

them that they might consider not beneficial. It would set up some 

other goals that they would have to meet as well. 

Mr. HODES. I understand. It’s a balance. You have to live with 

what Congress tells you to do, and that’s always tough. It’s a tough 

job. 

You said in your testimony—I forget whether it was written or 

oral—that your existing energy efficiency mortgage programs have 

met with little success over the years. 

Mr. LAWLER. They’re not our programs. We regulate Fannie Mae 

and Freddie Mac. So— 

Mr. HODES. So the programs for energy efficient mortgages over 

the years have met with little success, according to your testimony? 

Mr. LAWLER. Yes. 

Mr. HODES. Why? 

Mr. LAWLER. They haven’t been heavily publicized and they 

haven’t met with a great response. Borrowers find it relatively expensive to go through the process of establishing savings, and it 

hasn’t been worth it to them; it hasn’t made enough of a difference 

in getting loan approval, or in providing the kinds of savings that 

borrowers have been interested in acquiring at the same time they 

get the loan. The process, if it’s an existing home, is that you have 

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 a delay involved there in establishing after the fact 

that you have in fact achieved a certain level of savings, and so 

forth. 

29 

Mr. HODES. So it has been a cumbersome process for borrowers? 

Mr. LAWLER. I think so. 

Mr. HODES. Does the bill go far enough in its present form in addressing those issues? Or do you think it could do more? 

Mr. LAWLER. I think it needs to do more. Either the bill or the 

regulator in implementing this would have to try and design something that worked a little bit more efficiently. 

Mr. HODES. Okay. 

Mr. LAWLER. And I think it would be a difficult thing to do, and 

I’m not sure exactly what the right solution would be; I think it 

would need some help there. 

Mr. HODES. And isn’t one of the other reasons that you haven’t 

seen great success in energy efficient mortgages because the costbenefit ratio has simply not been there? 

Mr. LAWLER. Yes. I think that has been the case. The idea behind them is to try and prevent the lack of immediate cash from 

being a bar to being able to make some effective energy investments. But still you would have to convince the borrower that 

these are effective investments, that it will save them money— 

Mr. HODES. And as fuel prices rise as dramatically as they have, 

and as they will continue, that cost benefit analysis gets different. 

Mr. LAWLER. Should change. 

Mr. HODES. Okay. 

Do Fannie Mae and Freddie Mac currently buy second mortgages? 

Mr. LAWLER. Yes, they do. 

Mr. HODES. And let me just throw out: What impact do you see 

if we were able to help provide an incentive for Fannie Mae and 

Freddie Mac to buy second mortgages specifically addressing retrofit projects for existing stock, where homeowners come in, want 

to take a second mortgage in order to make the kind of changes 

that would be beneficial to their energy efficiency. 

Mr. LAWLER. That’s an interesting question. The recent experience, of course, with second mortgages has been very unfortunate, 

as a general proposition. 

Mr. HODES. Understood. 

Mr. LAWLER. These might be a little bit different. They might 

have somewhat different risk characteristics, especially if they 

were really saving money for the borrower in doing them. 

And so it is something that I think requires some more study to 

try and evaluate what the safety and soundness characteristics of 

it would be. 

Mr. HODES. Well, we look forward to working with you on that 

issue. Thank you. 

I’m out of time, Mr. Chairman. 

Mr. PERLMUTTER. Thank you. The gentleman yields back. And 

we would just like to thank you, Mr. Freedberg, and you, Mr. 

Lawler, for taking your time—when 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 will now call up our second 

panel: Ms. Koo; Mr. Purnell; Mr. Howard; Mr. Hicks; Mr. George; 

and Mr. Bernstein. 

30 

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 I would 

like to start with the testimony of Ms. Koo. Without objection, your 

written statements will be made a part of the record, and you will 

each be recognized for a 5-minute summary of your testimony. 

Ms. Koo? 

STATEMENT OF DORIS W. KOO, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, ENTERPRISE COMMUNITY PARTNERS 

Ms. KOO. Thank you, Mr. Chairman, and members of the committee. I am Doris Koo, president and chief executive officer of Enterprise Community Partners. We thank you for the opportunity to 

testify today. 

Enterprise is a national nonprofit organization that has invested more than $9 billion to create more than 240,000 units of affordable homes throughout this country, most of them in lower- and 

moderate-income communities. We are bringing the benefits of 

green building to low-income people, to build and rehabilitate forsale homes and rental apartments that are healthier, more energy 

efficient, and better for the environment. We call that the triple 

bottom line. 

Green Communities is a 3-year experiment, where homes are 

built according to a national criteria and it’s the only framework 

for green affordable homes that exists today. The criteria were developed in collaboration with and endorsed by leading environmental energy, green building, affordable housing, and public 

health organizations. In the last 3 years, Enterprise has invested 

more than $570 million to create more than 11,000 green communities homes in more than 250 developments in 28 States. And 

since we launched the initiative, we can count with pride 20 States 

having embraced similar criteria, either 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 ideology, but on practical 

experience in housing development and a growing body of research. 

We know housing, energy, and transportation needs for low-income families are interconnected, and they are getting worse. We 

can make progress on all these fronts and lock in long-term environmental benefits by making green affordable homes a national 

priority. We want to believe that green and affordable can be one 

and the same. 

Community organizations, home builders, financial institutions, 

mayors, and governors across the country have increasingly recognized this and are taking action. Now it is 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 

boldness in taking this leadership. 

The impacts of a national commitment to green, affordable 

homes would be profound. So to address Congressman Scott’s quesVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
31 

tion, green community 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 are also starting to demonstrate significant health benefits 

from green affordable homes, especially for people with asthma; 

most of them are predominantly 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. This will be 

particularly effective in communities that might be hardest hit by 

the foreclosure crisis, where rehabilitation of some of those vacant 

homes can generate both environmental benefits and economic benefits. 

Our 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’re showing that costs might be 

only 2 to 4 percent higher on the average, and appear to come 

down with experience. 

This holds true for virtually every form of housing in every type 

of climate in every kind of community we have tested around the 

country. And based on this experience and in light of the major 

benefits that would follow, Enterprise 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 a 

commitment and the national leadership. We pledge our knowledge, our expertise, and our track record to work with you to really 

move this bill forward. And we will submit with our testimony the 

publication called, ‘‘Bringing Home the Benefits of Energy Efficiency to Low Income Households,’’ as part of our testimony. 

Thank you. 

[The prepared statement of Ms. Koo can be found on page 230 

of the appendix.] 

Mr. PERLMUTTER. Without objection ‘‘Bringing Home the Green’’ 

will be made a part of the record. Thank you, Ms. Koo. 

Ms. KOO. Thank you. 

Mr. PERLMUTTER. Mr. Purnell? 

STATEMENT OF MARSHALL E. PURNELL, FAIA, PRESIDENT, 

AMERICAN INSTITUTE OF ARCHITECTS 

Mr. PURNELL. Chairman Perlmutter, and members of the committee, good morning. I am Marshall E. Purnell, FAIA, president 

of the American Institute of Architects. 

On behalf of our 84,000 members, and the 281,000 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 Efficient Neighborhoods Act. 

32 

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 my and the AIA’s 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 39 percent of the total energy consumption, more than both the transportation and industry sectors. 

Buildings and their construction are responsible for nearly half, 

about 46 percent, of all greenhouse gas and carbon emissions produced in the United States every year, and 71 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 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. 

The AIA 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 prescribes 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 practical 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 reduced utility 

costs. 

While establishing new energy standards for some residences 

will make great strides toward promoting residential energy efficiency, it is only one part of the overall strategy to achieve an economy-wide energy savings. 

To truly encourage energy efficiency, a multi-faceted approach is 

necessary. The GREEN Act rightfully acknowledges 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 build, 

33 

buy, or remodel their homes and to businesses to improve their energy efficiency. 

Specifically, the bill will promote the use of energy efficient and 

location efficient mortgages, EEMs and LEMs. EEMs and LEMs 

are effective financial tools that provide incentives to homeowners 

to purchase energy efficient homes or renovate existing homes to 

make them more energy efficient. 

The AIA is especially pleased by provisions in this bill that will 

result in more energy efficient mortgages and location efficient 

mortgages in the marketplace and educate 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 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 performance and safety. It means ensuring 

that the public knows where to turn for the best and most reliable 

information about who is properly qualified to design green residences. 

We strongly support the members of this committee in 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. 

[The prepared statement of Mr. Purnell can be found on page 248 

of the appendix.] 

Mr. PERLMUTTER. Thank you, Mr. Purnell. 

Now, Mr. Howard, you are recognized for 5 minutes. 

STATEMENT OF JERRY HOWARD, EXECUTIVE VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF HOME BUILDERS 

Mr. HOWARD. Mr. Chairman, and members of the committee, my 

name is Jerry Howard. I am the CEO and executive vice president 

of the National Association of Home Builders. 

Thank you for the opportunity to testify today on H.R. 6078, the 

GREEN Act, and the efforts our industry is making in building energy efficiency and supporting affordable housing. 

We appreciate the opportunity to continue in good faith to provide comments and input on H.R. 6078. 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. 

NAHB 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 and energy efficiency, including efforts to provide grants for builders to offset 

34 

some of the up-front 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 resources to achieve these goals it envisions, and in some 

instances, it appears to conflict with the overall housing mission of 

HUD and the GSEs. 

The legislation creates many new programs but it does not provide adequate staffing or additional appropriations to ensure that 

these programs are implemented successfully. 

Because of the establishment of these new programs, and the 

goals for the GSEs related to energy efficient mortgages and 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 FHA insurance, for example, could have the unintended consequences of 

limiting FHA 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. 6078 can be realized. 

NAHB is in an 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, NAHB is currently in the process of a 

groundbreaking effort to produce the first and only national green 

building standard that will be approved by the American National 

Standards Institute. 

My written statement details the efforts our members have taken 

on building green homes for nearly 3 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, 

multi-family, remodeling, and land development. 

I also want to take a moment to highlight one of the most important aspects of green building efforts in 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 

the independent resident behavior, that is lighting, electronics, appliance use, laundry, and cooking habits. Lack of energy conservation by the resident has the potential to subvert the efficiency or 

green features built into the home. 

35 

That is why NAHB is committed to greater consumer education 

within the context of our green building program and standard, 

and we hope that Congress can match this commitment with support for better consumer education on green building in lieu of simply endorsing potentially costly construction mandates that may 

not achieve the savings envisioned. 

I appreciate the ongoing dialogue on this very important issue, 

I appreciate the opportunity that we have been afforded to comment on H.R. 6078, and I am prepared to answer any questions. 

[The prepared statement of Mr. Howard can be found on page 

212 of the appendix.] 

Mr. PERLMUTTER. Thank you, Mr. Howard. 

Mr. Hicks, you are now recognized for 5 minutes. 

STATEMENT OF TOM HICKS, VICE PRESIDENT, INTERNATIONAL PROGRAMS AND LEADERSHIP IN ENERGY AND 

ENVIRONMENTAL DESIGN FOR NEIGHBORHOOD DEVELOPMENT, U.S. GREEN BUILDING COUNCIL 

Mr. HICKS. Thank you, Chairman Frank, Ranking Member Bachus, Congressman Perlmutter, and members of the committee for 

the opportunity to discuss the GREEN Act. 

My name is Tom Hicks. I am a vice president with the U.S. 

Green Building Council, a nonprofit 501(c)(3) organization comprised of more than 1,500 private, nonprofit, and government organizations. Our vision is to deliver a sustainably built environment 

and our mission is quite simply market transformation toward this 

vision. 

I would like to thank Congressman Perlmutter and the 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 true market transformation requires that the advantages of green building be made available to 

all individuals. 

The residential sector represents an unique opportunity to make 

this vision a reality. Representing 21 percent of the nation’s 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 a 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, Morrisania Homes, which you will 

see on the easel to my right, is an affordable housing project in the 

South Bronx. It is a project that earned the lead silver rating, 

makes use of recyclable carpeting, 100 percent Energy Star appliances, low flow water fixtures, and low Voc paints and finishes. 

In addition to these benefits, the residents of the Morrisania 

homes in the Bronx expect to save over 30 percent of their annual 

utility bills. 

The result is a community of homes that people can afford, which 

allow the city to grow in an environmentally responsible way. 

36 

Bringing the benefits achieved by Morrisania into the mainstream requires a two pronged approach, involving both new and 

existing homes. While the greening of the new homes is essential 

to advancing professional capacity for green building and ensuring 

that the green building practices are integrated into new housing 

projects, existing homes provide an unique opportunity to achieve 

great energy savings on a wide scale. 

Provisions of the bill that provide a minimum threshold for energy reduction to rehabilitate existing housing as well as residential energy efficiency block grant programs 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 adopter of green building and 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 energy efficient 

buildings. 

When our green building rating system was first introduced into 

the commercial marketplace, it was the first national green building certification program. The majority of the early projects using 

LEED 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 pro- jected $20 billion annually and first cost premiums for green buildings have gone down to as low as zero to 2 percent. 

The business case has been well-articulated from cost savings to 

increased property values, and market demand continues to grow. 

Leaders in both the private and public sectors are critical in getting green building to where it is today. Federal agencies were 

some of the USGBC’s first members and many continue to lead by 

example by requiring LEED for their own facilities. 

Finally, I would like to state our commitment to making green 

building affordable, accessible, and available to everyone. USGBC 

is dedicated to making the case for affordable green housing. 

We are now working with partners in the 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 Habitat 

for Humanity, and many others 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 LEED for Homes was just released in December of 2007, 

case results indicate low or no first cost premiums with strong 

operational cost savings. To date, more than 1,800 affordable units 

have registered with LEED, and nearly 300 have already completed the certification process. 

37 

Through a generous grant through the Home Depot Foundation, 

USGBC is able to offset the certification costs for their affordable 

housing projects seeking LEED certification. 

In conclusion, I would 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 I look forward to answering any questions. 

Thank you. 

[The prepared statement of Mr. Hicks can be found on page 185 

of the appendix.] 

Mr. PERLMUTTER. Thank you, Mr. Hicks. 

Mr. George, you are now recognized for 5 minutes. 

STATEMENT OF ALAN W. GEORGE, EXECUTIVE VICE PRESIDENT AND CHIEF INVESTMENT OFFICER, EQUITY RESIDENTIAL, ON BEHALF OF THE NATIONAL MULTI HOUSING COUNCIL (NMHC) AND THE NATIONAL APARTMENT ASSOCIATION 

(NAA) 

Mr. GEORGE. Thank you. Chairman Frank, Ranking Member 

Bachus, and distinguished members of the committee, I am Alan 

George, executive vice president and chief investment officer of Equity Residential, an S&P 500 company focused on the acquisition, 

development, and management of high-quality apartment properties throughout the United States. 

Equity Residential has investments in or owns 564 properties totaling nearly 150,000 units in 23 States and the District of Columbia. We are the largest publicly traded apartment company in the 

country and employ more than 4,000 people. 

I am here today on behalf of the National Multi Housing Council 

and the National Apartment Association representing the Nation’s 

professional multi-family housing industry. 

The multi-family 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 10 years, Equity Residential has actively sought 

out opportunities to improve the efficiency of our apartment properties which are both meaningful and cost effective. 

Equity’s investments in energy and efficiency include improved 

lighting efficiency using high-performance fluorescent bulbs and 

LED fixtures, white roofs, improving the performance of mechanical systems through HVAC systems, upgrading equipment, and 

the installation of programmable thermostats throughout our properties. 

Upgrading building envelopes by installing high-performance 

windows, upgrading installation, and conserving water through the 

efficient use of plumbing fixtures, weather based irrigation systems, and xeriscaping. 

The incentive-based approach embodied in the bill can assist developers and owners in improving 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 improveVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
38 

ments to the performance of America’s housing stock. However, our 

experience suggests that certain proscriptive mandatory building 

requirements, like some of those in the HOPE VI 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 VI program may have unintended consequences and costs that may far 

outweigh possible gains. 

Second, we believe that it is important that any minimum efficiency standards with sustainability benchmarks be tied to the nationally recognized codes and standards like those of the International Code Council or ASHRAE. These organizations follow 

time-tested protocols that ensure openness and fairness in the development process. 

While the minimum energy standards identified in Section Two 

of this bill flow from recognized standard setting and code making 

bodies, the standards, and for additional credit, as well as the mandatory requirements in Section 19 do not. 

Forced compliance with non-consensus based documents can lead 

to implementation problems, incompatibility with local business 

codes and standards, uncertainty in enforcement, and unnecessary 

costs in tabulation. 

To that end, NMHC has participated in the development of the 

national green building standard, along with a diverse group of 

stakeholders that 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 residential buildings, including multi-family, single 

family, and mixed-use development. 

Unlike other green building programs, it is written to be 

seamlessly incorporated into existing building codes and has followed the strict standard 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 in 

federally assisted housing. 

Recognizing there was a lack of industry specific data, NMHC 

and other 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 

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 FHA 

mortgage insurance for multi-family properties. However, we are 

concerned about the potential impact this may have on the integrity of the program when implementing regulations are developed. 

The FHA program plays an important role in the continued provision of affordable housing in the country. Any changes to the proVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
39 

gram, however well-intended, could create an imbalance that will 

negatively affect the strained supply of affordable housing. 

The bills directs the HUD Secretary to establish incentives 

through a discount on the mortgage insurance premium, but it does 

not provide guidance as to the formula for calculating this discount, 

nor does it specify the discount amount. 

We would suggest that the HUD Secretary convene a blue ribbon 

task force that would include representatives from Federal agencies, the real estate industry, the GSEs, and affordable housing advocates. The task force would develop policy recommendations regarding the most effective way for the FHA to incentivize uses of 

this program. 

In conclusion, multi-family housing supports the goals of this bill 

through dense development practices, inherent efficiencies in energy and water use, and the effective use of infrastructure and 

building materials. 

Apartment homes are an essential element for meeting our Nation’s affordable housing needs. The cost to develop these properties within practical mandates will spiral, which would add further stress to our housing affordable stock. 

Thank you. 

[The prepared statement of Mr. George can be found on page 131 

of the appendix.] 

Mr. PERLMUTTER. Thank you, Mr. George. 

Mr. Bernstein, you are recognized for 5 minutes. 

STATEMENT OF SCOTT BERNSTEIN, PRESIDENT, CENTER FOR 

NEIGHBORHOOD TECHNOLOGY 

Mr. BERNSTEIN. Thank you very much. My name is Scott Bernstein, and I am president of the Center for Neighborhood Technology in Chicago, which is a 30-year-old group that actually works 

to bring home the benefits of sustainable development inclusively, 

and I am also chairman of the Surface Transportation Policy Partnership, a coalition of organizations in 42 States. 

I thank the chairman, the ranking member, and the members of 

the committee for the privilege to testify today. 

We endorse this bill. My written testimony says why. I would 

like to quickly show some slides that illustrates why we support it 

and highlight some things that have not been spoken to by the previous speakers. 

First of all, I would like to talk about the cost of transportation 

in light of not only $4 gasoline costs, but how it compares to the 

cost of energy. 

The average American household uses 100 million British thermo 

units of energy per year, which is the amount used by a household 

driving 17,000 miles in a year at 25 miles to the gallon, or more 

realistically 15,000 miles a year at 20 miles to the gallon. American 

households are using as much or more energy at the household 

level for transportation as they are for heating, cooling, and lighting. 

Therefore, this is extremely important. They are also paying 

more for that. They are paying about $3,000 a year right now on 

average for transportation costs, and $2,000 for the other items, 

and therefore, this is of critical importance. 

40 

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. It is a little easier to understand if you look at the graph. 

As density and accessibility goes up, vehicle miles traveled for 

household goes down. That is six million data points for Chicago, 

San Francisco, and Los Angeles on there. It was peer reviewed by 

over 100 academics, and it has been shown now to work in 52 regions, 37 Japanese cities, and London and Paris. 

Same view. If you convert that to carbon, we find that as density 

and accessibility goes up, carbon emitted per household goes down 

as well. 

If you look at the map on the left, this is Chicago, and the light 

color areas are the ones where households are driving less than 

15,000 miles in a year. The red ones are the ones where they are 

driving more. 

The map on the right shows that households in those yellow 

areas are spending less than $1,900 a year for gasoline. By the 

way, this is real time data, calculated this week. In the red areas, 

it is between $4,000 and $6,000 a year right now and rising. 

There is a big savings to be had by promoting what we call location efficiency. 

If we convert that to dollars and cents, in the green areas, those 

households are spending $5,000 to $6,000 a year less than in the 

tan areas because they have the location efficiency. That is money 

in the bank, it is the equivalent for low- and moderate-income 

households of a 10 to 15 percent increase in income tax free to address Congressman Scott’s question. You can have it both ways. 

If we calculate a standard affordability index, the housing units 

in Chicago that are 30 percent of income or less, it is the map on 

the left, but if you say where can households live where they spend 

less than 48 percent on housing and transportation, it is the map 

on the right. 

We have done this now for 52 regions in the United States comprising half of the population and we always get this pattern. 

Therefore, if we do not take these costs into account, we are burdening these households. 

Again, when you put this story together, we find that in the red 

areas, households earning less than $50,000 a year across the 

United States, working families, they are now spending almost 

two-thirds of their income on housing and transportation. 

Transportation and energy costs double the cost of housing, 

therefore, that is why this bill is compelling. 

If you ask 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. The dark blue area, that is the lowest carbon 

emissions. The light blue, the next lowest, etc. 

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 as you get out to the ex-urban areas. You 

have very high emissions, between 9 and 15 tons for household, for 

transportation. As you get to the more urbanized areas, whether 

41 

they are in the city or the suburbs, down in the two to four ton 

range and so forth. 

Location efficient mortgages, I’m proud to be a co-inventor of 

this. It is a product that was introduced to the marketplace as a 

joint product with Fannie Mae by our organizations in the 1990’s 

based on research supported by foundations and the Federal Government. 

It is a mortgage that counts the savings from transportation, 

which I have just demonstrated, as an offset to the assumed fixed 

cost of housing, usually principal, interest, taxes, and insurance. 

It was tried in over 40 regions of the United States with these 

colorful brochures illustrating things like ‘‘Take the T Home’’ in 

Boston. I am sorry Chairman Frank is not 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, there are only a few thousand mortgages put out deliberately, but no foreclosures in Seattle. No foreclosures in Chicago. One out of 53 in Boston and none out of 100 

in San Antonio, Texas. 

These clearly out perform the market. I like what the Tribune 

had to say, ‘‘Skip the car, buy a house.’’ 

Mr. PERLMUTTER. You are going to have to wrap up. 

Mr. BERNSTEIN. I recommend that the definition of ‘‘energy efficiency’’ in this bill that is adopted include location efficiency for the 

reasons stated. I think that location efficient mortgages should 

take this into account. I think in defining geographically underserved markets, these costs can be taken into account quite simply, 

and I think in all of the federally assisted housing programs, 

whether vouchers, tax credits, or direct project subsidies, if we do 

not take these costs into account, we are going to burden American 

households, and frankly, we are going to increase the foreclosure 

rate. 

The last map here simply shows that foreclosures have risen the 

fastest in the least efficient parts 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 

GSEs, and that is why I strongly urge you to move forward with 

this legislation. 

Thank you very much. 

[The prepared statement of Mr. Bernstein can be found on page 

62 of the appendix.] 

Mr. PERLMUTTER. Thank you, Mr. Bernstein. I will recognize myself for 5 minutes to ask a few questions. I will start with you, sir. 

We heard from Mr. Freedberg that HUD and the Federal Government have had some programs on the books since the 1970’s. 

Location efficient mortgages or energy efficient mortgages, in your 

opinion, why have they not been more widely utilized? 

Mr. BERNSTEIN. There has been a lack of clarity in the statutory 

declaration of purpose. The legislation that HUD operated some of 

these earlier programs under has lapsed, notably, after the Carter 

Administration. 

42 

They have been treated as experiments instead of as essential 

features of the market. In Fannie’s and Freddie’s case, look, they 

are doing 10 mortgages a minute, we calculate, between the two of 

them. Location and energy efficient mortgages are not features. 

You cannot push the button on the automated underwriting software and get these up for all of them. If they are not offered to 

people, how will they know there is a choice? 

You have to commit to taking them to scale. You have to commit 

to doing what the banks wanted to do. Our experience was that 

lenders came out of the woodwork to offer these, but it was hard 

to get a commitment to take it to scale from the GSEs, and I think 

you can correct that by direction. 

Mr. PERLMUTTER. That is by stimulating a secondary mortgage 

market in these particular mortgages? 

Mr. BERNSTEIN. That is correct. I think there has been a misunderstanding, and it was reflected in earlier testimony, that we 

are asking people to take extra risk here. We are asking people to 

not borrow as much for cars, and to spend a little more on their 

homes in order to come out way ahead. 

Mr. PERLMUTTER. Mr. George, I would like to ask you a question. 

With respect to the upgrade that is within the bill, the 50,000 

units, you said that was an appropriate approach. Do you think 

that should be expanded? Do you think that is a good pilot program? How would you look at that? 

Mr. GEORGE. Yes, sir. I do think that is a program that should 

be expanded. I think there are a tremendous number of alternatives out there today with respect to energy efficiency. Clearly, 

as oil and other 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. 

Mr. PERLMUTTER. This question is for you and Mr. Howard. In 

your comments, both of you have talked a little bit about the International Code Council green building standard. Can the two of you 

tell me where we are in that process, whether it has been approved 

by the consensus group yet or whatever? 

Within the bill, the HUD Secretary can certainly make that one 

of the standards that would trigger a green mortgage which would 

allow Fannie Mae a credit, so if you two could comment. 

Mr. HOWARD. As I understand it, Mr. Chairman, that bill is in 

the final approval process at the ANSI organization, and it should 

be done in a relatively short timeframe. 

Mr. PERLMUTTER. For the whole panel, with the current housing 

stock that we have, both multi-family as well as single family residential, in your opinion, what would be the best way to get those 

homeowners or those building owners to reduce energy consumption? It is just an open-ended question. 

Mr. HICKS. I think that some of the measures that are in this 

bill by providing opportunities for second mortgages, for energy retrofits, I think would go a long way. I also think along with that, 

we need to focus in on education and awareness, making sure these 

opportunities are very well known to the homeowners. 

Mr. PERLMUTTER. Ms. Koo? 

Ms. KOO. Mr. Chairman, there is a major starting point where 

we have to look at how the Federal Government allows taxpayer 

43 

funds to support subsidized housing, and 25 million Americans live 

in low-income and subsidized housing. 

We heard the HUD gentleman talk about 1.2 million PHAs, public housing units, that were built before 1970. 

We 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 incentives. Of course, you 

need education. Modeling that we have done in the last 3 years 

really shows that the benefits will pay for the initial investment of 

2 to 4 percent. 

The Federal Government, as one of the biggest supporters of affordable housing, can alter the market by bringing/buying power 

into the market, in retrofitting and incentivizing both on the homeowner side and the rental side. 

This is about taking a commitment through practice to scale and 

transforming the market through a variation of incentives and also 

expectations, so that the taxpayers’ investment would bring back 

taxpayer benefits in the long run. 

Mr. PERLMUTTER. Thank you. Mr. Purnell, if you had a comment, 

and then my time has expired, and I will have to recognize Mr. 

Campbell. 

Mr. PURNELL. I would just like to echo the remarks from the last 

two panelists. Education, awareness, and the incentives that are 

there for a secondary mortgage market, you could even go as far 

as tax credits at some point to make sure that people are aware 

of this. 

The slides we just saw basically demonstrate that if you were to 

cut the energy usage in an average home by 50 percent, something 

that architects today know is quite doable, it is almost like getting 

50 percent more gas mileage on that vehicle in that household. If 

you cut the energy usage 50 percent in all buildings in the country, 

it is like doubling the gas mileage on every vehicle in the United 

States. 

It is not a function of should we do this. We are about where we 

were when we were talking about reducing gas mileage on automobiles back in the early 1970’s. It was not 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 apply this. 

Today, the people who have taken advantage of that are really 

reaping the benefits. It is 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 there is no reason why people 

should not be able to move into a home that has a 30 to 40 percent 

energy advantage over a home that was built 2, 4, or 5 years ago. 

Mr. PERLMUTTER. Thank you, sir. Now I will recognize Mr. 

Campbell for 5 minutes. 

Mr. CAMPBELL. Thank you, Mr. Acting Chairman. 

First question for Mr. Purnell. Mr. Purnell, in your statement, 

you said, ‘‘Designing and constructing energy efficient homes complete with energy efficient appliances as well as heating, air condiVerDate Aug 31 2005 13:14 Sep 29, 2008 Jkt 044184 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 K:\DOCS\44184.TXT TERRIE
44 

tioning, and lighting systems, will provide an immediate financial 

benefit to homeowners and renters through reduced utility costs.’’ 

If that is the case, why do we need this bill at all? Why will people just not do it because there is a financial incentive to do so? 

Mr. PURNELL. I think incentivizing people, and you have to 

incentivize the builders. This bill also addresses 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 letting low- and moderate-income people know this is something that should be done as well and then 

providing the opportunity for them to do it by the incentives at the 

lending financial markets and Freddie and Fannie with regard to 

second mortgages might help as well. 

Mr. CAMPBELL. Thank you. One caution I will make for the author and others. In California in 2001, we had a big energy crisis. 

People may remember. There were some of these incentive things 

put in, which allowed people to game the system and allowed people to get the incentive without actually doing what they were supposed to do. A lot of that went on and it ended up not being good 

for anybody. 

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 are doing here, and about whether 

we are taking our eye off the ball on producing more clean and 

cheap nuclear energy which will solve a lot of these problems over 

time, Mr. Howard, if you look at a national set of standards which 

I think is difficult, the plains, the coasts, the desert, etc., but is 

there a group of national standards or something that your organization supports? 

Mr. HOWARD. There are the ones that we have referred to in this 

testimony, Congressman, with respect to the ANSI process, and 

those standards when they come out will be supported by the National Association of Home Builders. 

Mr. CAMPBELL. Mr. Hicks, same question. 

Mr. HICKS. In addition to those, we promote the LEED for 

Homes rating system as a way to further drive leadership. 

Mr. CAMPBELL. Which? I am sorry. 

Mr. HICKS. LEED for Homes. Leadership, energy and environmental design, to further drive leadership and benefits that you 

can gain from the green building sector. 

Mr. CAMPBELL. Mr. George? 

Mr. GEORGE. There are several standards that NMHC, NAA, and 

a number of other building organizations have supported, referenced in my testimony, which is specifically designed for apartment housing, high-density apartment housing, which has many of 

the components of LEED and several other of the standards referenced. 

Mr. CAMPBELL. Is it fair to say the three of you have three different standards that you support? 

Mr. HOWARD. It sounds like it. 

Mr. CAMPBELL. Mr. Bernstein, a question for you. I found your 

charts and everything interesting. I live in an urban area. I am 

45 

from the Newport Beach area in California. There is not much— 

this is not about my district necessarily. 

It looked to be pretty clear that this efficiency occurs in urban 

areas and does not in rural areas where my neighbors are across 

the street and other people’s neighbors are a mile down the road 

or in a different town 25 miles down the road. 

How do you do something like you are talking about and make 

it equitable for people who are not living in high-density areas? 

Mr. BERNSTEIN. If I am not mistaken, right now approximately 

82 percent of the population does live in metropolitan location efficient areas and another 6.7 percent of rural Americans do as well. 

Rural America is a lot more dense actually than most people realize. 

The other half of that question has to do with the local amenities. What the chart shows is that you get the location efficiency 

one of two ways: Either because there is good mass transit or 

transportation choices; or because the stuff you do is close to you, 

like a grocery store. 

It is when you have very low density and no amenities at all that 

your travel demand is going to be very high, and too much of suburban America is like that. I think we need to start retrofitting it 

to provide better choices. 

On balance, this would be extremely equitable. It would count 

the savings that people are getting from making smarter choices 

and when they go to Realtor.com, sir, or Google.com, they do not 

get the transportation cost in with the housing cost, so they make 

a bad choice. Now, they would know how to do it. 

Mr. CAMPBELL. Thanks. Perhaps Mr. Howard and Mr. George, 

just kind of about what people are thinking out there. Before I lost 

my mind and went into politics, I was in the retail car business for 

25 years, and there were times when people were really interested 

in energy and fuel economy, like now. There were also times when 

people did not even look and did not care. 

What is the buyer, what is the renter, what is their concern and 

interest in this area, in green houses or green energy efficiency? 

Mr. GEORGE. I would say for the renting public, there is a tremendous and increasing interest in green technology, and that 

buildings that have green attributes to them are very attractive to 

people. They feel as though they are doing good. 

Mr. CAMPBELL. Mr. Howard? 

Mr. HOWARD. There is definitely an increase in the marketplace, 

increased demand for green energy efficient housing. Right now the 

marketplace is not as active as we would like it to be, but prior to 

the downturn, it was a significantly growing element in the industry. 

Mr. CAMPBELL. Thank you very much. 

Mr. PERLMUTTER. Thank you. The gentleman yields back. Mr. 

Scott was going to be recognized for 5 minutes but it will now be— 

you are next. Mr. Scott is recognized for 5 minutes. 

Mr. SCOTT. I wanted to kind of continue my line of discussion on 

the impact on how we make sure that we are not doing an over 

impact on the impact of energy costs on low- and moderate-income 

people. As we mentioned before, it is a very serious issue. 

46 

Are you all fairly confident that in this particular piece of legislation—are you familiar with it pretty well? Do you have any concerns about that issue vis-a-vis this bill? Do you see anything within what we are doing here that might have a negative effect on 

low- and moderate-income people? 

Ms. KOO. If I may, Representative Scott, we have studied for 3 

years by using a variety of incentives and capacity building, sharing knowledge, with affordable housing developers around the 

country, in all housing types, in rentals, for sale, and we have 

found an unconditional conclusion that the payback, both in terms 

of the utility savings for either the residence 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 be between 2 and 3 percent. 

You asked a question about manufactured homes earlier. We 

have limited experience with that. It was built into modular homes 

in Pass Christian, Mississippi, after the storm. What we learned 

was that the technique of making the homes green is more about 

how to put the modular pieces together, so that it is the caulking 

and the sealing and the fresh air intake and the exhaust and the 

ventilation that would make the house green. 

It is not the manufacturing or altering the panels to make them 

green even though the use of nontoxic paint and cabinets and stuff 

all add to the health quality. 

We are not seeing a tremendous increase of costs that would be 

prohibitive to the manufacturers of this type of housing, but it is 

the skill set and the knowledge with which you put them together. 

In return, the homeowners who live in those homes are realizing 

tremendous utility savings and a much more healthier home. 

Mr. SCOTT. How do you address the issue of the two separate 

codes that the manufactured homes’ 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? 

Ms. KOO. I am not an expert in the codes. I would defer to Mr. 

Purnell to address that. I can assure you that the initial concerns 

existed when Congress was going to introduce ADA Code compliance for the Americans With Disabilities Act to retrofit. It was the 

right thing to do. In time, the industry learned to work with it. 

Over time, the best practice becomes the common practice. 

Mr. Purnell may know about the specific codes that you are talking about. 

Mr. SCOTT. Mr. Purnell, if you could address that. We need to 

find out if this is a serious concern. What I hear from those in the 

industry is that the actual complying with these two codes, they 

feel it would 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? 

Mr. PURNELL. In my opinion, no, it is not true. Would there be 

some additional costs? I would have to know what aspects of the 

codes is giving the modular manufacturers some concern. 

47 

Typically, a local building code in a State or a city is more restrictive than these national codes that you are speaking of. Most 

manufacturers are sometimes kept out of marketplaces because of 

the local codes. 

For instance, here in the District of Columbia, they have a very 

strict local code that in addition or I should say amendments to national codes that are quite restrictive on manufacturers in many respects. 

I would have to know what the specifics are. Congressman Scott, 

I lived in a manufactured home as an architect; I lived in one I designed for about 18 years. Some of them are not necessarily for just 

low- and moderate-income people. 

The manufacturers really have the best opportunity to address 

this issue of green home and green design. I do not think we are 

that far away from having hybrid homes like we have hybrid cars, 

and the manufacturing industry is probably the best way to address it. 

Mr. HOWARD. Congressman, you asked about the impact on affordable housing and housing affordability. I would suggest to you, 

sir, that absent appropriations, increased appropriations, there 

could be a concern about the number of units that the Federal Government could subsidize if there are increased costs per unit. That 

only makes sense. 

Likewise, with respect to Fannie and Freddie, if they are given 

credit for achieving their affordable housing goals, and it is fewer 

units because they get extra credit for doing green housing, then 

there is less incentive for them to do more affordable housing. 

It is sort of like you can accomplish what you want to accomplish 

but it could end up costing more in appropriations, and I think 

with the scarcity of Federal resources right now, the committee 

needs to make decisions about balancing that. 

Mr. SCOTT. Do you think amending the charters of Freddie Mac 

and Fannie Mae to promote green building would distract them 

from their primary function of enhancing liquidity, which in effect 

helps with affordable housing? 

Mr. PERLMUTTER. The gentleman’s time has expired, but I will 

let you answer this question. 

Mr. HOWARD. I believe, sir, it could distract them. As I say, the 

way the bill is written right now, it gives them extra credit, as I 

understand it, in achieving their affordable housing goals for doing 

green housing, which would mean they would do potentially less, 

a smaller number of units of affordable housing. 

The answer is that depending upon how it is done, it could very 

easily and very well distract them; yes, sir. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Mr. BERNSTEIN. Congressman, I want to say that if that charter 

amendment was defined to very clearly delineate a focus on making the housing that they are 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, safety, and soundness, not just mission. What the bill does is bring the two together quite nicely. I am 

48 

unaware of any cap on the amount of affordable housing that 

Fannie and Freddie can be credited for. There are minimum’s. 

What they can sell in the market determines how much they can 

do in total. If, in fact, you give them a focus that allows them to 

do more, they are going to do more of it. 

Mr. PERLMUTTER. Mr. Green from Texas is now recognized for 5 

minutes. 

Mr. GREEN. 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, 

some folks are going to say, why did they, knowing what they knew 

then, fail to act when they could have? 

It is fairly clear to me that we are in a position where we must 

act. We are in a position where we may fail to act. 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 a mortgage 

payment in some places with some homes. We absolutely have to 

reduce the cost that persons are paying to cool and heat their 

homes. We really do. 

I greatly appreciate the testimony from the witnesses today. Let 

me ask this: With reference to appraisals, will the values of homes 

increase once these energy conservation efforts have been perfected 

within the homes? 

Mr. Purnell, how would this impact the appraisal process, sir? 

Mr. PURNELL. They should increase. It probably will make the 

home more desirable to the average buyer, if it follows what has 

happened 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 

command higher rents. 

There are some corporations and commercial enterprises that 

will insist on going into a building that is sustainable, and I would 

imagine that you would have home buyers with that same mindset. 

Mr. GREEN. 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 have introduced into the marketplace? 

Mr. PURNELL. I think you see it now in just about everything. 

You see it in the foods and the way advertising for food, food that 

is organic. Clothing, we have organic fibers and fabrics. You see 

there is a premium that people are willing to pay in some cases 

and the manufacturers of these are taking advantage of it. It is the 

same with home buyers. 

I think once you decide that energy efficiency is something that 

people want, it is something that is going to be desirable. It is 

going to drive demand. It is sort of an ironic thing, but as you move 

and demand to have more energy efficient homes and cars and just 

the lifestyle, you drive demand for oil down. When you drive demand down, prices will go down. It has a snowballing effect on 

where prices will go in the future. 

49 

Mr. GREEN. Let’s talk for a moment about Fannie Mae, Freddie 

Mac, and FHA. 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 is my belief that the legislation will not require them to enforce, but what they will do is accord loans to 

homes or purchasers who have homes that come up to a certain 

standard. 

They do not 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. In the case of FHA, it is a guarantee. 

Let’s talk for just a moment about FHA more appropriately. How 

would this harm FHA in terms of its safety and soundness if you 

think it will. Does anybody think it will, FHA guaranteeing a home 

that is energy efficient? 

Mr. BERNSTEIN. It should reduce the risk. If you are making 

loans on a basis of cost effectiveness to reduce the net outlay of the 

borrower, the borrower has an increased ability to pay, the risk 

should drop, the delinquencies and the defaults should drop, both 

for the energy efficient and for the location efficient mortgages. 

Mr. GREEN. My time is up, Mr. 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, or being over run. My hope is that we will lead 

on this issue. 

Thank you, Mr. Chairman. 

Mr. PERLMUTTER. Thank you, Mr. Green. The gentleman from 

Texas yields back. The gentleman from New Hampshire, Mr. 

Hodes, is recognized for 5 minutes. 

Mr. HODES. Thank you, Mr. Chairman. I want to thank the 

panel. I appreciate the effort that you have made in your remarks 

and the work you have done all on the development of sustainable 

buildings. 

As I see it, we are at a watershed moment. There is no going 

back. I know change is not easy. As humans, we have a chemical 

in our brain that wants to hang onto the status quo, and you need 

to make a decision when new information comes in to move forward. 

Anybody who has lived through the past 3 days, and the past 

couple of summers, knows we are now at 100 degrees up and down 

the Eastern Seaboard. Gas is skyrocketing past $4 a gallon. 

Change is upon us. We must accept it, adapt, and innovate. 

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, and a 

sustainable planet. 

Mr. Purnell, I have heard a lot from the other side, and this bill 

does not, of 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? 

Mr. PURNELL. It is something that the everyday citizen can basically control to a large measure. We cannot change the gas mileage 

in our cars as we drive them except that we can ease down on the 

50 

accelerator and not travel at posted speeds and maybe save 5 to 

10 percent of the gas mileage. 

We can go into our homes. We can make our homes more energy 

efficient in appliances that we use and in the types of ways we heat 

and cool our homes. We can save 40 to 50 percent of energy in our 

homes, without really going to active systems, such as wind and 

solar, which could take it down even further. 

Most Americans realize that they do not know how they can contribute and they do not know how they will get a payback and they 

do not know exactly what that payback is because they are not 

quite educated. They do not know if they can get a second mortgage just to do these kinds of things. 

I think this is a way that if the education is there, and 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, 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. 

You do not have to be told to do this. This is something that people 

want to do. I think this would allow them a way to do it. 

Mr. HODES. Mr. Howard, I appreciate the comments from the 

home builders and I appreciate the constructive way that we have 

worked with the home builders on this legislation. I look forward 

to further discussion about some of your ideas. 

I just wanted 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? 

Mr. HOWARD. That is correct, sir. 

Mr. HODES. You understand that we are putting in this bill the 

ability of the Secretary to include new standards as they come 

along? 

Mr. HOWARD. Yes, sir. 

Mr. HODES. 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. 

Mr. HOWARD. Where we see enhanced job growth mostly, sir, 

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 is in a downward cycle, the remodeling sector tends to go up. It could be a very countercyclical 

opportunity for builders in that regard. 

Mr. HODES. I would 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 market is addressed? 

Mr. PURNELL. I think it probably takes you out of the responsibility of this particular committee, but tax incentives would go a 

long way to ensure that people took advantage of this bill. 

Mr. HODES. We cannot do that here. 

Mr. PURNELL. But you can work with the folks who can. 

Mr. HODES. Yes, we can. Mr. Howard? 

51 

Mr. HOWARD. I agree with Mr. Purnell. Right now, the bill goes 

fairly far in terms of the jurisdiction of this committee. 

Mr. HODES. Mr. Bernstein? 

Mr. BERNSTEIN. There are 126 million homes in America, and we 

are adding 1.8 million a year. Clearly, the more we can do to 

strengthen the excellent point that was just made, the better we 

will be. 

Most people’s homes or most of the homes that we are going to 

see in 30 years from now are here already. If we do not make those 

as energy efficient as possible, we will lose twice. First, on the energy efficiency of those homes, and secondly, we are going to induce 

more sprawl. You saw from my slides the effect of that. 

We have an opportunity here by focusing on existing homes to 

strengthen at least two major cost saving centers and get the innovation out of both. 

Mr. HOWARD. Sir, if we were building 1.8 million homes this 

year, I would sleep a lot better at night. 

[Laughter] 

Mr. HOWARD. It is closer to half that number. 

Mr. HODES. Ms. Koo? 

Ms. KOO. Mr. Hodes, we remember the HUD number, $4 billion 

in energy utility subsidies a year. Mr. Howard was mentioning 

about appropriations. If you can save 25 to 40 percent of that utility allowance, and put back just 2 to 4 percent in increased costs 

to retrofit and build things more energy efficient, not only will you 

balance the appropriations question, but you would also create a 

much healthier living environment, especially for low-income people. 

Mr. HODES. Thank you. I know I am out of time. Mr. Chairman. 

I just want to commend the panel, and we look forward to working 

with you as we go forward to make this a better Act. 

I would 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 

backward. We have to look forward on where we are going. 

I thank you. I thank you, Mr. Chairman. 

Mr. PERLMUTTER. I know I speak for the committee and for 

Chairman Frank, thank you for all of the time you all put into your 

statements and for your comments today. 

The Chair notes that some members may have additional questions for these witnesses that they wish to submit in writing. Without objection, the hearing record will remain open for 30 days for 

members to submit written questions to these witnesses and to 

place their responses in the record. 

With that, this hearing is adjourned. 

[Whereupon, at 12:56 p.m., the hearing was adjourned.] 

(53) 

A P P E N D I X 

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