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61–989 PDF 2010

S. HRG. 111–693 

GREEN HOUSING FOR THE 21ST CENTURY: 

RETROFITTING THE PAST AND BUILDING AN 

ENERGY–EFFICIENT FUTURE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING, TRANSPORTATION, AND COMMUNITY 

DEVELOPMENT 

OF THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

ON 

EXAMINING THE BUILDING OF AN ENERGY–EFFICIENT FUTURE 

JUNE 30, 2010 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

MICHAEL F. BENNET, Colorado 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

KAY BAILEY HUTCHISON, Texas 

JUDD GREGG, New Hampshire 

EDWARD SILVERMAN, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director 

DAWN RATLIFF, Chief Clerk 

WILLIAM FIELDS, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

SUBCOMMITTEE ON HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT

ROBERT MENENDEZ, New Jersey, Chairman 

DAVID VITTER, Louisiana, Ranking Republican Member 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JOHN TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

KAY BAILEY HUTCHISON, Texas 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

MIKE JOHANNS, Nebraska 

JUDD GREGG, New Hampshire 

MICHAEL PASSANTE, Transit Staff Director 

(II)
C O N T E N T S 

WEDNESDAY, JUNE 30, 2010 

Page 

Opening statement of Chairman Menendez .......................................................... 1 

WITNESSES 

Sheldon Whitehouse, Senator from the State of Rhode Island ............................ 2 

Prepared statement .......................................................................................... 28 

Ed Perlmutter, Representative in Congress from the State of Colorado ............ 3 

Prepared statement .......................................................................................... 28 

Ron Sims, Deputy Secretary, Department of Housing and Urban Development ...................................................................................................................... 5 

Prepared statement .......................................................................................... 34 

Responses to written questions of: 

Senator Vitter ............................................................................................ 57 

David Caldwell, Jr., Vice President, Caldwell and Johnson, Inc. ........................ 16 

Prepared statement .......................................................................................... 41 

Trisha Miller, Director, Enterprise Green Communities, Enterprise Community Partners, Inc. ................................................................................................ 18 

Prepared statement .......................................................................................... 49 

Kenneth Gear, Executive Director, Leading Builders of America ....................... 19 

Prepared statement .......................................................................................... 53 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Letter and comments from Stewards of Affordable Housing for the Future ...... 58 

Prepared statement of the American Institute of Architects ............................... 61 

Prepared statement of Roger Platt, Senior Vice President, Global Policy and 

Law, U.S. Green Building Council ...................................................................... 68 

Prepared statement of Leanne Tobias, Managing Principal, and Martha Paschal, Managing Director, Malachite LLC ........................................................... 71 

(III)

(1) 

GREEN HOUSING FOR THE 21ST CENTURY: 

RETROFITTING THE PAST AND BUILDING 

AN ENERGY–EFFICIENT FUTURE 

WEDNESDAY, JUNE 30, 2010 

U.S. SENATE, 

SUBCOMMITTEE ON HOUSING, TRANSPORTATION, AND

COMMUNITY DEVELOPMENT, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Subcommittee met at 10 a.m., in room SD–562, Dirksen Senate Office Building, Senator Robert Menendez (Chairman of the 

Subcommittee) presiding. 

OPENING STATEMENT OF CHAIRMAN ROBERT MENENDEZ 

Chairman MENENDEZ. This hearing of the Subcommittee on 

Housing, Transportation, and Community Development will come 

to order. I look forward to hearing from my colleague, our House 

colleague in just a minute. I will start with an opening statement, 

and we will move to them. 

One of the great challenges we face as a society is how to build 

a sustainable energy future, one that can make us self-sufficient as 

a Nation and reduce the devastating impacts of climate change. I 

believe that any strategy to address these challenges has to involve 

the buildings where we live. 

In the United States, buildings account for 72 percent of electricity consumption, 39 percent of energy use, 38 percent of all carbon dioxide emissions, 40 percent of raw materials used. That is 3 

billion tons annually. 

Fortunately, in recent years there have been tremendous advances in green building technologies, and I see great potential to 

apply these technologies to our current and future homes. It is woefully inadequate that today only about 2 percent of homes in America are being built according to green standards. The spread of 

green housing is not only imperative from an environmental standpoint, it can also produce real cost savings, particularly for Americans seeking to achieve their American dream and homeownership. 

That is why I see green housing as a win-win opportunity. It is 

good for our planet. It is good for homeowners. I can be good for 

our economy as well as our environment. It is good for the opportunity to create a vibrant green building industry, which means 

new jobs are being created, good green jobs. 

That is why I am delighted to be chairing today’s hearing, 

‘‘Green Housing for the 21st Century: Retrofitting the Past and 
2 

Building an Energy-Efficient Future.’’ The goal of today’s hearing 

is to explore proposals to encourage energy-efficient home construction and retrofitting and, in particular, the Energy Efficiency in 

Housing Act, S. 1379, which I am proud to cosponsor with Senator 

Whitehouse. 

Over the course of this hearing, I look forward to asking questions and learning more about the state of green housing, the current market for green housing, and what we as a Congress can do 

to bring our Nation’s housing stock in line with the energy-efficient 

technologies of the 21st century. 

We are very fortunate to have firsthand testimony from some of 

the best minds on how to make our homes green and energy efficient. Our first panel will feature my distinguished colleague Senator Sheldon Whitehouse from Rhode Island, who is the author of 

the Energy Efficiency in Housing Act, and we will also be hearing 

from our colleague Congressman Earl Perlmutter of Colorado, who 

is a sponsor of the House companion bill, the GREEN Act. 

Our second panel will feature the Honorable Ron Sims, Deputy 

Secretary, United States Department of Housing and Urban Development. 

And on our third panel, we will hear from Mr. Dave Caldwell, 

Vice President of Caldwell and Johnson, a homebuilding firm; and 

Ms. Trisha Miller, the Director of Green Communities at Enterprise Community Partners; and Mr. Kenneth Gear, Executive Director of Leading Builders of America. And I look forward to their 

testimony, particularly, in addition to what we are trying to do 

here, how we can incentivize the marketplace and look at mortgages that may move us in the right direction to incentivize green 

building as well. 

With that, my dear colleague and friend, Senator Sheldon 

Whitehouse. 

STATEMENT OF SHELDON WHITEHOUSE, SENATOR FROM THE 

STATE OF RHODE ISLAND 

Senator WHITEHOUSE. Chairman Menendez, thank you for the 

opportunity to speak this morning and for holding this hearing to 

examine proposals to encourage energy efficiency in the housing 

sector, including my Energy Efficiency in Housing Act. I want to 

particularly thank my friend Representative Ed Perlmutter for 

leading the way on this crucial topic. He has succeeded in shepherding green housing legislation through the House and has been 

one of the leading champions of energy efficiency. 

I also want to acknowledge Dave Caldwell, on the third witness 

panel, who has led pioneering efforts in green building in Rhode Island and has traveled down to D.C. to share his experiences with 

the Committee. 

I hope that this hearing will make clear that energy-efficient 

housing connects tackling climate change and reducing our dependence on foreign fossil fuels to cutting Government outlays and trimming household budgets, to renovation, design, and construction 

jobs that cannot be exported. Despite this promise, energy-efficient 

options in housing are not well understood by consumers, and 

homebuyers today often pass up green opportunities that are in 

their economic interest. Our challenge as legislators is to devise 
3 

programs to inform consumers and jump-start our green housing 

economy. 

Representative Perlmutter’s GREEN Act is the first comprehensive green housing bill to be introduced in Congress. Working with 

you, Chairman Menendez, and Senator Schumer, I drafted a companion to the GREEN Act and introduced it last June. Similar to 

Representative Perlmutter’s bill, the Energy Efficiency in Housing 

Act would authorize programs and incentives to encourage green 

construction and retrofitting. The support of the home builders and 

the mortgage bankers shows that this is common-sense legislation. 

EEHA would energize the market for energy-efficient and location-efficient mortgages by directing the HUD Secretary to develop 

up-front incentives for homebuyers. As a result of lower monthly 

energy costs, green homeowners are slightly less likely to default 

on their mortgages over time. This lower credit risk justifies borrowing incentives such as waived fees and lower points and rates. 

Additionally, EEHA would create incentives in the secondary mortgage market, making it more profitable for lenders to sell these 

products. 

On the public housing side, EEHA would require the Secretary 

to develop incentives for energy efficiency for the housing programs 

that HUD oversees, designed so that the savings are shared between landlord and tenant. To help find the right balancing points, 

the bill would authorize a 50,000-unit demonstration program for 

Section 8. 

As Members of this Subcommittee well know, housing programs 

often cut across layers of government. To help State and local governments experiment with novel and innovative green housing programs, EEHA would authorize a revolving loan fund. It would also 

create a grant program so that community development nonprofits 

can participate in and administer construction and retrofitting efforts. 

Mr. Chairman, I once again commend you and express my great 

personal appreciation to you for holding this hearing. With buildings accounting for between 40 percent and 50 percent of greenhouse gas emissions, green housing incentives offer environmental 

promise in addition to jobs and cost savings—the win-win you mentioned, Mr. Chairman. 

I thank you. 

Chairman MENENDEZ. Thank you, Senator. 

Congressman Perlmutter. 

STATEMENT OF ED PERLMUTTER, REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF COLORADO 

Mr. PERLMUTTER. Senator Menendez, thank you for inviting me 

here to testify on green housing and energy efficiency. Renewable 

energy and energy efficiency have long been priorities of mine. We 

must find different ways to power our country and find ways to 

save energy wherever possible. Combined, our homes, businesses, 

schools, governments, and industries consume more than 70 percent of the natural gas and electricity used in the country. 

When I came to Congress in 2007, I was selected to serve on the 

House Financial Services Committee. Chairman Frank recognized 

the interest in energy efficiency among Committee Members and 
4 

asked me to head the Energy Efficiency Task Force. The task force 

included Democrats and Republicans. We held a number of meetings to gather feedback. And as a result of this feedback, Congresswoman Judy Biggert and I introduced the Green Resources for Energy Efficient Neighborhoods Act, the GREEN Act. The GREEN 

Act initially passed as part of the comprehensive energy package 

in the 110th Congress and then again in the 111th Congress. 

I have worked with Senator Whitehouse since the beginning 

when we started the task force. He has introduced companion legislation, and I would like to thank him—I would like to take this opportunity to thank him for all his work and expertise on these matters. For the purposes of my testimony, I will refer to the GREEN 

Act and Senator Whitehouse’s Energy Efficiency Housing Act of 

2009 interchangeably. 

The legislation is an incentive-based bill and will help create jobs 

and save taxpayers money. According to an independent study by 

the American Institute of Architects, the GREEN Act would potentially create more than 140,000 jobs, and at this time, I would like 

to submit this study for the record. 

Chairman MENENDEZ. Without objection. 

Mr. PERLMUTTER. HUD estimates it spends approximately $5 billion on both direct and indirect energy costs, making energy one of 

HUD’s biggest line items. This legislation establishes a demonstration program of 50,000 HUD units to show cost-effectiveness and 

to confirm utility costs will go down. HUD estimates a conservative 

savings of just 5 percent would save taxpayers $1 billion over the 

next 5 years. Savings from energy efficiency will also help improve 

the quality of life for consumers while putting money back in their 

pockets. 

The legislation include energy-efficient and location-efficient 

mortgage outreach, a critical component to fostering livable communities. A renewable energy systems leasing program will be developed, allowing consumers to take advantage of renewable energy 

without the up-front costs. Appraisal standards are updated to ensure that energy-efficient and renewable features are taken into account during the appraisal process, a necessary step toward properly incentivizing green housing. 

The provisions included in the act were developed in consultation 

with stakeholders and other industry experts. Many groups support 

this legislation, including the National Association of Home Builders, the National Multi-Housing Council, the Mortgage Bankers Association, the U.S. Green Building Council, Enterprise Community 

Partners, the American Planning Association, the American Institute of Architects, and individual companies such as LENNAR Ventures. 

Both the GREEN Act and Energy Efficiency in Housing Act are 

examples of the forward thinking we must do to encourage energy 

efficiency and move our Nation toward greater energy independence. These bills strike a balance by showing it is easy to be green, 

making energy-efficient practices more affordable, accessible, and 

achievable. Simply put, energy-efficiency measures are, as the 

Chairman said, good for national security, good for the environment, and good for jobs and the taxpayers. For these reasons, I 
5 

hope the bill introduced by Senator Whitehouse will be part of the 

energy conversation going forward. 

I look forward to working with you and with my colleague to 

move this legislation. Thank you again for the opportunity to 

speak. 

Chairman MENENDEZ. Well, let me thank both of you for your 

leadership in this regard. I think that lays an excellent foundation 

for why this legislation makes a lot of sense. I have no doubt that 

it will be part of the energy portfolio that we are trying to pursue. 

With that, I thank you both and look forward to working with you 

to make this happen. 

Senator WHITEHOUSE. Thank you, Mr. Chairman. 

Mr. PERLMUTTER. Thank you. 

Chairman MENENDEZ. Our next witness is HUD’s Deputy Secretary Ron Sims. I am going to ask the Secretary to come on up. 

Deputy Secretary Sims was unanimously confirmed, something 

that is rare here, by the U.S. Senate on May 6th of 2009 as Deputy 

Secretary for the Department of Housing and Urban Development. 

He is the second-most senior official at HUD. He is responsible for 

managing the Department’s day-to-day operations, nearly a $40 billion annual operating budget and the agency’s employees, and we 

appreciate you being here today to share HUD’s views on the issue 

of the legislation that we just heard about. 

Mr. Secretary. 

STATEMENT OF RON SIMS, DEPUTY SECRETARY, 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. SIMS. Good morning, Chairman Menendez, and also Senator 

Warner. It is a pleasure and honor to be here. 

I want to thank you for this incredible opportunity to testify on 

the Energy Efficiency in Housing Act of 2009. I want to commend 

you, as well as Senator Whitehouse, Senator Schumer, Senator 

Bennet, and Senator Merkley for your support for energy efficiency 

and green building. And I want to thank Congressman Perlmutter 

for his incredible work in the House. I have been working closely 

with him as well. 

I also want to thank you and Chairman Dodd for your work on 

the Livable Communities Act. The Livable Communities Act would 

permanently authorize HUD’s Office of Sustainable Housing and 

Communities and solidify our partnership for sustainable communities with the U.S. Department of Transportation and EPA. We 

strongly support that legislation and intend to provide the Committee with technical comments in the near future. 

I am also pleased today to express support for Senate bill 1379 

as it impacts HUD’s program and policies. This bill represents an 

important effort to address the high cost of heating, lighting, and 

cooling housing in the United States, especially with portable housing. We also support both the energy efficiency as well as the location efficiency of the build environment. 

I would let you know that our support for the bill is contingent 

on a number of technical amendments that would more closely 

align it with the House version as well as HUD—excuse me. I do 

not know why I am nervous—as well as HUD’s new programs and 

policies. 
6 

I will touch on a few areas where we believe correction or modification will help HUD implement this important legislation in the 

future and link it more closely with HUD’s current initiatives. 

First, with regard to minimum standards, our understanding of 

the bill is that it gives the Secretary the discretion to apply minimum or enhanced energy and green standards rather than mandating them. There is a green premium for implementing new 

standards that HUD believes may be to raise the corporate—accordingly. 

We also recommend reordering and amending the provision related to underwriting energy-efficient and location-efficient mortgages. We recommend allowing the proposed commission in the legislation to complete its work and to make its recommendations to 

FHA for consideration—creating new products without such guidelines. We also want to ensure that the definition of an energy-efficient mortgage works and that budget neutrality is applied to the 

FHA Mortgage Insurance Fund. 

I look forward to working with the Committee staff to address 

these issues and ensure that HUD can do proper due diligence on 

the feasibility of implementing the new program. 

I had to be really nervous not to push that button. 

As the former county executive of King County, Washington, 

where we developed one of the most cutting-edge green building 

and smart growth programs in the country, I bring to HUD a personal commitment of putting HUD-assisted properties at the forefront of creating a greener economy. Some believe green buildings 

is only affordable for higher incomes. I believe that we cannot afford not to build green. 

While everyone is hurt by the high energy costs, no one is more 

vulnerable to rising energy prices than low- and moderate-income 

families. Large-scale initiatives such as the Enterprise Green Communities program show that properties achieving 20 to 30 percent 

greener energy efficiency yield cost savings that accrue directly to 

low-income residents or are reinvested back into the property in 

which they live. HUD’s own budget faces challenges because of skyrocketing energy costs. HUD spends $5 billion on energy for our 

public housing and Section 8 operations. A modest savings of 5 percent could generate a savings of $1 billion for taxpayers over the 

next 5 years. 

Sustainable green building has a clear connection to better 

health as well. In King County, we found that people living in the 

most walkable were less likely to be overweight and more likely to 

be physically active and that wide health disparities existed between low-income families and persons of color and the rest of the 

population in traditionally poor neighborhoods. 

But as we saw in the High Point public housing development in 

Seattle, building green can change the equation entirely. It became 

an economic engine in the community that everybody had given up 

on and once called ‘‘the armpit of King County.’’ Green building requires a new generation of professionals not simply ready to build 

these technologies but to install, repair, and maintain them—mechanics and electricians and plumbers and construction workers 

who will pioneer the wave of green technologies. 
7 

For all of these reasons, Secretary Donovan and I are committed 

to making HUD a leader in green development. Nowhere is this 

commitment more evident than HUD’s new strategic plan, which 

was published last month. 

One of HUD’s strategic goals is to promote energy-efficient buildings and location-efficient mortgages and communities that are 

healthy, affordable, and diverse. That is why over the next 2 years 

HUD aims to create 159,000 energy-efficient or green housing units 

through our Recovery Act initiatives and our ongoing programs. 

We have also invested significant Recovery Act funds in greening 

our housing stock. Our green retrofit program is helping to retrofit 

20,000 federally assisted housing units. In public housing, we have 

financed over 35,000 energy retrofits. We also provided greening incentives with our Indian housing and our Neighborhood Stabilization Program. 

Looking beyond current programs and funding, we are currently 

implementing a new $50 million energy innovation fund. This fund 

will pilot various innovation strategies for financing cost savings 

and energy-efficient measures for both single- and multi-family— 

excuse me—in both the single- and multi-family sectors. We expect 

to deploy these funds later this year and will keep the Committee 

closely informed. 

We are also hard at work on a comprehensive energy action plan 

that will provide detailed reporting on energy consumption and expenditures in HUD-assisted housing and lay out a set of specific 

steps HUD will take over the next 2 years to dramatically increase 

the environmental performance of HUD-assisted housing. We look 

forward to sharing the next vision with the Committee later this 

year. 

I believe that HUD’s energy efficiency program initiatives are 

closely aligned with what Senate bill 1379 proposes. I hope we can 

work together in the future to align our strategies for achieving our 

shared goals. 

Thank you, and I look forward to answering any questions you 

may have. 

Chairman MENENDEZ. Thank you, Mr. Secretary. And I am a little confused myself. I thought green normally means talk and red 

means don’t, and it changes here. So you were fine. 

[Laughter.] 

Chairman MENENDEZ. Let me start off with a round of 5 minutes 

here. 

First, I know that FHA has been providing energy-efficient mortgages as part of a national program since 1995. Do you have any 

sense of how that has worked and what we can learn from it? 

Mr. SIMS. The amount of mortgages that are in that program 

were not sufficient enough for us to determine what the market 

would do at a greater scale, so we are still working on it internally 

and with other agencies to see what the underlying data would be. 

That is why we are doing studies right now to determine how both 

location-efficient mortgages would work as well as energy-efficient 

mortgages would work. 

Chairman MENENDEZ. Well, one of our other panelists in the 

next panel is going to advocate in their testimony for incorporating 
8 

green incentives into mortgage calculations, which strikes me as a 

worthy idea. 

Do you have any models as to how that can be done? Is there 

any view that HUD has about that? 

Mr. SIMS. There are projects throughout the country that have 

done that. HUD is trying to internally work and see how you would 

build that in, for instance, our mortgage instruments, our insurance instruments. And we just need more data. We are looking 

at—it has worked in some places and failed in others, and I think 

what we are concerned about is the integrity of our fund and then 

how literally it takes us to scale, whether using appraisers, whether using mortgage—the financial industry, whether it is trying to 

determine what consumer preference is, which is why we like the 

commission and why we are undertaking lot of studies right now. 

When this gets implemented, we want this really to be effective. 

We look forward to the commission system because that commission can handle all of these issues, and we look forward to that report that would come out of the commission that is set forth in the 

bill. 

Chairman MENENDEZ. I think this is a worthwhile endeavor, and 

I want to commend it to the Department’s attention. It seems to 

me that if we can incentivize as part of the mortgage calculation 

the move toward green energy and efficiency, we can use the private marketplace as a way in which we can accelerate the pace of 

energy efficiency. 

Let me ask you, in your testimony you describe a new $50 million energy innovation fund to pilot or test various strategies. Have 

you had the opportunity to see some of the most innovative strategies that show promise? 

Mr. SIMS. The Notice of Funding Availability is going to be going 

out early this fall, and then we will be seeing some of—— 

Chairman MENENDEZ. That is your first round? 

Mr. SIMS. That is our first round. And then we will be able to 

explore, obviously, the collective genius out there in America and 

their responses to our—— 

Chairman MENENDEZ. And then finally, HUD began its Green 

Initiative 3 years ago, which was a voluntary nationwide pilot initiative to encourage owners and purchasers of affordable multifamily properties to rehabilitate and operate their properties using 

sustainable green building principles. You write in your testimony 

that that led to the rehabilitation of approximately 2,700 units. 

What is your plan for continuing moving that in the future? 

Mr. SIMS. We are creating a much more vigorous culture of commitment. Our goal is to—that is why we put it in the strategic 

plan. That is how we are going to measure our own performance 

as an agency, and we are measuring employee performance as well. 

It has—— 

Chairman MENENDEZ. Is the culture matched by any resources? 

Mr. SIMS. The culture is matched—we have—we are applying 

across all of our programs on the green building side. We think it 

is really important. We realize that there are savings to us as a 

granting agency and there are savings to the people in that housing in terms of their own income. 
9 

Chairman MENENDEZ. Thank you. I have to go to an Energy 

markup briefly to offer an amendment. I would ask you, Senator 

Tester, if you are willing to chair for the balance. 

Senator TESTER. Your wish is whatever I can do to help you out, 

Mr. Chairman. 

Chairman MENENDEZ. I tell you, you are the man. 

Senator Warner is next, and we will call upon him, and then 

Senator Tester. Thank you very much. 

Senator WARNER. Well, thank you, Mr. Chairman, and let me 

start by thanking you and Senator Whitehouse and the others who 

have been involved in this effort. Also, Secretary Sims, it is great 

to see you again and thank you for what you are doing at HUD. 

I wanted to give a quick statement here and then get to a question point. I am supportive of what Senator Whitehouse and Senator Menendez are trying to do in this overall green housing initiative. There is another piece of this whole mix that I know the Administration has been supportive of as well that I have been very 

involved in on the retrofitting of homes, what we are calling the 

Home Star Program. President Obama has spoken on that, and we 

also are trying to see if we can get that included in whether a larger energy bill or perhaps even in a small business or some of the 

other legislation that is moving forward. 

As you are probably aware, that has got broad bipartisan support. It would be up to a 50-percent match using private sector distribution networks like the Loew’s and Home Depots of the world 

to do the kind of energy efficiency that can be done either by a contractor or by a homeowner on their own. 

I would like you to speak for a moment about within your not 

just new green building initiatives but within the retrofitting piece 

of what HUD is doing, what kind of experience you have had, obviously, with, as you describe, some of the examples in your old job 

in King County, taking communities that are usually a little more 

poverty-ridden, a little more challenging. But could you speak for 

a moment to HUD’s retrofit activities already around this energy— 

around the green energy space? 

Mr. SIMS. When I was testifying earlier about how we used our 

Recovery Act funds, much of that was recovery retrofit and weatherization, and I think at that time I was talking about the number 

of homes. I think we had 28,000 properties that were assisted 

housing, another 39,000. So we are a believer as an agency in the 

retrofit of properties, and we have seen, for instance, in Nashville 

the use of geothermal systems for heating. So we have been seeing 

a lot of innovation as we apply these funds, as we have coordinated 

ourselves with the Department of Energy as well on new investments. But I think it is—our experience, I think we would say, 

have been positive answers, and it has been incredibly positive, rewarding. That is why it is in our strategic plan, and that is why 

we have done such intensive work right now trying to figure out 

how we scale it up over a lot more of properties. 

Senator WARNER. And this may not be your area, since I think 

on the—well, I am very optimistic and hopeful about the Home 

Star Initiative. My sense was, at least from some of the public 

press, and I think about in my own State in Virginia, some of the 

Recovery funds that were used in the weatherization program, it 
10 

has gotten some mixed reviews in terms of the spend-out, the hiring-up process. You may not be able to speak to this at this moment, but I would love to see some more current data on the status 

of the Recovery Act weatherization programs, because my concern 

is, you know, one of the good things, I think, about the Home Star 

Initiative is it appeared to be less bureaucratic than perhaps the 

classic weatherization programs that have been run through—I 

think about our old LIHEAP programs and others. But can you get 

me that data if you cannot speak to it right now? 

Mr. SIMS. I can, yes. 

Senator WARNER. All right. One last point, and my time remains 

but—and this is more—again, a question you may not have a full 

answer for. But we all know the value of green building. We all 

know the value of retrofitting. We can make the business case. 

What seems to be that we have not cracked the code on yet is if 

we are going to achieve the savings that I think we can point out 

on episodic instances, and if we can, as the Chairman was talking 

about, trying to get this incentive into the mortgage—get it into the 

base in terms of rental on Section 8 or a homeowner making a decision, we ought to be able to finance this. And I know there are communities—I think Senator Merkley from Oregon has talked about 

some of the things they have done in Portland. But is HUD looking 

at various financing models out there so that we could actually 

maybe use seed public monies, but if we create an appropriate 

baseline in terms of what normal energy consumption would be 

and we can demonstrate that the green building construction or the 

retrofit can actually deliver savings, there ought to be a way in 

partnership with the utilities—as we move toward renewable 

power standards and renewable utility standards that we should be 

able to finance this through public—through actually private financing rather than simply rely on public grant programs. 

My sense is from the Chairman’s earlier questions, you are looking at trying to get these modeling right. Do you want to speak to 

this whole notion of how we might be able to do more of a public– 

private financing on these efforts going forward? 

Mr. SIMS. For the insurance that we provide through FHA, our 

issue is to make sure in the—we have an obligation to make sure 

that our fund remains—has reduced risk, and we have been asked 

to do that. We are also, at the same time, trying to determine how 

we adjust what we do with the market, because we don’t want to 

take ourselves out of that market, either. So we are trying to look 

at how do you stimulate the private sector market to begin to look 

at energy efficient tools and location efficient tools, which is why 

I think we are doing such an—we want to make—we are trying to 

perfect—by working with the private sector, just how would we attract you to properties and use instruments that—basically where 

we could calculate energy efficiency, but how do you do that. We 

have both EPA and the Department of Energy with two tools that 

they are working with, and those have gone in the field on an experimental basis, as well. 

So there is a great deal of work and we are trying to shepherd 

and integrate that work into what we can do at HUD at trying to 

scale it up very significantly, the use of energy efficient mortgages 

or location efficient mortgages. I am not answering your question 
11 

because of the fact that there is just a lot of churning, trying to 

get the right data so that we can say to the market, whether it is 

our insurance estimates or the private market, these work. 

Senator WARNER. And again, my time is up, but I would just 

think that we should be able to get data that shows, here is what 

a home’s energy costs would be without energy efficiency, whether 

in the construction or in the retrofit, and there ought to be an ability to have some of that to monetize that shared savings in the financing tool and find a way to really create, I think, a very, very 

valuable financing, private sector financing piece on sharing the 

savings with the homeowner or with the renter. And again, I would 

encourage the Department to look at those models. 

Thank you, Mr. Chairman. 

Senator TESTER. You bet. I want to thank you, Senator Warner, 

for your questions. I also want to thank Deputy Secretary Sims for 

being here. 

I have got a few questions here, some pretty basic, actually. 

There are different levels of green, and I would assume that 

HUD—is there a certain level that you try to achieve as you push 

out programs? 

Mr. SIMS. We use a—there is an Enterprise Green Community 

Standard is the one we are using at the present time. 

Senator TESTER. And it compares building costs with savings? Is 

that what it does? 

Mr. SIMS. Yes. 

Senator TESTER. Is there a certain percentage you are trying to 

achieve? 

Mr. SIMS. Twenty to 30 percent is what we have been able to accomplish so far. 

Senator TESTER. OK. And that 20 to 30 percent, and I am just 

trying to get myself up to speed, the 20 to 30 percent is based on 

the amount of energy used, the amount of CO2 that is produced, 

the amount of build material that is used? Is all of the above? Is 

it measured by all of the above? 

Mr. SIMS. It is pure energy use. 

Senator TESTER. Pure energy use? OK. And so are there standards that are set up—say I am building a brand spanking new 

house and I want to build it green and save 30 percent. Are there 

standards that you use as far as the construction of that house, 

whether you use two-by-six walls or two-by-four walls or the number of windows and all that stuff? I am just trying to get my arms 

around what the definition of green is, and I understand the energy use, but if I am building a house and I want to say to myself, 

I want to achieve 30 percent minimum. If I get more than that, it 

is great. Are there standards that HUD looks at? When you are 

doing public housing, for example, and you want to achieve that, 

is there a place you go for those standards? 

Mr. SIMS. There are no—most of the standards that we have to 

build to are local building codes. 

Senator TESTER. Got you. 

Mr. SIMS. What there are is a great deal of literature out there 

talking about how you can achieve efficiency. It may be the source 

of energy use. For example, if you use geothermal, that creates efficiencies. 
12 

Senator TESTER. Got you. 

Mr. SIMS. Double-pane windows, we know, work. I saw a system 

in Hawaii, which is a very expensive place for energy consumption, 

where they were using pressurized devices. So I think there isn’t 

a specific set of standards that are out. There is a lot of literature. 

There is a lot of work being done, a lot of engineering design, 

whether it is material use, whether it is the flow of temperatures 

in your homes—— 

Senator TESTER. Got you. And it—— 

Mr. SIMS. ——appliances you use. 

Senator TESTER. And it may be beyond the purview of HUD to 

disseminate that information. That is probably done by the DOE or 

a Department in there. 

I want to talk a little bit about rural versus urban. 

Mr. SIMS. Yes. 

Senator TESTER. It is an issue that, whether we are talking 

about housing, health care, whatever it might be, there are different challenges out there. What do you see as the challenge in 

providing green housing from a HUD perspective in rural America 

versus urban America, and there are challenges on both ends of 

that. 

Mr. SIMS. We just have begun to explore that. We have been 

meeting with the Rural Policy Institute to actually get a better appreciation and understanding of both rural housing and then rural 

activity centers or small cities in rural areas to see how the housing would look, designed, and as soon as we can provide—we know 

that with any structure, we can get those efficiencies, no matter 

where they are at. The issue is how do we finance those? Is it going 

to be by grant, utility savings? Are there opportunities present in 

rural areas that are not present in urban areas? For instance, can 

you augment your energy source with wind, with deeper wells? 

Senator TESTER. Yes. 

Mr. SIMS. So we are trying to—that is why, and not to avoid the 

question, why we are doing so much homework now—— 

Senator TESTER. Yes. 

Mr. SIMS. ——because it isn’t a single answer. The issue is how 

would we, as a Federal agency, and along with our partners, 

USDA, approach rural areas, how would we do the urban areas, 

and we are trying to work through that now. 

Senator TESTER. Right. Well, along those lines, I will just tell you 

that I think there is—all of Montana is rural, all right. But in the 

more urban centers of a rural State, I honestly think we are going 

to see some out-migration into real frontier areas. We are already 

starting to hear words of it, or thoughts of it, because housing, land 

costs are less and there are quality of life issues that people want 

to take in. And so the urban versus the rural/frontier areas, I think 

are going to become more of an issue as we move forward. 

A last question before I turn to Senator Reed. Is there any coordinated efforts between you, speaking of rural, HUD, and outfits 

like the USDA Rural Housing, given that they deal with rural? Are 

you able to cut those silos down and work across those lines? Has 

that been approached yet? 

Mr. SIMS. Senator Tester, yes, it has been. 

Senator TESTER. Oh, good. 
13 

Mr. SIMS. We had a meeting with their staffs. They are convening and we are creating work groups, including with our Sustainability Office working very closely, because our Sustainability 

Office is the one pushing green housing. 

Senator TESTER. Very good. 

Mr. SIMS. That is why I was saying earlier we are merging our 

interests. 

Senator TESTER. Kudos to you on that. I think you get more synergy, a better program the more you can work together to get on 

the same sheet. 

With that, Senator Reed. 

Senator REED. Well, thank you very much, Mr. Chairman, and 

thank you, Mr. Secretary. 

Just a quick question, and it follows on to the discussion with 

Senator Warner. One of the aspects of the Recovery Act that 

seemed to go extremely well is the public housing use of funds for 

weatherization. First, do you have statistics showing what they did, 

and importantly, how much they will be saving over the course of 

the next several years, because there is nothing better to argue for 

programs like this if you can say that this has saved housing authorities significant monies. 

Mr. SIMS. We have so far done 39,000 units. Our hope is to go 

up to 159,000 units. The program has worked incredibly well. The 

local housing authorities who we are working with have been talking about their energy savings. We are now going back and getting 

all that data and collecting that data so that we can actually quantify it. We still believe it is going to be in the range of 20 to 30 

percent savings per unit. 

Senator REED. Once you get that quantified data, and again, this 

echoes what Senator Warner was talking about, it would seem that 

you could use those savings to amortize loans to further complement your efforts so that we could move very aggressively and 

perhaps move to increase your goal even more than it is now. Is 

that what you are planning to do? 

Mr. SIMS. That is what we are going to try to do, but we have 

to do that in coordination with our housing authorities who are the 

grant recipient agencies, and I think many of them are doing that, 

as well, looking at how do you lower the cost of your tenants and 

then how do you grab any savings you have—for instance, in Nashville, which I remember walking through their program with them, 

they believe the savings are so significant that they can put their 

units into an export into the utility as a generator, which would 

be—and they would accrue the revenues from the sale of that because of the efficiencies they have gained so far. 

Senator REED. The ARRA money will run out. 

Mr. SIMS. Yes. 

Senator REED. How are you going to keep the momentum going? 

Since this is something that seems to be a win-win in so many different ways, lowering costs of Public Housing Authorities, which 

they need to save every nickel they can, lowering consumption of 

energy, employing people to go in and do this work, which can be 

done by Americans in America, how are we going to keep this 

going? 
14 

Mr. SIMS. We are building it into our grants, so that if you are 

going to be a recipient of any of our grants on the housing side, 

we expect to see energy efficient homes. 

Senator REED. Just a final point, which is the less successful part 

of this, from my perspective, was the weatherization of private residences because of many factors, but one was licensing and qualifying the workers. There was some confusion. Again, this seems to 

be such a win-win. Where are we on that? Are you making 

progress? Have we resolved things? 

Mr. SIMS. We are making progress. It is a multi-agency task on 

how do you qualify people, how do you train people, how do you license them, how do you get them into the homes, but there has 

been an incredible effort to do that, whether it is targeting people 

who we have in our public housing under Section 3 who we want 

trained and moving into that field, whether it is now coordinating 

with the community colleges that have accredited training programs, whether it is working with the unions who can certify. So 

there is a pretty substantial effort right now to create what we call 

the qualified labor force to be able to go ahead and do those homes. 

The reason why it is so important is because we find out that 

people who hold the mortgage instruments and people who insure 

them want to know who is doing the work so that they can certify 

the value of the work done and determine through various modeling the efficiencies gained. 

Senator REED. Well, thank you, Mr. Secretary. I just think these 

are programs that have so much further potential and benefit that 

we have to get them right in terms of deploying them effectively. 

And then once the Recovery Act money runs out, we have to make 

a good case here in a tough environment for additional funding. 

The facts, the figures, the savings, the work, the people that are 

employed, all that is going to be absolutely vital to us and we are 

counting on you providing it. 

Mr. SIMS. Thank you, Senator. We have been at this at the Federal level seemingly less than a year and we are—there are some 

quarters where we might be considered to be irreverent in our approach. But our goal is to say that it is important to have energy 

efficiency because that is going to be a source both of energy in the 

future, jobs in the future, lower cost savings to the people in those 

homes, and we think it is a win-win-win-win. It is trying to move 

what I always call the substantial processes within the Federal 

Government to get there. It requires a lot of work, a lot of 

lawyering, a lot of economists, a lot of road changes, and we are 

very, very focused on that. 

HUD as an institution, as a Department, we believe in green. We 

believe in green building. We believe in energy efficiency and we 

have built it into our strategic plan, which we will measure our employees, our offices, and our own performance, and we adopted that 

policy. And we are also saying that it has to be a policy that lifts 

all boats. It cannot be you can get one performance out of the 

homes of the affluent. That is really, really easy. Our issue is making sure that middle class and lower-income people can also win. 

So we are trying to take this to scale. 

But when we come back here, we want to be able to say that we 

took it to scale and it worked because we were very exhaustive and 
15 

very thorough in our preparation, which is why we have commissioned so many studies to get so much data to find what really, 

really works. We don’t want to chase a good idea. We want to chase 

success, which is why we are being thoughtful, but we are working 

at a very high speed to accomplish it. 

Senator REED. Thank you. 

Mr. SIMS. Thank you, Senator. 

Senator TESTER. Thank you, Senator Reed, and I want to thank 

you, Deputy Secretary Sims, for being here. We are going to move 

to the next panel, but I will just say this. This is the low-hanging 

fruit. It is a win-win-win-win situation, and with some minor costs 

up front, increased costs up front, you are right, it will pay back 

for years and years and years and years and years. So the work 

you do is critically important, especially for the middle class and 

the poor folks in our economy. We wish you the success in the 

world and we offer you our support as you move forward. So thank 

you. 

Mr. SIMS. Thank you, Senator Tester. When I was younger, I actually worked in your State. I was working for the U.S. Forest 

Service in Eureka, Montana, and I have a friend that went to Montana State, another one that went to the University of Montana. 

Senator TESTER. That is pretty darn nice country up there. 

Mr. SIMS. It is beautiful country. 

Senator TESTER. You were there. All right. 

Mr. SIMS. Thank you. 

Senator TESTER. Thank you. Thank you, Deputy Secretary. 

Our next panel, and if they would come up, I will kind of announce. Mr. Dave Caldwell, Ms. Trisha Miller, and Mr. Kenneth 

Gear. I will make the introductions as we go forth. 

Dave Caldwell is Vice President of Caldwell and Johnson, a 

North Kingstown, Rhode Island-based home builder. Mr. Caldwell 

holds a LEED Accredited Professional designation, the Certified 

Green Professional designation, is a green verifier for the National 

Association of Home Builders Green Building Program, and is an 

instructor for the Certified Green Professional Program through 

the NAHB University of Housing. He serves as a Director of the 

Rhode Island Builders Association—he is a busy guy—and is active 

in the Rhode Island Chapter of the U.S. Green Building Council. 

From 1998 to 2006, he served as a commissioned officer in the 

United States Marine Corps. We appreciate that. And he is a veteran of Operation Iraqi Freedom. It is great to have you here, 

Dave. 

Ms. Trisha Miller serves as Deputy Director of the Green Communities Initiative at Enterprise Community Partners, a national 

nonprofit that is the leading provider of capital and expertise for 

affordable housing and community development. Her work focuses 

on leveraging private and public investments in green affordable 

housing development and sustainable building practices across the 

country. 

She manages the Green Communities National Grant Program, 

which provides over $1 million annually for planning and construction of green affordable housing. We appreciate your work and it 

is good to have you here, Trisha. 
16 

Kenneth Gear is Executive Director of Leading Builders of America, a trade association of the Nation’s largest home builders that 

builds approximately one-third of all new homes in the United 

States. Prior to joining Leading Builders of America, Mr. Gear was 

Vice President of—I hope I pronounce this right—Pulte Homes, the 

largest home builder in the country, and served on their Energy 

Committee. 

We absolutely appreciate you being here, Mr. Gear, and all three 

of you. We look forward to your testimony and the questions that 

will follow thereafter. Your entire testimony will be in the record, 

and we will start with you, Mr. Caldwell. 

STATEMENT OF DAVID CALDWELL, JR., VICE PRESIDENT, 

CALDWELL AND JOHNSON, INC. 

Mr. CALDWELL. Good morning, Mr. Chairman, Members of the 

Committee. Thank you for offering me the opportunity to speak on 

behalf of the merits of green housing and in particular the Energy 

Efficiency in Housing Act of 2009. My name is Dave Caldwell, Junior. I am a second-generation home builder from a small family 

owned construction company in Rhode Island and a recent Marine 

Corps veteran of Operation Iraqi Freedom. 

Recently, our company completed the first Department of Energy 

Builders Challenge Home in Rhode Island, which is a complete gut 

remodel of a foreclosed and abandoned home built in 1952. There 

is the finished product. For an additional $5,000 in construction 

costs, we were able to more than double the energy efficiency of the 

house. The house was built entirely on speculation, three bedrooms, 

two-and-a-half baths, 1,300 square feet. It sold for $265,000, which 

is about 15 percent below the median in North Kingstown. It was 

a single mom, a friend of the family, who bought it with two 

daughters. She is a school teacher and enjoys living there, happy 

to show the place off if you want to stop by. 

Interestingly enough, we had a lot of press and we had a lot of 

people very interested in the concept of buying a home like that. 

We had an open house. We had overwhelming response. We had 

about 200 people through there in the course of 2 days. 

The principal value proposition is that extra $5,000 in construction costs, if spent to double the energy efficiency, amortized over 

30 years on her mortgage, is about a dollar a day. The documented 

energy savings by the Department of Energy, which is this next 

sheet here that the DOE certified, it is about two dollars a day. Assuming that mortgage stays fixed for 30 years, and I think it will 

with the low rates, that gap is going to increase substantially as 

the cost of energy rises. Once again, the homeowner will receive approximately double the value in energy savings that the green features of the home will cost over time. I think that is a return on 

investment that should appeal to everybody. 

In Rhode Island, there appears to be significant demand for this 

type of home, but neither the mortgage industry nor the appraisal 

community is at this time willing to assign any additional value to 

homes built to greener energy efficient standards. It makes appraisals and financing very difficult for that little bit of green premium, particularly those applying for FHA mortgages with low 

down payments. 
17 

Not one person who has seen this house has disagreed with the 

value proposition for the homeowner created by its increased energy efficiency. However, the overwhelming focus of the financial 

community, the real estate community, and the appraisal community is purely that extra $5,000 figure for the cost involved, not the 

operational savings and value for the homeowner that has been 

created. 

Presently, I have a customer who is designing an energy efficient 

custom home. When he went to the bank seeking financing for the 

loan, which he is well qualified for, he explained all the attributes 

of the green housing, the photovoltaics, the energy efficiency, the 

bank basically said, we don’t care about any of that. It is just 

added expense—literally. I talked to the mortgage originator, who 

I know, a very competent person and a very good bank. They don’t 

think it matters. They assigned no value to that. 

I am frequently asked why more houses are not being built similar to the green home we constructed, and I like to use this analogy 

when I talk to customers. Customers purchasing a car, when they 

see two cars on a car lot that look identical in every respect, like 

the picture there, and they don’t know anything else except the fact 

that one car costs 2 percent more than the other, they are going 

to make a decision based on cost and pick the cheaper car. But if 

you tell them the car that costs 2 percent more gets double the gas 

mileage, intuitively, everybody is going to assume right off the bat 

that that is the better bargain, and the customer understands that. 

It is that easy. It is that basic. 

Today, consumers are provided with considerably more information when they purchase a car, a box of cereal, or a cell phone than 

they are when they purchase a home, which is usually the most 

significant and major purchase they are ever going to make. As 

such, I am very much in favor of the incentives for green housing, 

specifically the ones in the Energy Efficiency in Housing Act, S. 

1379. I have met no one, and I mean no one, who does not believe 

that energy efficiency in housing is not a great idea. I have met no 

one who would not be willing to spend a dollar a day to save two 

dollars. It can be done, and I think it should be done. There is no 

reason not to. I don’t know why anyone would build a new house 

any other way. I really don’t. 

The question, then, is why we are not doing this. I think the incentives and guidance of the Energy Efficiency in Housing Act will 

be a tremendous help to both homeowners and small businesses in 

facilitating the shift toward more sustainable and efficient housing 

stock. This is an outstanding example where Federal leadership 

can synthesize a true win-win situation for businesses and homeowners. 

Thank you again for the opportunity to testify and I am happy 

to answer any questions. 

Senator TESTER. Thank you, Mr. Caldwell, and we will have 

some. 

Trisha Miller, you are up next. 
18 

STATEMENT OF TRISHA MILLER, DIRECTOR, ENTERPRISE 

GREEN COMMUNITIES, ENTERPRISE COMMUNITY PARTNERS, INC. 

Ms. MILLER. Thank you, Chairman and Members of the Committee, for the opportunity to testify on the Energy Efficiency in 

Housing Act introduced by Senator Whitehouse. I am Trisha Miller, Director of Green Communities at Enterprise Community Partners. Enterprise is a national nonprofit organization with the mission to see that all low-income people in the United States have the 

opportunity for affordable housing. Since 1982, we have invested over $10 billion in States, including 

Montana and New Jersey, New York and Louisiana, to create over 

270,000 units of affordable housing. Through our Green Communities Initiative, Enterprise provides funds and expertise to enable 

developers to build and maintain housing that is healthier, more 

energy efficient, and better for the environment without compromising affordability. Our Green Communities criteria, which you 

heard Deputy Ron Sims discuss earlier, is the first national framework for environmentally sustainable homes. 

Mr. Chairman, now is the time for Federal leadership on green 

housing. The Government has an essential role to play in linking 

the benefits of an emerging green economy with low-income individuals and their communities. Green development offers a cost effective way to address our housing challenges and the rising costs 

of energy, water, and transportation. 

Despite recent declines in home prices, the Nation faces a huge 

shortfall of decent, affordable housing. Nationwide, an estimated 55 

million Americans are living in overcrowded or substandard housing. Green, affordable housing gives us the ability to reverse this 

trend. 

The Energy Efficiency in Housing Act and the Green Act represent a major step toward that goal and we commend Senator 

Whitehouse and Representative Perlmutter for their commitment 

and leadership in introducing these bills, which Enterprise enthusiastically supports. 

National legislation would have positive impacts on the housing 

market and especially the affordable housing sector. Mr. Chairman, 

housing and transportation costs make up the largest share of our 

household budgets and quickly force low-income families in the untenable choice between life’s most basic necessities. A low-income 

household will pay four times as much of their monthly household 

income as the average American to keep apace with the rising utility costs. 

There are roughly 25 million Americans with annual incomes of $25,000 or less in the country. For these families and individuals, 

the daily realities of rising housing, energy, and transportation 

costs are intertwined and they are simply crushing. 

Not surprisingly, high utility costs force low-income families to 

make desperate tradeoffs. A survey of households that receive Federal Home Energy Assistance during a 5-year period found that 47 

percent of those surveyed has to miss—went without medical care, 

and 25 percent missed a monthly payment on rent or toward their 

mortgage. Twenty percent in the survey went without food for at 

least 1 day in order to keep apace with these rising costs. And 
19 

these are not mere statistics. They are real families who continue 

to live on the edge. 

The Energy Efficiency in Housing Act signals a comprehensive 

approach to green housing that will bolster community and environmental benefits and save families money on utility bills without 

imposing significant costs on the Federal Government. 

There is also emerging evidence that green homes are healthier 

homes. A targeted study recently assessed the health impact on 

asthmatic children who moved into health public housing in Seattle’s High Point community. After just 1 year, the results were 

staggering. Children showed a 60 percent increase in symptom-free 

days and a 67 percent reduction in their trips to the emergency 

room or other clinical care facilities. 

The Energy Efficiency in Housing Act can not only improve 

health outcomes, it can protect our natural resources and fight climate change. Just imagine if we could rehab the 25 million units 

of homes that house our lowest-income citizens. Using EPA’s 

equivalency calculator, that would translate into savings of 60 million tons of carbon dioxide removed from the atmosphere, ten million cars taken off the road, or nearly 400,000 acres of forest preserved each year. 

One of the hallmarks of this bill is that it would provide new 

Federal resources for green housing through incentives to publicly 

financed and assisted housing developments on an unprecedented 

scale. The bill also provides resources to enable private developers 

to achieve green goals cost effectively. 

One especially important provision would provide funds to 

strengthen the capacity of community-based organizations in green 

development. The bill would also spur green public housing by requiring that all HOPE VI construction comply with the mandatory 

aspects of our Green Communities Criteria. 

Mr. Chairman, this isn’t just about the environment. It isn’t just 

about housing. And it isn’t just about healthy living. It is about 

families who are struggling to find jobs, to keep the lights on, and 

to continue to make their monthly payments. This is a critical step 

and we urge Congress to enact the Energy Efficiency in Housing 

Act. 

Thank you, and I look forward to the opportunity to take some 

questions. 

Senator TESTER. Well, thanks for your testimony, Trisha. I appreciate it, and it is a no-brainer when you think about it, no pun 

intended. 

Mr. Gear, you are up. 

STATEMENT OF KENNETH GEAR, EXECUTIVE DIRECTOR, 

LEADING BUILDERS OF AMERICA 

Mr. GEAR. Thank you, Senator Tester. My name is Ken Gear. I 

am Executive Director of Leading Builders of America. We are relatively newly formed association representing 16 of the Nation’s 

largest homebuilding companies. In 2009, our members sold approximately one-third of all new homes sold in the country. 

LBA member companies are building green homes every day 

throughout the country and have been active participants in vol-
20 

untary energy efficiency programs like Energy Star, The Builders 

Challenge, and Environments for Living. 

We are not made up of sort of niche green builders; rather, we 

are mainstream builders who all have a variety of different business models, but who are all committed to building an energy-efficient future. 

Our members are on the front lines of this effort and recognize 

the important role that housing can play in reducing energy consumption in the United States. 

We have jointly developed a plan along with the Institute for 

Market Transformation with significant input and support from the 

Alliance to Save Energy and the Natural Resources Defense Council, and we thank you for the opportunity to share our collective 

thoughts today. 

We commend Senator Whitehouse as the primary sponsor of the 

Energy Efficiency in Housing Act, and we are pleased to see that 

that bill recognizes the need to help homeowners finance the incremental up-front costs associated with purchasing highly efficient 

new homes by providing energy-efficient mortgages and appraisal 

enhancements. 

We have a few suggestions to further this objective so that energy-efficient mortgages can be universally available in the marketplace, which is critical to its success. 

We propose to provide Federal mortgage agencies with the tools 

and direction necessary to improve the accuracy of mortgage underwriting by accounting for energy costs associated with operating 

the home for all new mortgage loans. 

With a better, more granular assessment of whether the homeowner can manage the cost of hospital, Federal mortgage programs 

will produce better quality loans for better informed borrowers. It 

will lead to more efficient homes being built and a reduced risk of 

mortgage default and will more accurately account for whether the 

borrower can afford the cost of homeownership or not. 

The policy can be implemented in a manner that will not reduce 

the availability of credit or increase the cost of credit, and over 

time the people should make energy-efficient homes more affordable which will result in increased consumer demand and more 

green jobs. 

One of the first steps in the underwriting process for any loan 

is calculating the cost of ownership. This analysis typically involves 

summing the total of annual expenses for principal, interest, taxes, 

and insurance premiums. Conspicuously absent from this calculation is the anticipated annual energy cost for operating the home, 

and that cost is actually larger on average than taxes and insurance. 

We suggest adding an ‘‘E’’ for Energy to be added to the PITI calculation for all federally backed mortgages, and this would have 

two immediate and substantial benefits. First, the quality of mortgage underwriting would improve with the addition of energy in 

factoring the cost of homeownership. And, second, the change 

would encourage consumers to buy more energy-efficient homes by 

allowing energy savings over the life of the home to be used to offset the up-front cost. 
21 

We would urge the Senate to include these changes in any bill 

before any proposed energy mandates would go into effect, and 

there are a few pending in the energy bills that are pending out 

there. Our analysis shows that a 30-percent mandated increase in 

energy efficiency would cost the typical new home approximately— 

would increase the cost of a new home by approximately $5,000, 

and at a 50-percent level, it goes up to $15,000, and that varies significantly by climate zone. So unless we have a strong energy-efficient mortgage program in place and available throughout the 

country, the mandates will cause homebuyers to be unable to afford 

or obtain financing to cover the extra up-front cost, making them 

less likely to purchase the more efficient home. 

For this plan to work, we must adopt an accurate and universally understood method of measuring and valuing energy efficiency. Today buyers and builders typically realize no value, as Mr. 

Caldwell said, for including energy efficiency features in a home, 

even though they cost significantly more. We propose a rather simple solution by using a Home Energy Rating System, or HERS rating, which is a well-established and universally accepted energy efficiency standard. 

Using a HERS system to measure the efficiency of the home allows one to determine the expected energy usage of the home without placing a burden on home appraisers to place subjective values 

on energy-efficient features. The HERS system will give you an estimate of the expected monthly energy savings based upon a performance test of the home done by a third-party, certified energy 

rater. The net present value of those monthly savings can then be 

factored into the underwriting process to help finance the additional up-front costs. And for homes that have not been rated, an 

average energy cost as determined by DOE would be the default for 

underwriting purposes. So the system would not penalize unrated 

or presumably less efficient homes. It would just provide a benefit 

to more efficient homes. 

So, in conclusion, I think I would just leave you with a prospective homebuyer interested in energy efficiency should be facing a 

win-win situation. An energy-efficient home is good for the environment, and it will save money, and the incentives and the changes 

that we are proposing would make energy-efficient homes and features affordable and it would allow buyers to finance them. 

So, with that, I will look forward to your questions. 

Senator TESTER. Well, thank you, Mr. Gear. I appreciate your 

testimony also as with the two preceding participants. 

I really do not know where to start, so we will start with a question for both Mr. Caldwell and Mr. Gear. It deals with an issue 

that you were just talking about, Ken, about prospective homebuyers, and almost without exception, when somebody is going to 

buy a house and they can get the financing for it—the house is already done, it is already buttoned up, they cannot see what is behind the sheetrock, they cannot see what is behind the siding, they 

can see if it is double-pane or triple-pane windows or whatever it 

might be there—how—and like every one of you said, everybody 

wants to save some bucks. The example that you gave, Mr. 

Caldwell, five thousand bucks up front, $2, DOE, $2 a day, that is 

21 grand. I mean, that is a pretty good return on investment. So 
22 

we want it, but we want to make sure we get it. How does the 

homebuyer know that when the place is buttoned up, it is done, it 

looks beautiful, it is painted well, it has got a nice yard, but what 

is under the skin is what is really important, how does the homebuyer know that? Are there agencies out there that you certify with 

right now? Because it is all voluntary at this point, correct? 

Mr. GEAR. It is all voluntary, and right now there are energy raters that can actually go in and do that. 

Senator TESTER. Who are they? 

Mr. GEAR. There are various—that is the HERS rater I was talking about. There are different agencies and companies that go out 

for—— 

Senator TESTER. So I have got a 1,500-square-foot home, and I 

want to have it HERS rated. What State are you from, Mr. Gear? 

Mr. GEAR. Virginia. 

Senator TESTER. Virginia? How much would it cost additional for 

that? 

Mr. GEAR. It is roughly $300. 

Senator TESTER. Three hundred bucks? 

Mr. GEAR. Yes. 

Senator TESTER. Is it based on square footage or just it is about 

300 bucks—— 

Mr. GEAR. No. They physically test the home. It is roughly 300. 

It varies a little bit. 

Senator TESTER. OK. And then they will come back and tell you 

what the savings is on that? 

Mr. GEAR. Correct. 

Senator TESTER. OK. Mr. Caldwell, would you address that as far 

as, you know—and is HERS used a lot? In what percentage of the 

homes are they used? Or is there a different method? Go ahead. 

Mr. CALDWELL. In Rhode Island, which is my State, there is a 

nonprofit called Conservation Services Group funded by the local 

utility. That will do a baseline analysis for free. 

Senator TESTER. Good. 

Mr. CALDWELL. There is also a nonprofit called Rhode Islanders 

Saving Energy. You can call them. They will come to your house 

for free, change some light bulbs. Beyond that, you will spend a little bit more to evaluate the building performance test of the house 

through a recognized national standard through DOE. But it basically involves a series of performance metrics. You will probably 

hear the words ‘‘Blower Door’’ test. They will try to figure out 

where the leaks come behind the sheetrock. They use thermal imaging cameras that will look behind the wall. That will tell you 

where your heat loss is. It is a pretty neat tool. 

So the tools are all there, and it is not that complicated, and the 

software packages are there—it is called ResNet—that they use to 

come up with this document right here. 

Senator TESTER. Well, good. Trisha, do you want to respond to 

that at all? 

Ms. MILLER. Sure. We tend to see projects that are single-family 

and under four stories use the HERS index, and that is 

benchmarked against the Green Communities Criteria for projects 

of that scale. I also just wanted to cross-reference Energy Star, 

which allows you to go through a full certification, and the Energy 
23 

Star certification requirements, guidelines, are also incorporated in 

the Energy Efficiency in Housing Act. So we see an opportunity to 

really take what we have learned across the country and get to 

scale in the affordable housing sector using HERS and then also 

using ASHRAE for larger-scale projects, multifamily, high-rise. 

Senator TESTER. OK. I am not a banker, but if I was a banker 

and somebody came in to me and said we are doing these energy 

savings and there was documentation that this was actually going 

to save you some dough—might have the builder with me, might 

have somebody from one of those agencies you talked about, Mr. 

Caldwell—I would think it would be a no-brainer to give them the 

extra dough. 

What do we have to do to break through that, you know, it is 

just additional cost and we do not care? 

Mr. CALDWELL. I am not a banker, either, so I am not particularly qualified to answer that, but I can tell you this: From a pure 

human perspective, FHA does have energy-efficient mortgage programs on the books. They are good. The banks will not use them 

for the following reason: that it is a lot more work for the underwriter and the appraiser to make the same commission. They are 

all directly endorsed, the lending institutions. When someone gets 

an FHA mortgage, they do not go talk to FHA. They go to the bank 

or the loan company. I have had that discussion with them. They 

say this is too much work, just put them in a regular loan, they 

are qualified, or, you know, we will make something else work. 

That is kind of it. 

So I do not know the answer to that, but some of the incentives 

with mortgage insurances, rate reductions, fee reductions, things 

like that, and, again, the data to get this thing rolling, I think you 

would be OK. 

Senator TESTER. It would just seem to me that it makes just too 

much sense to say—you know. The other side of the coin is—and 

I was wondering, and I will get back to you in a second, Trish, but 

either Mr. Gear or Mr. Caldwell, what—when your builders are 

building a house or you are building a house, Mr. Caldwell, there 

is opportunity to save money, too, in building costs. I mean, you 

know, if you are in Montana, do not put that window on the north 

side of the house. You know, put that money into insulation somewhere else, and you have killed two birds with one stone. 

Are those the kind of things you talk about or that the certifiers 

talk about with you? And you have said—I mean, you build a large 

percentage of the homes in this country. 

Mr. GEAR. Correct. Yes, those are sort of the easy, low-hanging 

fruit, if you will. When you want to get to even higher levels of efficiency, it requires extra features in the home, you know, HVAC 

systems or air-conditioning systems that use lower efficiency. So 

when you get into those costs and the appraisals do not recognize 

that extra money you put in, therefore the banks will not finance 

them, it creates a disincentive to go that extra mile. 

Senator TESTER. Let me ask you, does the White House bill take 

care of the appraisal problem? 

Mr. GEAR. We would like to see them go a little bit further, but, 

yes, it appears—it is on point for the issue. We have a little few 

tweaks, but, yes, it addresses the issue. 
24 

Senator TESTER. OK. Mr. Caldwell, do you have any further— 

OK. Good enough. 

Trish, I want to ask you about rural versus urban because I am 

a rural guy. Is there a difference in challenges out there between 

rural and urban when it comes to green building? And if there are, 

what are they? 

Ms. MILLER. Sure. That is a terrific question, and we have a 

rural and Native American initiative and enterprise that I work 

closely with to address some of those very challenges. 

Senator TESTER. And housing is a huge issue. 

Ms. MILLER. Exactly. So you have—I think when you raised the 

question of how do you find a HERS rater in Montana, just getting 

the right technical assistance and support onsite for projects can be 

a real challenge in more isolated rural communities. But we have 

seen—in Montana we work with a nonprofit called Homeward that 

has built over three affordable housing developments using the 

Green Communities Criteria. They have made the case that this 

can be done. 

Senator TESTER. And do great work, by the way. 

Ms. MILLER. Terrific work. So we are following the example of 

what rural developers are able to achieve using the Green Communities Criteria and incorporating, you know, their guidance and lessons learned as we provide more technical support through our 

Green Communities network of TA providers. And I think one of 

the tremendous assets of this bill is that it addresses targeted capacity-building grants for projects in rural communities that could 

take advantage of some of the expertise we have learned in the industry for the last 5 years. 

Senator TESTER. OK, good. Well, I want to thank all three of you 

for being here. I very much appreciate your presentations and appreciate your work. It is good, it is very, very good work, and we 

have just to figure out ways to help you make it work even better. 

With that, I am going to turn the gavel back to the Chairman, 

Senator Menendez. 

Chairman MENENDEZ [presiding]. Thank you, Senator Tester, 

and thank you for chairing for the period of time. 

I did not get to hear your testimony, but I read it, so let me pursue it. Mr. Gear, some of the members of your organization, the 

Leading Builders, include some of the largest home developers in 

the Nation. And the home construction industry suffered through 

some of the most difficult times in the recession, and the sector still 

has a large unemployment rate, about 20 percent. 

Would the enactment of green housing initiatives such as those 

that we have discussed today, the GREEN Act and the Energy Efficiency in Housing Act, help to stimulate home construction, do you 

believe? 

Mr. GEAR. Yes, there is definitely a pent-up demand out there for 

green homes, and what the bill would do, it would allow homebuyers the opportunity to help finance a greener home. And if the 

home is greener, it is going to mean there is more features in the 

home which will require putting people back to work to install 

them and get those features installed in the homes. So, yes, it 

would definitely be a boost to an industry that, you are right, is 

hurting right now. 
25 

Chairman MENENDEZ. Now, part of what your testimony talks 

about, it incorporates—seeking to incorporate green initiatives into 

mortgage calculations, which strikes me as a worthy idea. Are 

there any models for how this can be done? 

Mr. GEAR. Fannie and Freddie, I believe it was Fannie Mae had 

a model that they had a few years ago that actually was—the architecture was there, and it worked quite well. The reason it did 

not get to scale was because, as Mr. Caldwell said, it was a program that required a little bit more work from the banks and the 

underwriters. And at the time, credit was free flowing in the economy, and nobody needed a green mortgage. Today they do, which 

is why we think it is so important that this not be a pilot program, 

that it be to scale available to all consumers. 

Chairman MENENDEZ. So what do you think are some of the 

practical obstacles to implementing that? 

Mr. GEAR. Well, I think, you know, our analysis has shown that 

it would require certainly a software upgrade to the underwriting 

systems that FHA and Fannie and Freddie use, essentially just 

adding sort of a line on there, on the analysis to show so you can 

input what the monthly savings would be, the net present value of 

the monthly savings, and that would allow the borrower increased 

borrowing capacity to finance the energy-efficient features. 

So we do not think it would be too much work to do that, to implement it and get it up to speed within 12 months. 

Chairman MENENDEZ. Ms. Miller, your enterprise provides financing for affordable housing. What are the unique challenges 

that affordable housing faces in terms of achieving energy efficiency? 

Ms. MILLER. One of the challenges that we find affordable housing developers face in the market is going green for the first time, 

so making that early transition to using the Green Communities 

Criteria or equivalent green rating systems. And we have been providing technical expertise and support through the forms of 

predevelopment loans and grants to help affordable housing developers address some of those challenges, just thinking differently 

about everything from the building envelope to active systems incorporating renewable energy or getting to—in Green Communities 

Criteria we have a 15-percent above code minimum requirement 

that they can achieve at very low cost, but it requires a new approach to design, and the integrated design process is something 

that we have been advocating for and provide charrette grants to 

allow the development team to come together and think about what 

are the cost-effective means to achieving those energy efficiency 

goals and have seen tremendous success with that, starting early 

in the design process to reach those targets. 

Chairman MENENDEZ. You talk about the challenges sometimes 

that lower-income people have between paying their utility bills 

and dealing with medical care or food. You have invested about 

$700 million—— 

Ms. MILLER. We have. 

Chairman MENENDEZ. ——to create green affordable homes in 32 

States. Have you been able to quantify a difference in people’s lives 

as a result of it? 
26 

Ms. MILLER. We have been able to quantify the direct pocketbook 

savings that low-income renters and homeowners benefit from as 

a result of meeting the Green Communities Criteria. We have seen 

a 20- to 30-percent savings in terms of lower utility bills from energy efficiency upgrades and water conservation measures. I referenced earlier the Seattle High Point project where we able to 

commission a study to quantify the health impacts which are often 

intangible or harder to get hard numbers on, and we found that for 

children with respiratory ailments a dramatic reduction in terms of 

symptom days and trips to the emergency room. So we continue to 

look at both the pocketbook savings and the health benefits that 

are achievable for low-income families. 

Chairman MENENDEZ. Thank you. 

Mr. Caldwell, I understand from your testimony that a mere 

$5,000 in construction costs on a home that is sold for $265,000 is 

able to double the energy efficiency of the house. 

Mr. CALDWELL. That is correct. 

Chairman MENENDEZ. That is a 2-percent increase in cost. That 

should seem an enormous attraction to anyone if they are just 

doing the math. 

Mr. CALDWELL. True. I brought a few props with me. I am glad 

you asked. But this is basically how you do it: a little bit of exterior 

rigid insulation on the outside of the house, a little bit of—this is 

a water-based foam. You can eat it. I do not recommend it, but that 

was part of the project pitch from the salesman. I made him eat 

a little bit, so I can testify that that is not harmful foam. But it 

is called Icynene. It is a water-based foam. 

To make a long story short—— 

Chairman MENENDEZ. We will get you out for lunch time so do 

not get overeager. 

[Laughter.] 

Mr. CALDWELL. But that is pretty much it right there. That is 

about a thousand bucks extra to install this on the house, and it 

is about 2,500 bucks to use this instead of fiberglass. And that is 

pretty much 90 percent of it right there. 

But as Ms. Miller said, you have to start with a design. You have 

to think a little differently. You have got to rethink the entire process. But if you do that—and we continue to move forward with a 

few more projects in the pipeline as to how to make the houses 

more efficient and also make them less expensive. This is our business model, so this is not just a pure pie in the sky, theoretical concept to me. This is the actual way we are focusing our business 

right now, is to how to continue to build a few more of these. We 

have got two more breaking ground this summer that are going to 

be built to the same house but built a little differently. We are 

using a different methodology. This is literally, you know, how I 

make my paycheck by doing this type of stuff. So I have an extreme vested interest in making sure this runs well, especially to 

my Dad, who is writing the checks, you know, watching me quite 

closely. 

So that in a nutshell, very briefly, is how you would do that. 

Chairman MENENDEZ. So is that attracting buyers for you? 

Mr. CALDWELL. Absolutely. If I had 20 of these houses, I would 

have sold all 20 of them. No joke. Once the buyer hears that, it 
27 

does not take a genius to figure out that this is a good deal, if it 

is in all other respects a nice home, well built, nice location, and 

all those other things. 

Chairman MENENDEZ. Well, thank you all very much for your 

testimony. I think you have helped us move forward on making the 

case for energy-efficient housing and what are the benefits that 

would be derived, environmentally certainly but also in terms of 

jobs and cost savings for Americans that are on tight budgets. So 

I hope we will mark up and pass the Energy Efficiency in Housing 

Act here in the Senate as a good step in the right direction. We 

appreciate your testimony. 

We are going to keep the record open for 2 days. Should any 

Members have any questions of any of our witnesses, they will be 

able to do so. And with that, this hearing is adjourned. Thank you 

very much—I am sorry. I take it back. We are going to have 1 week 

for our Members to submit questions. So if you get those, we would 

urge you to answer them as soon as you can so we can close the 

record and be able to hopefully move forward. 

With that, the hearing is adjourned. 

[Whereupon, at 11:20 a.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 
28 

PREPARED STATEMENT OF SENATOR SHELDON WHITEHOUSE 

Chairman Menendez and Members of the Committee, I thank you for the opportunity to speak this morning and for holding a hearing to examine proposals to encourage energy efficiency in the housing sector, including my Energy Efficiency in 

Housing Act. I also want to thank Representative Perlmutter for leading the way 

on this crucial topic. He has succeeded in shepherding green housing legislation 

through the House and has been one of the leading champions of energy efficiency. 

I also want to acknowledge Dave Caldwell, on the third witness panel, who has 

led pioneering efforts in green building in Rhode Island, and has travelled down to 

D.C. to share his experiences with us. 

I hope that this hearing will make clear that energy-efficient housing connects 

tackling climate change and reducing our dependence on foreign fossil fuels to cutting Government outlays and trimming household budgets, to renovation, design, 

and construction jobs that can’t be exported. Despite this promise, energy efficient 

options in housing are not well understood by consumers, and homebuyers today 

often pass up green opportunities that are in their economic interest. Our challenge 

as legislators is to devise programs to inform consumers and jumpstart the green 

housing economy. 

Representative Perlmutter’s G.R.E.E.N. Act, is the first comprehensive green 

housing bill to be introduced in Congress. Working with Chairman Menendez and 

Senator Schumer, I drafted a companion to the G.R.E.E.N. Act and introduced it 

last June. Similar to Representative Perlmutter’s bill, the Energy Efficiency in 

Housing Act would authorize programs and incentives to encourage green construction and retrofitting. 

EEHA would energize the market for energy efficient and location efficient mortgages by directing the HUD Secretary to develop upfront incentives for homebuyers. 

As a result of lower monthly energy costs, green homeowners are slightly less likely 

to default on their mortgage over time. This lower credit risk justifies borrowing incentives such as waived fees and lower points and rates. Additionally, EEHA would 

create incentives in the secondary mortgage market, making it more profitable for 

lenders to sell these products. 

On the public housing side, EEHA would require the Secretary to develop incentives for energy efficiency for the housing programs that HUD oversees, designed 

so that savings are shared between landlord and tenant. To help find the right balancing points, the bill would authorize a 50,000-unit demonstration program for Section 8. 

As Members of this Subcommittee well know, housing programs often cut across 

layers of government. To help State and local governments experiment with novel 

and innovative green housing programs, EEHA would authorize a revolving loan 

fund. It would also create a grant program so that community development nonprofits can participate in and administer construction and retrofitting efforts. 

Mr. Chairman, I once again commend you for holding this hearing. With buildings 

accounting for between 40 percent and 50 percent of greenhouse gas emissions, 

green housing incentives offer environmental promise in addition to jobs and cost 

savings. 

Unfortunately, I need to leave to return to the confirmation hearing of Elena 

Kagan. My staff will monitor all comments and suggestions raised today and I will 

consider them in refining and advancing my bill. I look forward to continuing our 

work on green housing legislation. Thank you. 

PREPARED STATEMENT OF REPRESENTATIVE ED PERLMUTTER 

Thank you Chairman Menendez, Ranking Member Vitter, and Members of the 

Subcommittee, for inviting me here to testify on green housing and energy efficiency. Renewable energy and energy efficiency have long been a priority of mine. 

We must find different ways to power our country and find ways to save energy 

where possible. Our Nation’s building stock is one area in particular where it is important we focus our efforts. Combined, our homes, businesses, schools, governments 

and industries consume more than 70 percent of the natural gas and electricity used 

in the country. 

When I came to Congress in 2007, I was selected to serve on the House Financial 

Services Committee. I proposed ways to increase green housing and energy efficiency during the Committee’s consideration of several bills. Chairman Frank recognized the interest among Committee Members and asked me to head the Energy 

Efficiency Task Force. The task force included Democrats and Republicans. We held 

a number of meetings to gather feedback on best practices and ways to increase energy efficiency. As a result of the input the task force received, Congresswoman 
29 

Judy Biggert and I introduced the Green Resources for Energy Efficient Neighborhoods Act (GREEN Act). The GREEN Act initially passed as part of the comprehensive House energy package in the 110th Congress and then again in the 111th Congress. 

Senator Sheldon Whitehouse introduced companion legislation last year. I am 

proud to work with Senator Whitehouse as someone who shares the commitment 

to renewable energy and energy efficiency. I would like to take the opportunity to 

thank him for all of his work and expertise on these matters. For the purposes of 

my testimony, I will refer to the GREEN Act and Senator Whitehouse’s Energy Efficiency Housing Act of 2009 interchangeably. 

The legislation is an incentive-based bill and will help create jobs and save taxpayers money. According to an independent study by the American Institute of Architects, the GREEN Act would potentially create more than 140,000 jobs. HUD estimates it spends approximately $5 billion on both direct and indirect energy costs, 

making energy one of HUD’s biggest line items. This legislation establishes a demonstration program of 50,000 HUD units to show cost-effectiveness and to confirm 

utility costs will go down. HUD believes this is an area where significant cost savings can be recognized and estimates a conservative savings of just 5 percent would 

save taxpayers $1 billion over the next 5 years. Savings from energy efficiency will 

also help improve the quality of life for consumers, while putting money back in 

their pockets and giving them greater control over their disposable income. 

Energy efficient and location efficient mortgage outreach, which is a critical component to fostering livable communities is included. A renewable energy systems 

leasing program will be developed, allowing consumers to take advantage of renewable energy without the up-front costs. Appraisal standards are updated to ensure 

that energy efficient and renewable features are taken into account during the appraisal process, a necessary step towards properly incentivizing green housing. 

The provisions included in the GREEN Act were developed in consultation with 

stakeholders and other industry experts. Many groups support this legislation including the National Association of Home Builders, the National Multi-Housing 

Council, the Mortgage Bankers Association, the U.S. Green Building Council, Enterprise Community Partners, American Planning Association, American Institute of 

Architects and individual companies such as LENNAR Ventures to name a few. 

Both the GREEN Act and Energy Efficient Housing Act are examples of the forward-thinking we must do to encourage energy efficiency and move our Nation towards greater energy independence. These bills strike a balance by showing it is 

easy to be green, making energy efficient practices more affordable, accessible and 

achievable. Simply put, energy efficiency measures are good for national security, 

good for the environment and good for jobs. For these reasons, I hope the bill introduced by Senator Whitehouse will be part of the conversation going forward on comprehensive energy reform. 

I look forward to working with you to move this legislation. Thank you again for 

this opportunity, I am happy to take any questions. 
30 

Attachment 
31 
32 
33 
34 

1 U.S. Department of Housing and Urban Development, Strategic Plan, FY2010–2015. 

PREPARED STATEMENT OF RON SIMS 

DEPUTY SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

JUNE 30, 2010 

Good morning Chairman Menendez, Ranking Member Vitter, distinguished Members of the Subcommittee. Thank you for the opportunity to testify on behalf of the 

Department today on S. 1379, the Energy Efficiency in Housing Act of 2009. I want 

to commend you, as well as Senators Whitehouse and Schumer, for your support for 

energy efficiency and green building throughout HUD’s programs and in the affordable housing sector at large. I also want to take this opportunity to commend Chairman Dodd on S. 1619, the Livable Communities Act—which in many ways complements Senator Whitehouse’s efforts through the bill we are considering today. 

I am here today to provide support for the bill as it impacts HUD’s programs and 

policies, contingent on amending certain provisions of the legislation. Before coming 

to HUD I was County Executive in King County, Washington for a dozen years, 

where we developed one of the most cutting edge green building and smart growth 

programs in the country. As you know, with strong support from this Committee, 

HUD has created a new Office of Sustainable Housing and Communities and Secretary Donovan has asked me to oversee that office. In that capacity I am responsible for synchronizing our efforts with other departments and agencies and implementing HUD’s green building and energy efficiency initiatives as we bring some 

of the best local ideas for building strong, sustainable communities to the national 

stage. 

So I have a strong interest in the outcome of this legislation. That’s why we have 

worked closely with Congressman Perlmutter and the House Financial Services 

Committee on H.R. 2366, on the House counterpart to this bill and, at the same 

time, HUD has begun to implement a series of initiatives that are very much 

aligned with the goals and objectives of this legislation. 

I am pleased to report that HUD has made some significant steps to further our 

commitment to improving the energy efficiency of the 5 million HUD-subsidized affordable housing units and incorporating energy efficiency standards throughout the 

various HUD programs. HUD’s FY2010 budget proposal, our new Strategic Plan 

and newly formed partnerships with the Departments of Transportation and Energy 

and the Environmental Protection Agency reflect HUD’s commitment to increasing 

and promoting energy efficiency. 

Nowhere is this commitment more evident than in HUD’s new FY2010–FY2015 

Strategic Plan, which we published last month. Indeed, one of the five strategic 

goals of the 6-year plan is to ‘‘promote energy efficient buildings and location-efficient communities that are healthy, affordable and diverse.’’ 1

Specific strategies included in the Strategic Plan to support this goal are to: (i) 

Support and promote an energy efficient, green and healthy housing market by retrofitting existing housing; (ii) Support energy efficiency in new construction projects; 

(iii) Improve home energy labeling and high-performing upgrades that reduce the 

carbon footprint of non-HUD supported residential buildings; and (iv) Reduce energy 

consumption and incorporate green buildings in the design and operation of HUDsupported affordable housing. 

In support of this goal, over the next 2 years, the Department has set a goal of 

159,000 energy efficient retrofits or green housing units through our Recovery Act 

initiatives, as well as through our ongoing programs. 

In addition, HUD is hard at work on a comprehensive Energy Action Plan that 

will provide detailed reporting on energy consumption and expenditures in HUD-assisted housing and lay out a set of specific steps HUD will take over the next 2 

years to dramatically increase the energy efficiency and broader environmental performance of HUD-assisted housing. This Plan is required of us every 2 years under 

the Energy Policy Act of 2005 and we look forward to sharing the next version with 

the Committee later this year. 

Greening HUD’s stock of public and assisted housing supports four sound public 

policy principles. First, it’s sound fiscal policy. HUD’s budget is directly impacted 

by utility costs. HUD spends an estimated $5 billion annually on energy, either directly in the form of the public housing operating subsidy or indirectly through utility allowances and Section 8 contracts in assisted multifamily housing. This is an 

area where significant cost savings are possible. For example, a modest savings of 

just 5 percent per year could generate a savings of $1 billion over the next 5 years. 

The overall cost of utilities in public housing (including water and sewer charges) 

in 2006 totaled $1.85 billion, including an estimated $421 million that was spent 
35 

2 U.S. Department of Housing and Urban Development, Energy Progress Report to Congress, 

November 2008. 3 Utility allowances increased from an average of $996 per year in 1998 to $1,467 per year 

in 2007. 4Whitney, Sheryl Verlaine, ‘‘Seeking Sustainable and Inclusive Communities: A King County 

Case Study’’, April 2010. 5Department of Energy, 2008 Building Energy Data Book.. Buildings account for 38 percent 

of carbon emissions, residential buildings account for 20 percent. 6Schweitzer, Martin, ‘‘Estimating the National Effects of U.S. DOE’s Weatherization Assistance Program With State Level Data: A Meta Evaluation 1993–2005’’, Oak Ridge National Laboratory, September 2005. 

through utility allowances on tenant-paid utilities. Utility costs have also been 

steadily increasing in assisted housing. Between 2000 and 2005, average owner-paid 

utility costs increased by 28 percent. In addition, HUD spent an estimated $3.2 billion on project- and tenant-based utility allowances in 2007. 2 Between 1998 and 

2007, the average tenant-based Section 8 utility allowance per resident has increased by 67 percent. 3

Second, energy efficiency and green building play a crucial role in housing affordability. Some are concerned that green building adds to the cost of housing. I do 

not subscribe to that view: I believe that we can’t afford not to build green. Research 

increasingly shows that all types of affordable housing can be built or rehabilitated 

to rigorous green standards at minor additional cost, and often without the need for 

capital investment. Secretary Donovan and I are committed to making HUD a leader in green development precisely because of the benefits it will provide to people 

across the economic spectrum and lower-income families in particular. These kinds 

of investments are essential to creating the new generation of professionals—from 

mechanics and plumbers, to architects, energy auditors, and factory workers building solar panels and wind turbines—we need to design, install, and maintain the 

first wave of green technologies and unlock the clean energy economy. 

As we dispel the notion that green building will mean higher costs for low income 

families we must recognize, while everyone is hurt by high energy costs, no one is 

more vulnerable to rising energy prices than low- and moderate-income families. 

Higher energy costs often result in cutting back on other critical needs, such as 

medicine and food. 

Large scale green initiatives such as the Enterprise Green Communities program 

show that properties achieving 20 to 30 percent greater energy efficiency yield cost 

savings that accrue directly to low-income residents, or are reinvested back into the 

property in which they live. 

Third, sustainable, green building has a clear connection to better health as well. 

Right now we can predict morbidity rates and life expectancy by zip code. In King 

County, we did a study called HealthScape, which looked specifically at how the 

built environment and the transportation system impacts public health and climate 

change. 4 What we found was that while people living in the most walkable areas 

of the county were less likely to be overweight and more likely to be physically active, in pockets of the county with lower-income and high concentrations of minority 

populations wide health disparities existed. 

But as we saw in the High Point public housing development in Seattle, a commitment to building green can be a big part of overcoming these disparities. In addition to walkability, by adding green features specifically designed to reduce asthma 

triggers, the number of asthma-free days increased, and mold—which is an important asthma trigger, especially in children—was effectively controlled. 

Finally, greening our buildings will have a positive impact on our environment. 

As the American people are well aware, transportation accounts for a third of all 

greenhouse gas emissions. But most people would be surprised to learn that buildings account for even more—almost 40 percent—of our emissions. About half—20 

percent of all carbon emissions—are from heating, lighting and cooling our homes. 5

As many of the Nation’s Mayors, some 1,042 at last count, have recognized through 

their commitments to the 2030 Building Challenge, significant improvements in the 

energy efficiency of our building stock will yield big gains on the carbon reduction 

front as well. We believe that the Federal Government should be—and can be—a 

leader, rather than a follower in reducing the impact of housing on global warming 

and climate change. 

Studies have already found a significant return on efficiency investments. A study 

of energy savings in single-family homes through the Department of Energy’s 

Weatherization Assistance Program from 1993 to 2005 found that the program 

achieved savings of 23 percent in gas-heated single-family detached homes. 6

This and other studies point to significant savings resulting from energy improvements. For example, through some 200 Energy Performance Contracts in public 
36 

housing, HUD estimates a cost savings of approximately $100 million per year for 

an investment of $571 million, with an average investment of less than $4,000 per 

unit. 

So there should be no doubt that lower energy costs in federally subsidized housing are critical to the overall health of the portfolio, and to the welfare of the residents. It is clear that greening buildings will have dramatic benefits for low and 

moderate income households by reducing their energy costs, improving their health, 

and increasing economic opportunities. Green building is not only the key to making 

all our neighborhoods better—it is essential to building the kind of stronger communities America needs to meet the challenges of the 21st century. 

The Energy Efficiency in Housing Act will enable HUD to be a more effective 

partner in this effort. The bill is wide ranging and comprehensive, and in totality 

represents an important effort to address the high cost of heating, lighting, and cooling federally financed, assisted or insured housing. With suggested modifications 

that we will be happy to provide the Committee, we are generally in support of the 

key provisions of the bill as they impact HUD policies and programs. 

The bill includes a number of provisions for piloting or demonstrating energy efficiency in federally assisted or insured multifamily housing, a sector which, due to 

the .split incentive. between residents and owners faces particular challenges in 

incentivizing energy investment, along with limitations on accessing energy performance contracts that have so been used with some success in public housing. 

There are also sections related to energy efficiency in mortgage underwriting, incorporating green standards in the HOPE VI program and stronger energy efficiency 

requirements for rural housing. 

The bill also provides for a competitive grant program to fund local community 

organizations in low-income communities. The bill also requires HUD to play a financing role in residential renewable energy leasing. This would be an area outside 

of HUD’s current expertise, and the prescriptive terms and potentially risky nature 

of such financing could ultimately lead to higher costs, or lower participation if high 

fees are required to offset costs. We look forward to working with you on technical 

amendments to the bill to clarify this issue. Two provisions in the bill involve public 

housing, the first applies the Green Communities standard to HOPE VI, the second 

requires an annual report to Congress. In addition, there are several provisions of 

the bill that fall outside HUD’s jurisdiction. 

Our support is contingent on a number of amendments to the bill that we would 

like to share with the Committee in order to more closely align the bill with the 

House version of the bill, as well as with HUD’s current practices and procedures. 

The bill also contains provisions that are inconsistent with the Federal Credit Reform Act, and Federal credit policies; such provisions would lead to less efficient or 

effective use of Federal credit assistance to achieve policy goals and could be costly. 

Let me touch on a few areas where we believe corrections or modifications will be 

needed. 

First, with regard to minimum standards, our understanding of the bill is that 

it gives the Secretary the discretion to apply minimum or enhanced energy and 

green standards as cited in Section 3 (Definitions). The only programs for which 

these standards are required are for certain demonstration or pilot programs specified in the legislation. The Committee may want to consider providing the Secretary 

with the discretion to apply these standards to other programs. The primary challenge will be that recipients of HUD funds in those States who have not yet adopted 

the minimum standard (the 2009 International Energy Conservation Code) would 

need to familiarize themselves with the higher code requirements. In addition, even 

though the application of these standards is discretionary, the definition of HUD 

‘‘assisted programs’’ that are covered by these standards should exclude loan insurance and loan guarantee programs, consistent with the definitions in the most recent House version of the bill. It would also be helpful if the bill simply cited the 

specific programs in the bill to which these definitions apply. 

Second, if there is a ‘‘green premium’’ associated with implementing these standards, HUD may need to raise Total Development Cost (TDC) limits accordingly; 

however it should be clear that any increases in front-end development costs would 

be offset by lower operating costs, and that energy efficient construction doesn’t always require additional costs. 

Third, we recommend re-ordering and amending the provisions of the legislation 

related to energy efficient (and location efficient) mortgage underwriting. Section 11 

creates a Commission to study and make recommendations for the creation of model 

energy efficiency mortgage products and underwriting standards, while Section 10 

would have the FHA developing methods for considering the impact of utility cost 

savings in underwriting standards, separate from and prior to the Commission’s 

proposals. HUD recommends reversing these two sections to allow the Commission 
37 

7Section 5, Incentives for Energy Efficient Mortgages and Location Efficient Mortgages. (Note 

that this provision is not included in the House version of the bill). 

to complete its work, submit its recommendations and FHA to consider those recommendations, instead of FHA creating new products without such guidance. We 

will be happy to provide the Committee with detailed technical suggestions to 

achieve this end. 

We also recommend several improvements to Section 5, which requires the Secretary to establish ‘‘budget neutral incentives for encouraging lenders to make, and 

homebuyers and homeowners to participate in, energy efficient mortgages and location efficient mortgages.’’ 7 The key words here should be ‘‘budget neutral.’’ The bill 

should explicitly specify that budget neutrality applies to the FHA Mutual Mortgage 

Insurance (MMI) Fund and other FHA funds when considering these incentives. In 

addition, this section requires the Secretary to ‘‘consider the lower risk of default 

on energy efficient and location efficient mortgages’’ compared to other mortgages; 

we recommend that this lower risk should be contingent on HUD’s analysis and determination that these mortgages do lower the risk of delinquencies or default. This 

section also establishes a new definition of an energy efficient mortgage for FHA 

which may be problematic, in that projected or modeled energy savings are not always realized in practice—and may create confusion with current FHA energy efficient mortgages, which are defined differently. Finally, we suggest that this section 

of the bill also be implemented in conjunction with the Commission’s work as described in Section 11 of the bill, rather than requiring the Secretary to act before 

the Commission has submitted its recommendations. 

In the multifamily arena, Section 6 requires HUD to develop incentives to increase the energy efficiency of FHA-insured multifamily housing—such as a discount on premiums, loan limit increases for energy efficiency improvements, or reductions in required owner contributions—but does not establish clear parameters 

for these incentives or require budget neutrality. This section would be improved by 

providing permissive authority for HUD to create incentives, rather than requiring 

them, and by including a more limited set of incentive authorities that do not provide blanket waivers of the core statutory loan limits and underwriting requirements that apply to all other multifamily loans. 

We look forward to working with the Committee staff to address these and other 

suggested modifications to the bill. These include, for example, technical amendments for consistency with the Federal Credit Reform Act, possible improvements 

to the design of multifamily housing pilot programs; more manageable timelines for 

issuing regulations; amendments to Sections 19 and 21 in order to ensure consistency with Federal credit program policy; and ensuring that HUD has the ability to 

do proper due diligence on the financial and operational feasibility of implementing 

new programs in new areas of activity, such as solar leasing (Section 21). 

I’d like now to take a few moments to highlight the progress we have made over 

the past 18 months in moving this agenda forward and to illustrate what HUD is 

already doing in these areas. The Department’s successful Mark to Market (M2M) 

Green Initiative, initiated in 2007, continues to provide property owners who have 

entered the Mark to Market Program enhanced incentives and credits for .going 

green.. To date, the program has led to the green rehabilitation of some 27 properties with approximately 2,700 units. HUD requires a green physical condition assessment, an energy audit and an integrated pest management inspection, in order 

to identify energy and water saving and other measures that improve indoor air 

quality and benefit the environment. 

The Green Initiative is voluntary; to incentivize owners, HUD offers to reduce the 

required contribution from the owner from 20 percent to just 3 percent, and also 

increase the incentive performance fee, which is paid annually upon meeting required conditions. Owners agree to green the property for the life of the use agreement (generally 30 years) and to develop and maintain a green Operations and 

Maintenance Plan. 

Recovery Act Investments 

Building on the success of this initiative, HUD has targeted funds appropriated 

by Congress through the American Recovery and Revitalization Act of 2009 to further its commitment to energy efficiency. 

Approximately $250 million has been made available for energy efficient and 

green retrofits in assisted multifamily housing. 210 project applications have been 

accepted, with approximately 20,000 units. The first award under the Green Retrofit 

Program went to a New York project, the West 135th St. Apartments in Harlem, 

New York, a 198-unit, 10 building, Section 8 assisted property developed by Jonathan Rose Companies. Energy efficient improvements will include Energy Star re-
38 

frigerators, replacement of 32 old boilers with 10 high-efficiency boilers, rooftop 

solar photovoltaic panels, formaldehyde-free kitchen cabinets, recycled-material 

kitchen counters, Energy Star ceiling fans, compact fluorescent lamp (CFL) fixtures 

and bulbs, double-pane argon-filled low emissivity (low-e) windows, insulated exterior doors, low-flow fixtures, shower heads and toilets, linoleum flooring to replace 

vinyl tile, wood floor installations using Forest Stewardship Council (FSC)-certified 

wood, and nontoxic paints, adhesives, and sealants throughout. 

Public housing has also received a significant boost in additional resources to 

green their housing stock. Housing authorities received an additional $4 billion over 

the past year through the Recovery Act in the Capital Fund for energy efficiency, 

green and other upgrades—$3 billion in formula grants, and $1 billion in competitive funds. Of the total amount, $300 million has been made available through competition for high-performing green projects that meet Enterprise Green Communities standards; 36 awards were made to public housing authorities for 1,400 new 

green units. Eighteen of these projects will be utilizing photovoltaic panels, another 

8 projects will install geothermal heating and cooling and one project will be utilizing either photovoltaic panels or wind turbines. 

Another $300 million has funded high performing energy retrofit projects that 

achieve 20–40 percent in energy savings. 134 housing authorities received awards 

for a total of 222 energy retrofit projects with 35,000 units. As part of these awards, 

31 projects plan to retrofit units with photovoltaic panels and 13 projects with geothermal heating and cooling systems. 

Additional funds have been made available for green building through the competitive portion of the Native American Housing Block Grant program, as well as 

through the second round of the Neighborhood Stabilization Program, both of which 

have strong incentives for improving the energy efficiency of buildings. 

Beyond the Recovery Act 

Beyond these Recovery Act investments, HUD is implementing a number of strategies for green affordable housing. In public housing, we continue to offer incentives 

to Public Housing Authorities to work with third party Energy Services Companies 

(ESCOs) to finance and implement energy upgrades in their buildings through Energy Performance Contracts, and are in the process of establishing the Office of 

Field Operations (OFO) Energy Center to assist housing authorities to manage and 

implement these contracts. 

HUD’s Office of Community Planning and Development has implemented several 

initiatives to promote green and energy efficient practices through the HOME program. CPD awarded recaptured HOME funds to expand the supply of energy-efficient and environmentally friendly affordable low-income housing. Ten $250,000 

awards have been made. Additionally, the HOME program developed a Model Guide 

and training curriculum for Participating Jurisdictions and Community Housing Development Organizations (CHDOs) on energy efficient and green building. 

HUD’s Office of Healthy Homes and Lead Hazard Control is working with DOE 

and the Environmental Protection Agency (EPA) to develop a home assessment procedure that can be used to identify priority residential health hazards in conjunction 

with an energy audit. The Office is also funding healthy homes demonstration 

projects to pilot this integrated housing assessment and intervention approach, and 

supporting research to improve our understanding of the potential benefits of green 

rehabilitation on indoor environmental quality and resident health. In FY2009 the 

Office competitively awarded $2.4 million to fund four cooperative agreements to 

study health aspects of low-income green housing in Arizona, Minnesota, New York, 

and Ohio, respectively. The Office continues to partner in the Centers for Disease 

Control and Prevention’s National Center for Environmental Health to conduct additional research on the health benefits of green rehabilitation and maintenance 

practices in low-income housing. 

Multifamily Weatherization 

HUD has also formed a partnership with the Department of Energy (DOE) to coordinate investment of Recovery Act funds. The partnership includes a commitment 

to develop a common set of guidelines and specifications for retrofitting public housing as well as privately owned, federally subsidized rental properties. 

A highlight of our partnership is a Memorandum of Understanding signed by the 

two agencies aimed at eliminating duplicative income verification requirements for 

DOE’s weatherization program, which received $5 billion in ARRA funding. Using 

available information, HUD has provided DOE with lists of nearly 7,000 public 

housing properties (with 936,000 households) where all of the buildings meet income 

eligibility requirements for DOE’s weatherization program. In addition, HUD has 

identified more than 10,000 other federally assisted properties (567,000 households) 
39 

that meet in the income eligibility requirements. Together, these qualified properties account for 1.5 million assisted households that meet at least one of the eligibility criteria required under the DOE weatherization program. HUD has also 

begun establishing a process for collecting additional information that we believe 

will enable us to certify many more assisted buildings as meeting the income eligibility requirement. 

HUD has undertaken a series of training sessions with its regional and field office 

network to ready field management, multifamily and public housing program staff 

to help support the successful implementation of the weatherization program. To 

date over 300 HUD staff have been briefed on the weatherization program, including recent rule changes and HUD’s published list of qualified properties. 

This partnership is yielding results on the ground. A number of States have 

begun to target weatherization assistance for multifamily rental housing. The Rhode 

Island Office of Energy Resources, has allocated $7 million (roughly one third of 

their ARRA funding) to buildings with multiple units. The State of Colorado allocated $11 million for multifamily weatherization program. In Pennsylvania, the 

State added the Pennsylvania Housing Finance Agency (PHFA) as an additional sub 

grantee to serve multifamily units statewide. PHFA is partnering with the State 

weatherization agency to support existing preservation through its ‘‘smart rehab 

program’’ with $20 million in ARRA funding. Florida, Michigan, Texas, California 

are also initiating multifamily weatherization programs, in addition to States like 

New York that have historically committed weatherization funds to multifamily 

housing. 

New Initiatives 

Looking beyond current programs and funding, we are in the process of implementing a new $50 million Energy Innovation Fund. This Fund, administered by 

FHA, will pilot or test various strategies for financing cost-saving (and energy-efficient) measures in both the single family and multifamily sectors. We expect to deploy these funds in innovative financing initiatives later this year and will keep the 

Committee closely informed. 

In addition, we are exploring options for utilizing HUD’s existing regulatory authority to encourage owners of HUD-assisted properties to make green improvements as they rehabilitate and refinance their properties. 

Sustainable Communities Initiative 

I’d like to take a moment to focus on an increasingly important element of green 

building, in addition to energy efficiency: the location efficiency of the property. 

Most green building programs provide additional points for housing that is located 

at or near transit, or provides access to close-in or walkable amenities and services. 

On average, Americans spend more than half of their incomes (52 percent) on housing and transportation. 

That is why HUD joined with the Department of Transportation and EPA to create an unprecedented Partnership for Sustainable Communities that, for the first 

time, brings our agencies together to speak with one voice on housing, transportation, and environmental policy. That’s also why we think Senator Dodd’s Livable 

Communities Act, is so important, and is complementary to S. 1379. Sustainable development must include both the energy efficiency of the building itself as well as 

the location of that building, and the extent to which there is good access to transportation, services and amenities. The Livable Communities Act would permanently 

authorize the Office of Sustainable Housing and Communities at HUD and solidify 

our partnership with DOT and EPA. We are strongly supportive of this legislation 

and intend to provide the Committee with technical comments in the near future. 

This month we published a key product of the Partnership’s work—a Notice of 

Funds Availability (NOFA) for $140 million in Sustainable Communities Initiative 

funding to enable local communities and metropolitan areas to plan and implement 

comprehensive sustainable development. 

The Sustainable Communities Initiative includes $100 million for Regional Planning Grants that will encourage metropolitan regions to develop integrated housing, 

land use, and transportation plans. The goal of this initiative is not just to develop 

plans—it is to articulate a vision for growth tailored to specific metropolitan markets that Federal housing, transportation, and other Federal investments can support. Funding to these metropolitan regions will be used to support the development 

of integrated, state-of-the-art regional development plans that use the latest data 

and most sophisticated analytic, modeling, and mapping tools available. 

Earlier this year, we issued an Advanced Notice and Request for Comment for the 

program, inviting feedback through a new online ‘‘Wiki’’ accessible via HUD’s Web 

site and through an extensive listening tour around the country. We wanted commu-
40 

nities to tell us what works for them, what isn’t working, and how we can use this 

program to help them build sustainably. Just as importantly, we hoped to send a 

very important signal that we in the Obama administration are serious about being 

the kind of partner that listens and learns. 

And the response exceeded even our expectations. We received over 900 written 

comments, met with over 1,000 stakeholders in seven listening sessions, and staged 

webcasts that touched thousands more. The feedback we received was overwhelmingly positive as well—from mayors and other officials of both small and large communities, to business leaders in growing regions, to governors of States that have 

been hit hard economically. 

If there was one common theme we heard it was that while community after community is ready to embrace new kinds of sustainable practices—and that the Federal role can’t be about dictating what they can or can’t do, but rather offering them 

the resources and tools to help them realize their own visions for achieving the outcomes we all want and more and more are insisting on. 

Complementing this regional planning investment will be our $40 million Community Challenge Planning Grant program targeted to local communities. HUD has 

also issued a NOFA for this program—in conjunction with DOT’s NOFA for its $35 

million ‘‘TIGER II’’ planning grant program. Where DOT’s program will fund planning activities that relate directly to a future transportation capital investment, 

HUD’s program will fund land-use related planning activities that would be linked 

to a future transportation investment—modernizing the building codes, zoning laws 

and other barriers communities face to sustainable development. 

Greening America’s Homes Through the Transformation of Rental Assistance 

I would also like to explain how HUD’s Transformation of Rental Assistance initiative, including its green physical needs assessment, advances the Administration’s sustainability agenda. TRA would to reform America’s public housing system 

and transform the way the Federal Government provides rental assistance to more 

than 4.5 million of our most vulnerable families. 

But let me also explain to you how TRA would spur our Clean Energy Economy. 

As this Committee knows, every property has a lifecycle, and when a property has 

reached the end of its useful life, the owner has to figure out how to replace it or 

it will be lost. TRA will allow properties to establish .reserves for replacement,. 

which will help preserve millions of units as they reach the end of their normal life’s 

course. This is important because it is more sustainable to preserve and rehabilitate 

existing housing than to build anew. 

The first condition for conversion to TRA is ‘‘Promoting the rehabilitation, energyefficiency, and long-term financial and physical sustainability of properties.’’ In addition, TRA would require the property to undergo a ‘‘green’’ physical condition assessment—an analysis to show what exactly would need to be done to a property 

to green it. 

The main reason for PHA’s to convert to TRA is to generate the capital needed 

to rehab a building. The capital comes in a form of a mortgage of sorts. When lenders underwrite these investments and look at planned future uses/income, TRA will 

require the cost of the property rehabilitation to include rebuilding green. Our estimate is that between $20.7 billion and $28.9 billion will be borrowed in these ‘‘mortgages’’ and spent on retrofits that must be green. These investments will go a long 

way to improving buildings as well stimulating markets and products, such as green 

mortgage and underwriting standards and building materials. 

Finally, today, 1.2 million public housing units provide low-income families a permanently affordable place to live. The units are often built more densely than surrounding housing. Tomorrow, 1.2 million or more TRA units will be in the same locations, with the same target population. In other words, Mr. Chairman, we know 

exactly where to target infrastructure that promotes sustainability—transit, being 

the most obvious. 

Mr. Chair and Members of the Committee, I hope this overview of HUD programs 

and initiatives addresses the opportunities and challenges that we are facing as we 

address green building and energy efficiency in HUD-assisted properties. We are 

still in the process of reviewing the particulars of S. 1379 and will be happy to provide you with more detailed comments once that review is complete. 

Thank you again for the opportunity to appear before the Committee today. 
41 

PREPARED STATEMENT OF DAVID CALDWELL, JR. 

VICE PRESIDENT, ON BEHALF OF CALDWELL AND JOHNSON, INC. 

JUNE 30, 2010 

Good Morning Mr. Chairman and Members of the Committee, thank you for offering me the opportunity to speak on behalf of the merits of green housing, and, in 

particular, on the Energy Efficiency in Housing Act of 2009. My name is David 

Caldwell, Jr., a second generation home builder from a small family owned construction company in Rhode Island and a recent Marine Corps veteran of Operation Iraqi 

Freedom. 

Recently, our company completed the first Department of Energy Builder’s Challenge House in Rhode Island, which was a complete gut remodel of a foreclosed and 

abandoned home originally built in 1952. (See picture.) For an additional $5,000 in 

construction costs, we were able to more than double the energy efficiency of the 

house. The house, built entirely on speculation, has 3 bedrooms, 2.5 baths, just 

under 1300 square feet, and sold for $265,000 to a single mother who is a school 

teacher with two daughters. We had multiple offers over the asking price of 

$259,900 in a matter of 5 days, and had approximately 200 people visit two open 

houses at the property. Suffice to say, the response to this house was somewhat 

overwhelming. 

The principle value proposition is that the additional $5,000 in construction costs 

spent to double the energy efficiency of the house, when amortized over 30 years 

at present rates, equals about $1 per day. The energy savings for the house, at 2010 

rates, equals approximately $2 per day. Over time, assuming a fixed rate mortgage, 

if the price of energy increases, this gap will likely increase substantially. Once 

again, the homeowner will receive approximately double the value in energy savings 

that the green features of the home will cost over time. That’s a return on investment that should appeal to everyone. 

Though in Rhode Island there appears to be significant demand for this type of 

home, neither the mortgage industry nor the appraisal community is at this time 

willing to assign any additional value to homes built to green or energy efficient 

standards, making appraisals and financing very difficult, particularly for those applying for FHA mortgages with low down payments. 

Not one person who has seen this house has disagreed with the value proposition 

for the homeowner created by its increased energy efficiency. However, the overwhelming focus of the financial community, the real estate community, and the appraisal community is the extra cost involved, not the operational savings and value 

to the homeowner that has been created. Presently, I have a customer who is designing an energy efficient custom green home. When he went to the bank seeking 

financing for a construction loan, he explained all the attributes of the green house, 

including a photovoltaic system to provide enough electricity for the entire house, 

but the bank literally said, ‘‘we don’t care about that energy efficiency stuff, it’s just 

added expense. It does not matter for the mortgage and the appraisal.’’ 

I am frequently asked why more houses are not being built similar to the green 

home we constructed. I am fond of using this analogy: If a customer is purchasing 

a car, and sees two cars that look identical in all respects on the car lot, but knows 

nothing other than the fact that the first car costs 2 percent more than the second 

car, he or she will pick the less expensive model. If told that the first car gets over 

double the gas mileage of the second car, the customer will probably reason that 

the first car is definitely the better value, even though it costs 2 percent more 

money to purchase. 

Today, consumers are provided with considerably more information when they 

purchase a car, box of cereal or cell phone than they are when they purchase a 

home, which is usually by far the most expensive purchase that most people make. 

As such, I am very much in favor of the incentives for green housing, including 

the ones in the Energy Efficiency in Housing Act. I have met no one who does not 

believe that energy efficiency in housing is not a great idea. I have met no one who 

would not be willing to spend a dollar a day to save two dollars. It can be done, 

and should be done—I do not know why anyone would build a new house any other 

way, it does not make sense to me. The question, then, at this time, is why we are 

not collectively building in this fashion. I believe that the incentives and guidance 

of the Energy Efficiency in Housing Act will be a tremendous help to both homeowners and small businesses in facilitating the shift towards more sustainable and 

efficient housing stock. This is an outstanding example where Federal leadership 

can synthesize a true win-win situation for business and homeowners. Thank you 

again for the opportunity to testify and I am happy to answer any questions. 
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49 

PREPARED STATEMENT OF TRISHA MILLER 

DIRECTOR, GREEN COMMUNITIES, ON BEHALF OF ENTERPRISE COMMUNITY PARTNERS

JUNE 30, 2010 

Introduction 

Chairman Menendez, Ranking Member Vitter, and Members of the Subcommittee 

on Housing, Transportation, and Community Development, I thank you for this opportunity to testify on the Energy Efficiency in Housing Act. I am Trisha Miller, 

Director of Green Communities at Enterprise Community Partners (Enterprise). 

Enterprise is a national nonprofit organization whose mission is to see that all 

low-income people in the United States have the opportunity for fit and affordable 

housing and to move up and out of poverty into the mainstream of American life. 

Enterprise provides financing and expertise to community-based organizations for 

affordable housing development and other community revitalization activities 

throughout the United States. Since 1982, Enterprise has invested more than $10 

billion to create more than 270,000 affordable homes and strengthen hundreds of 

communities across the country. Enterprise also works closely on a bipartisan basis 

with policymakers at all levels of government to develop solutions to low-income 

community needs. 

Mr. Chairman, now is the time for Federal leadership on green housing. The Federal Government has an important role to play in linking the benefits of the emerging green economy to low-income families and communities. Green development— 

energy efficient, healthy and environmentally responsible development—offers job 

opportunities and cost effective ways to address housing affordability challenges and 

rising energy, water and transportation costs, all of which disproportionately affect 

low-income people. 

Despite recent declines in home prices, the Nation faces a huge shortfall of decent, 

affordable housing. Currently, there is not a single county in the United States 

where an individual earning minimum wage can afford to rent a market-rate apartment, according to the National Low Income Housing Coalition. Nationwide, an estimated 55 million Americans live in unaffordable, overcrowded, or substandard housing. 

Green development offers proven, cost effective ways to address current and longstanding housing, energy and transportation challenges. The practice of greening affordable housing gives us the ability to support and deliver healthy communities. 

Indeed, we can harness energy efficiency and renewable sources of energy that will 

lower our carbon dependency and build thriving communities. 

Enterprise’s Green Communities initiative leverages financing and expertise to 

enable developers to build, rehabilitate, and maintain housing that is energy efficient and better for the environment—without compromising affordability. Over the 

last 5 years, Enterprise has supported the development of over 17,000 homes built 

according to Enterprise’s Green Communities Criteria, the first national framework 

for environmentally sustainable affordable homes. The Criteria were developed in 

collaboration with and endorsed by a number of leading environmental, energy, 

green building, affordable housing, and public health organizations. 

To date, Enterprise has invested more than $700 million to create green affordable homes in 32 States. We have trained over 5,000 housing professionals and 

helped more than 20 States and cities implement greener housing policies. All State 

housing finance agencies have adopted portions of the Enterprise Green Communities Criteria as part of their scoring systems for awarding allocations of low-income housing tax credits. 

Enterprise’s vision is for all affordable housing both new and existing in the 

United States to be energy efficient and environmentally sustainable. Partnerships 

with housing providers and public agencies have led us toward innovations in green 

building and provided an incubator to test green methods, materials and their impact on communities and energy performance. Federal leadership can take this 

progress to scale. The Energy Efficiency in Housing Act represents a major step towards that goal. We commend Senator Whitehouse for his commitment and leadership in introducing the bill, which Enterprise enthusiastically supports. Both this 

legislation and the GREEN Act in the House represent a national commitment that 

would have substantial positive impacts in the housing market, especially the affordable housing sector. 

The Case for Green Affordable Housing 

Mr. Chairman, housing and transportation costs make up the largest share of our 

household budgets and quickly force low-incomes families into an untenable choice 

between life’s most basic necessities. Indeed, too many families must make the dif-
50 

1See, www.energystar.gov/index.cfm?c=newlhomes.nhlbenefits. 

ficult choice between paying the rent and putting food on the table. According to 

a Low Income Housing Energy Assistance Program study, a low-income household 

pays 4 times as much of their monthly household income on utility payments as an 

average U.S. household. There are roughly 25 million very low-income households 

with annual incomes of $25,000 or less in the country. Roughly two-thirds of these 

households are renters and one-third are homeowners. For these families and individuals, the daily realities of rising energy, housing and transportation costs are 

intertwined. 

Home energy costs have increased much faster than incomes for very low-income 

households in recent years, rising 33 percent since 1998. Not surprisingly, high utility bills force many very-low income households to make desperate tradeoffs. A survey of households that received Federal home energy assistance during a 5-year period found that 47 percent went without medical care, 25 percent failed to fully pay 

their rent or mortgage and 20 percent went without food for at least one day as a 

result of home energy costs. 

In addition, low-income and minority communities are more likely to live in worse 

environmental conditions and experience greater rates of disease, limited access to 

health care, and other health disparities. Studies have shown that negative aspects 

of the built environment tend to magnify these disparities. Housing conditions in 

particular are important factors influencing health. Specific housing hazards include 

exposure to allergens that may cause or worsen asthma, lead-based paint hazards, 

mold, and excess moisture and indoor air quality. 

A study by the Center for Housing Policy (CHP; the research affiliate of the National Housing Conference) found that transportation costs are also rising, especially 

for very low-income families. CHP also found that families earning $20,000 to 

$50,000 spend nearly half their incomes on housing and transportation costs combined because they must drive away from job centers to where they qualify for housing that they can afford. Again, low-income families are stretched too thin. 

In summary, housing, environmental, health and transportation challenges are inextricably linked for millions of very low-income households. We can make progress 

on all these issues simultaneously and lock in long-term benefits by making a renewed commitment to greening housing that is affordable to people with low-incomes. We can build smarter, with less of an environmental impact and with development patterns that inspire people and create choices in terms of access to jobs, 

schools, open space, and healthy living environments. And, most importantly, we 

can help all Americans find homes they can afford and feel proud to live in. 

Consumer and Environmental Benefits of Green Housing 

The Energy Efficiency in Housing Act signals a comprehensive approach to green 

housing that would bolster community and environmental benefits without imposing 

significant costs. Green housing can generate pocketbook savings for low-income 

families and create healthier living environments. When we launched Enterprise 

Green Communities in 2004, we set out to prove that for less than a 5 percent premium on total development costs, green buildings would return significant benefits 

to low-income residents through increased energy savings, water conservation, and 

a healthier living environment. 

We engaged in an extensive and rigorous data collection effort to analyze the costs 

of meeting Green Communities Criteria and assess the associated financial benefits 

resulting from reduced energy and water utility costs over the life of the home. 

From a strictly financial standpoint, the projected ‘‘lifetime’’ utility cost savings, 

averaging $4,851 per dwelling unit (discounted to today’s dollars) are sufficient to 

repay the average $4,524 per-unit cost of complying with the Criteria. The average 

cost per dwelling unit to incorporate the energy and water criteria was $1,917, returning $4,851 in predicted lifetime utility cost savings. In other words, the energy 

and water conservation measures not only paid for themselves but also produced another $2,900 in projected lifetime savings per unit. 

Enterprise’s experience through the Green Communities initiative indicates that 

new and existing properties that achieve 20–30 percent greater energy efficiency 

generate substantial cost savings from lower energy and water usage—hundreds of 

dollars per unit on an annual basis. This is consistent with other research on improving energy efficiency. For example, the Department of Energy reports that Energy Star-qualified single-family homes delivered $200–$400 in annual savings compared to conventional homes, with potentially substantial additional savings on 

maintenance. 1

In addition, studies of home weatherization and retrofit programs captured consumer benefits beyond lower energy and water costs, including greater comfort, con-
51 

2 Jennifer Thorne Amman, ‘‘Valuation of Non-Energy Benefits to Determine Cost-Effectiveness of Whole House Retrofits Programs: A Literature Review’’, American Council for an Energy-Efficient Economy (May 2006). 3 ‘‘Income, Energy Efficiency and Emissions: The Critical Relationship’’, Energy Programs 

Consortium (February 26, 2008). 4 Ibid. 

5 ‘‘Testimony of Dan W. Reicher, Director, Climate Change and Energy Initiatives, Before the 

Senate Committee on Finance’’, Google.org (February 27, 2007). 

venience, health, safety and noise reduction. These ‘‘nonenergy benefits’’ have been 

broadly estimated by the American Council for an Energy-Efficient Economy to be 

worth 50 percent–300 percent of annual household energy bill savings. 2

There is also mounting evidence that green homes are healthier. A targeted scientific study recently assessed the health impact on asthmatic children who moved 

into healthy green public housing at Seattle Housing Authority’s High Point community. Asthma is the sixth-ranking chronic condition in Washington State and one of 

the leading chronic illnesses of children across the country. The homes in this study 

all met healthy housing criteria. After just 1 year, the results were staggering. The 

outcome for the asthmatic children living in these homes showed a 60 percent increase in symptom-free days and a 67 percent reduction in the use of urgent clinical 

care. That finding is particularly significant when you consider that the children in 

low-income communities are twice as likely to suffer from asthma and one in four 

emergency room visits nationwide is asthma related. 

It comes down to a basic principle: green investments in housing have the potential to improve resident health and reduce the cost of health care. A great example 

of measurable health outcomes associated with green housing can be seen in the 

Southwest MN Housing Partnership’s redevelopment of Viking Terrace in Worthington, Minnesota. The green rehabilitation of 60 apartments for people with low 

incomes addressed core contributors to an unhealthy living environment by meeting 

Enterprise’s Green Communities Criteria. The National Center for Healthy Housing 

conducted a health assessment of the development and found improvements in 

health and safety across the board. One resident, Abang Ojullu, spoke of the lasting 

impact these health measures had on her and her children. For 2 years, Abang 

made the hour-long drive to Sioux Falls once a month so her daughter, Ananaya, 

could see a specialist for her severe asthma. But, 6 months after moving into the 

renovated Viking Terrace Apartments, Ananaya did not get sick once, nor did any 

of her five other children, though in the past each had bouts of asthma. As Rebecca 

Morley, executive director of the National Center for Healthy Housing, noted, ‘‘instead of paying for medical care that could have been avoided, occupants in Green 

Communities will be able to keep more of their income and avoid the suffering and 

loss associated with poor health.’’ 

Currently, the Mount Sinai Department of Preventive Medicine is conducting a 

study investigating the effects of green housing on respiratory health of families in 

Melrose Commons V, a 63-unit housing property in the South Bronx. This work will 

focus on documenting respiratory benefits of residents after moving into an environment with improved ventilation and built with green building materials. 

The Energy Efficiency in Housing Act can help improve health outcomes, while 

protecting our natural resources and fighting climate change. Residential units consume 22 percent of the Nation’s energy and cause 20 percent of our greenhouse gas 

emissions. 3 The 25 million units that are home to our lowest income citizens are 

almost one-quarter of all residential units in the country. Most of these units were 

built before 1980 and many were poorly constructed. Just imagine if we could rehab 

and retrofit all of those units. That would translate into annual carbon emissions 

reductions utilizing EPA’s equivalency calculator of either: 60 million tons carbon 

dioxide (CO2), 10 million cars off the road, or nearly 400,000 acres of forests preserved. 

Increasing energy efficiency in housing would address one of the most significant 

contributors of greenhouse gas emissions—the built environment. One recent analysis suggest that the 34 million households eligible for Federal home energy assistance generated 276 million tons of carbon dioxide emissions, 27.5 percent of total 

emissions from residential units overall. 4 Another study found that weatherizing 

12,000 homes in Ohio avoided more than 100,000 pounds of sulfur dioxide and 

24,000 tons of carbon dioxide, while cutting average utility costs for low-income 

homeowners by an average of several hundred dollars per year. 5

The Minnesota Green Communities program has concluded that once green affordable housing projects receiving State funding through 2008 are built, the reduction in emissions will be almost five million fewer pounds of CO2 released each 

year—the equivalent of the CO2 footprint of 90 to 100 average households. The En-
52 

ergy Efficiency in Housing Act will amplify these outcomes, and improve health and 

housing conditions for vulnerable communities. 

Costs and Benefits of Increasing Our National Stock of Green Housing 

In creating Green Communities, Enterprise sought to show that all affordable 

housing—new construction and rehabilitations, home ownership as well as rental, 

large urban developments, and small rural projects—could be green within the 

budgets and capacity of the typical affordable housing developer. Enterprise has 

demonstrated that green affordable developments can be created for little if any 

higher development costs than conventional projects that do not offer the same benefits. And Enterprise has demonstrated the many additional benefits of green affordable development. 

Enterprise’s Green Communities portfolio represents virtually every form of housing in every type of climate in every kind of community in the country: 

• New rental construction for seniors in Ewing, New Jersey; 

• Single family homeownership in Blacksburg, Virginia; 

• Urban infill redevelopment in New Orleans; 

• Rental preservation in New York City; 

• Farmworker housing in Independence, Oregon; 

• Family housing in Billings, Montana; 

• Public housing revitalization in Cleveland; 

• Single family rehabilitation in Columbus; 

• Green design with Native American communities in Wisconsin; 

• Transit oriented development in Austin, Texas. 

Enterprise’s extensive evaluation efforts have generated data that show we can 

create highly sustainable homes for low-income families such as these for only marginally higher development first costs—2 percent over total development costs—and 

those first costs can come down with experience. Critically, our evaluation suggests 

that most of the marginally higher costs are attributable to measures that generate 

financial savings, such as energy and water efficiency features, or enable developments integrate systems and thinking during the early design phase which has been 

shown to lower life cycle costs and enhance environmental performance in buildings. 

Of course, there are examples of green developments that cost more than conventional developments, just as there are many nongreen developments that go over 

budget. The point is that we can no longer allow the lowest common denominator 

to constrain Federal leadership in the face of the overwhelming body of experience 

and proven benefits of green housing. 

Role of Legislation 

The Energy Efficiency in Housing Act authorizes HUD to apply minimum standards and bonus incentives for meeting energy efficiency and green development requirements. The minimum energy efficiency standards establish clear thresholds 

based on the International Energy Conservation Code (IECC) and the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE). It would 

also raise the bar on building and environmental performance by encouraging new 

and rehabilitated development to meet more comprehensive criteria that include improved indoor air quality, reduced water use, lower environmental impact on the 

surrounding site, and greater access to transit. The bill addresses this issue by providing ‘‘additional credit’’ for developments that incorporated comprehensive green 

building standards, including Enterprise’s Green Communities Criteria and the 

USGBC’s LEED rating systems. 

One of the hallmarks of Sen. Whitehouse’s bill is that it would provide new Federal resources for green housing through incentives to publicly financed and assisted 

housing developments on an unprecedented national scale. These funds generally 

would support the incremental costs of energy efficiency improvements. The bill also 

would provide critical resources to build capacity and provide technical assistance 

to enable developments to achieve green goals cost effectively. One especially important provision would provide funds to strengthen the capacity of community-based 

organizations in green development (Section 20). Finally, the bill would also spur 

green public housing by requiring all new HOPE VI construction to comply with the 

mandatory aspects of the Green Communities criteria (Section 15). 

In addition to Federal leadership and public investment to transform green affordable housing, capital and innovation must come from mainstream financial institutions to make major progress, and targeted Federal incentives have an important 

role to play. The bill facilitates private-sector participation by offering mortgage in-
53 

centives to reward energy and location efficient mortgages (Sections 5, 6, and 10). 

It would also stimulate innovation in multifamily green affordable housing by creating a competitive Energy Efficiency and Conservation Demonstration Program to 

green affordable homes for low-income people (Section 7). 

Finally, the bill recognizes the critical importance of consumer awareness. 

Through a Federal public education and outreach campaign on the availability and 

advantages of energy-efficient mortgages (Section 11), and Green Banking Centers 

that provide information on energy saving improvements and related funding 

sources and financial products (Section 22), consumers will make informed choices 

and increase demand for green affordable housing. 

Conclusion 

Enterprise commends the Subcommittee for convening this hearing at a time 

when we must take bold action to support communities around the country struggling to keep pace with housing and energy demands. We must green affordable 

housing, because the benefits for the most vulnerable among us are too important 

and the environmental risks too great. The Energy Efficiency in Housing Act presents an opportunity to meet this challenge by connecting critical Federal housing 

programs with innovative financing strategies that will stimulate renewable and energy efficient technologies and create healthier communities. Together, we can build 

green housing and create a sustainable future. This bill would be a groundbreaking 

step in the right direction. We look forward to working with you to pass this bill 

this year. 

Thank you again for the opportunity to appear before you, and I am happy to answer any questions. 

PREPARED STATEMENT OF KENNETH GEAR 

EXECUTIVE DIRECTOR, LEADING BUILDERS OF AMERICA

JUNE 30, 2010 

Thank you for the opportunity to express the views of Leading Builders of America (LBA) regarding ‘‘Green Housing for the 21st Century: Retrofitting the Past and 

Building An Energy-Efficient Future.’’ 

LBA commends Chairman Menendez and Ranking Member Vitter for focusing on 

this critical issue. 

Leading Builders of America is a newly formed trade group representing 16 of the 

Nation’s largest homebuilding companies. In 2009, our members sold more than 

99,000 homes in 34 States accounting for 27 percent of the new homes sold in the 

U.S. 

LBA member companies are building green houses every day throughout the 

country and are active participants in voluntary energy efficiency programs like Energy Star, The Builders Challenge, and Environments for Living. 

LBA member companies are committed to building an energy-efficient future. 

They are on the front lines of this effort and recognize the important role that housing can play in reducing energy consumption in the United States. 

A prospective homebuyer looking at an energy efficient home should be facing a 

win-win situation. An energy efficient home is good for the environment and the 

homebuyer will enjoy reduced energy costs. However, while the homebuyer may 

value the energy efficient features of the new home, the current mortgage underwriting and appraisal process does not, and this serves as a disincentive. LBA believes that providing tools to help homebuyers pay for energy efficiency features and 

ensuring that those features are properly valued in appraisals must be at the heart 

of any legislation aimed at reducing energy consumption in homes. 

LBA commends Senators Whitehouse, Bennet, Bingaman, Menendez, Merkley, 

Schumer, and Udall, sponsors of S. 1379, the Energy Efficiency in Housing Act of 

2009, for recognizing the need to help homebuyers pay the incremental costs associated with purchasing energy efficient new homes. 

S. 1379 calls for the refinement and expansion of Energy Efficient Mortgages, or 

‘‘EEM’s.’’ We fully support this effort and look forward to working with the bill sponsors and members of this Committee to strengthen the concept so that it can be implemented on a timeline that is in sync with the anticipated imposition of new energy efficient mandates for new homes. Along with the Alliance to Save Energy 

(ASE) and the Institute for Market Transformation (IMT), we are concerned that 

a delay in implementing a robust energy efficient mortgage proposal would be counterproductive and would have the perverse effect of actually creating a disincentive 

for homebuyers to buy energy efficient homes. 
54 

LBA’s analysis shows that a 30 percent mandated increase in efficiency would increase the cost of the typical new home by more $5,000; and at a 50 percent level 

cost would increase by an average of $15,000. These costs vary significantly depending on climate zone. Unless a strong energy efficient mortgage program is in place 

and universally available, homebuyers will be unable to obtain financing to cover 

the increased up front costs, making them more likely to purchase a less efficient 

home that does not have those incremental costs. 

LBA believes that the effectiveness of any energy efficient mortgage program is 

closely linked to reforms in the appraisal process to ensure that the value of energy 

saving features are consistently and accurately reflected in the value of a home, and 

we have a proposal, based on the well-established Home Energy Rating System 

(HERS), that would do just that. 

As Congress looks at mandates to increase energy efficiency standards for new 

homes, there is an opportunity to make modest changes to the mortgage underwriting and appraisal process that will give homebuyers meaningful tools needed to 

help pay for energy efficiency features and make the increased energy efficiency 

standards a success. LBA looks forward to working with the Committee and the bill 

sponsors to accomplish the goal of building an energy-efficient future. 

Outdated Underwriting and Appraisal Standards Discourage Energy Efficiency 

One of the first steps in the mortgage underwriting process is calculating the cost 

of homeownership. This analysis typically involves summing the total annual expenses for principal and interest and property tax and insurance premiums. This 

calculation is commonly called PITI and has been used by the mortgage industry 

for over 60 years. Conspicuously absent from this calculation is the anticipated annual energy cost for operating the home. 

In our view, the current cost of homeownership test creates an incomplete picture 

of the actual costs associated with owning and operating a home. To illustrate this 

point, a recent analysis conducted by the Institute for Market Transformation (IMT) 

found that average energy costs exceed both insurance and property taxes. The failure to account for energy costs in mortgage underwriting is a significant deficiency 

that must be addressed to improve the quality of underwriting and provide an accurate picture of repayment risk. 

Failing to account for energy costs in the underwriting process also has the unintended effect of discouraging consumers from purchasing energy efficient homes. 

Since energy costs are not factored into mortgage underwriting it stands to reason 

that energy savings cannot be factored in either. The result is that today’s homebuyer cannot use energy savings to help offset the incremental cost associated with 

purchasing a home. 

Of equal concern are current residential appraisal standards which do not provide 

for a consistent and accurate way to value energy saving features in a home. The 

result is that homeowners and homebuilders are discouraged from installing energy 

saving features since they will not be considered in the appraisal. Similarly, homebuyers are discouraged from buying homes that have energy saving features since 

those features are not considered in an appraisal and as a result cannot be financed 

in a mortgage. 

Our conclusions are that any effort to increase energy efficiency in homes will not 

succeed unless the problems described above are addressed at a systemic level. 

The Power of E 

Since January, LBA has been working to develop a more robust and universally 

available approach for making energy efficiency affordable to consumers and ensuring that energy saving features are accurately and consistently valued in appraisals. 

We have partnered with The Alliance to Save Energy (ASE) and the Institute for 

Market Transformation (IMT) to develop specific proposal to accomplish these goals. 

Our plan has two components: 

Update and Improve the Accuracy of Mortgage Underwriting. Mortgage underwriting criteria must be updated to include energy in the cost of ownership test. A 

PITI+E test would have two immediate and dramatic impacts in the marketplace. 

First, the quality of mortgage underwriting would improve with the addition of energy in factoring the cost of homeownership. Second, this change would encourage 

consumers to buy energy efficient homes by allowing energy savings to be used to 

offset the increased up-front cost of an energy efficient home. 

This goal could be accomplished simply by using the HERS Index, a well-established and universally accepted energy efficiency standard. Using it will enable us 

to reach our goals of building an energy efficient future faster than waiting for another system to be developed. An equivalent rating system is also an option; how-
55 

ever, developing an entirely new system could take considerable time and even more 

time to be understood and rolled out in the marketplace. This would delay efforts 

to encourage consumers to buy energy efficient homes. 

Unlike proposals to measure other operating costs, a HERS energy assessment 

provides quantifiable data and is well-established and understood. HERS raters 

would provide their data (a ‘‘score’’ of 1–100) which could be used by appraisers. 

Create a Uniform System for Valuing Energy Saving Features. Homebuyers, builders, appraisers and mortgage underwriters need a uniform methodology for accurately and consistently calculating the value of energy saving features in a home. 

This can be accomplished relatively simply by basing value on the amount of money 

the homeowner can expect to save through reduced energy costs over the life of the 

mortgage discounted to the current net present value. This methodology was devised 

a number of years ago by Fannie Mae as a cornerstone of their original Energy Efficient Mortgage Pilot Program. 

The Fannie Mae pilot program never really took off, in part because at the time, 

credit was relatively easy to obtain, and as a result, there was not a real demand 

for the program. Tightening credit markets combined with growing foreclosures and 

a growing need to reduce energy consumption have changed marketplace dynamics. 

Implement a Comprehensive Solution Now. Congress is considering sweeping energy legislation that could include efficiency mandates for new homes. These 

changes will increase the cost of new homes and in turn make them less attractive 

to homebuyers. However, if the mortgage and appraisal reforms described above are 

included in the same legislation, the added cost of energy saving features would be 

fully offset and appropriately valued in appraisals. In our view mortgage and appraisal reforms must be part of any legislation that mandates increased energy efficiency in new homes. 

The Federal Government is currently in a unique position to drive these much 

needed changes through the highly fractured home building, mortgage and appraisal industries. The vast majority of new mortgages today are either insured or 

owned by the Federal Government. Requiring that these loans consider energy costs 

in the underwriting process and accurately value energy saving features would dramatically accelerate the supply of and demand for energy efficient new homes. 

Thank you for taking our thoughts into consideration. 

Attachment 

APPENDIX: SUMMARY OF REQUIRED LEGISLATIVE CHANGES 

Updating Federal Mortgage Programs To Encourage Energy Efficiency 

Public Policy Goals 

Reduce the amount of energy that is consumed by homes. Encourage the development of energy efficient building technologies, materials and components. Facilitate 

the growth of ‘‘green jobs’’ in the residential construction and remodeling sector. 

Summary of Legislative Objectives 

1. Update underwriting standards for federally insured mortgages to accurately 

reflect energy costs. Ensure that demonstrable operating savings are factored 

into underwriting to offset the incremental expense of making homes more energy efficient. 

2. Adjust appraisal standards for federally insured mortgages to accurately reflect 

the added incremental value of energy efficiency. 

Detailed Discussion—Mortgage Underwriting Standards 

‘‘Covered Agencies’’ are defined as Federal agencies and federally chartered entities. 

‘‘Federal Insurance’’ is defined as insurance provided by Federal agencies and federally chartered entities. 

Direct the Administration to develop enhanced energy efficiency underwriting criteria for all federally insured mortgages as follows: 

• Any mortgage underwriting system that is used to originate a federally insured 

mortgage must take into consideration energy costs in determining the portion 

of gross income that can be used to service mortgage debt. 

• To facilitate this consideration, mortgage underwriting platforms must include 

a line item for ‘‘estimated annual energy costs.’’ 

• Annual energy operating costs shall be determined using one of two methods. 

A default annual estimated energy cost shall be calculated for each home and 

shall be based on the size of the home and on the most current version of the 
56 

Energy Information Administration’s Residential Energy Consumption Survey. 

The default annual estimated energy cost shall be used when an energy efficiency report is not provided. 

• An energy efficiency report may be supplied by the buyer or seller. Such a report shall be prepared by a qualified third-party and include an estimate of annual energy costs specific to the home being purchased. If an energy efficiency 

report is provided, it shall be used as the basis for estimating annual energy 

costs. 

• The criteria for calculating the cost of homeownership, (principal, interest, 

taxes, and insurance) shall be expanded to include energy costs. Qualifying income ratios shall be adjusted accordingly. If an energy efficiency report is provided, it shall be used as the basis for estimating annual energy costs. In consultation with DOE, EPA, and Covered Agencies, the Department of Housing 

and Urban Development (HUD) shall study the feasibility of adding water costs 

and location-based transportation costs to mortgage underwriting calculations. 

HUD shall report back to Congress within 18 months of enactment. Covered 

agencies shall fully cooperate in this analysis. 

Safeguards and Limitations 

• Any Federal mortgage insurance program subject to this act shall be prohibited 

from modifying other underwriting criteria so as to negate any benefit that results from the use of enhanced energy efficiency underwriting criteria. 

• Covered Agencies are prohibited from imposing greater buy back requirements 

or credit overlays on loans that utilize enhanced energy efficiency underwriting 

criteria. 

• Covered Agencies are prohibited from adding additional private mortgage insurance premiums for loans that utilize enhanced energy efficiency underwriting 

criteria. 

• Enhanced energy efficiency underwriting criteria may be used for both new and 

resale homes and shall be available for all housing types that would normally 

qualify for Federal insurance. 

Detailed Discussion—Appraisal Standards 

Direct the Administration to develop enhanced energy efficiency appraisal guidelines for all federally insured mortgages as follows: 

• Appraisals used to underwrite federally insured mortgages must include a line 

item that quantifies annual energy costs. 

• An energy efficiency report prepared by a qualified third-party may be supplied 

by the buyer or seller. Such a report shall include an estimate of annual energy 

costs specific to the home being purchased. If an energy efficiency report is provided, it shall be used as the basis for estimating annual energy costs. 
57 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR VITTER 

FROM RON SIMS 

Q.1. It was stated that utility costs within HUD’s budget were an 

area where ‘‘significant cost savings are possible.’’ While you gave 

very specific information regarding the increasing costs of utilities, 

the methods for achieving these savings were vague at best. What 

‘‘greening’’ methods will be employed to achieve these savings? 

A.1. Answer not received by time of publication. 

Q.2. The Energy Efficiency in Housing Act of 2009 would require 

the Department of Housing and Urban Development to develop 

mortgage incentives for homebuyers—such as waived fees and 

lower interest rates—to finance purchases of energy efficient homes 

and home improvements. Many people believe affordable housing 

goals and government mandated subprime lending played a major 

role in the financial crisis. Would it be considered unwise to increase such loose lending practices at a time when we are still uncertain of their effects? 

A.2. Answer not received by time of publication. 

Q.3. This legislation we are discussing today amends the United 

States Housing Act of 1937 to prohibit the Secretary from making 

a site revitalization grant unless the applicant’s proposed revitalization plan meets specified Green Developments requirements. Yet 

these standards can be a broad as ‘‘criteria as the Secretary determines to be appropriate,’’ going as far as requiring ‘‘improved indoor and outdoor environmental quality through . . . acoustics.’’ 

Should it be the Government’s responsibility to ensure that new 

housing projects sound pleasant to its residents? And how do the 

acoustics of a home impact its sustainability or green qualities? 

A.3. Answer not received by time of publication. 

Q.4. A major focus of your testimony was that green housing would 

provide health benefits. However, the only example you cited was 

that buildings with less mold that may help decrease asthma 

symptoms. What are the tangible plans for improving health of citizens through green building projects? 

A.4. Answer not received by time of publication. 
58 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

LETTER AND COMMENTS FROM STEWARDS OF AFFORDABLE 

HOUSING FOR THE FUTURE 
59 

Stewards of Affordable Housing for the Future (SAHF) is a nonprofit organization 

consisting of nine social enterprise nonprofit Members which own and operate over 

85,000 affordable rental homes in 50 States, the District of Columbia, Puerto Rico 

and the Virgin Islands. SAHF Members utilize annual operating budgets over $400 

million. As nationally focused nonprofits, SAHF Members possess expertise in developing, financing, and operating affordable housing across the country. Energy efficiency in multifamily rental buildings is a critical issue to both HUD and our members. By SAHF’s calculations, hundreds of millions of dollars are spent unnecessarily each year on energy which could be conserved with cost-effective energy efficiency renovations. Unfortunately, market, regulatory, and subsidy constraints have 

deterred the necessary investment, and only modest sums from the American Recovery and Reinvestment Act (ARRA) have been invested in retrofitting affordable rental housing. 

We thank you for the opportunity to comment on the Energy Efficiency in Housing Act of 2009. This Act represents an important set of steps toward a solution to 

this national problem, and SAHF is proud to support it. We are particularly pleased 

by the inclusion of Section 7 in the Act, the ‘‘energy efficiency and conservation demonstration program,’’ which would enhance the energy efficiency of 50,000 federally 

assisted units through a targeted, leveraged subsidy. This program would help alleviate barriers that currently make energy efficiency renovation unnecessarily difficult in multifamily buildings. 

The Pressing Need for Action 

Tens of billions of dollars are spent each year paying utility bills in multifamily 

residential buildings. Significant economic savings—easily hundreds of millions of 

dollars each year—could be realized by making simple, cost-effective renovations to 

increase the efficiency of energy use in these buildings. These renovations, coupled 

with green building practices that call new construction up to the highest standards 

of modern design and technology, would save money, have important health and environmental benefits, and contribute to the long-term effort to combat global climate 

change. SAHF supports the mission of greening new construction. Targeting existing 

buildings is also critical because a substantial portion of the buildings of the future 

have already been built: over 50 percent of the residential structures that will be 

in use in the year 2030 are standing today. Assisting existing rental buildings is 

critical because nearly two-thirds of very-low income households—those who need 

relief from rising utility prices the most—live in rental units. This problem is not 

just economic, but environmental: energy use in buildings accounts for approximately one-third of energy-related global greenhouse gas emissions, and 20.5 percent of carbon emissions in the United States are due to current residential energy 

use. 

HUD alone spends more than $5 billion a year on direct and indirect subsidy of 

utility bills for multifamily housing. In addition, tenant utility payments and the 

utility bills of properties assisted under the Low Income Housing Tax Credit program (not paid by HUD) add billions of dollars to the utility bill for federally assisted housing. HUD’s Energy Action Plan estimated that reducing energy bills by 

just 5 percent would save the department $200 million annually, and analysts believe savings of 25 percent or more may be possible. 

Addressing these costs and inefficiencies requires investment, and fortunately 

most major energy efficiency renovations are projected to pay for themselves in 3 

to 10 years by saving an amount in energy costs equal to or greater than their price. 

However, because nearly all multifamily projects have existing loans, taking out 

new loans to pay for energy efficiency improvements generally requires agreements 

between the new lender and the existing lender to ensure all parties are protected 

in the case of default or foreclosure. For loans of a few hundred thousand dollars, 

legal fees related to negotiations between creditors, or simply the cost of drafting 

complex legal documents, would quickly consume an unacceptable share of the savings energy efficiency improvements could produce. Adding the delay and restrictions inherent in a closely regulated context puts these loans even further beyond 

the reach of federally assisted buildings. 

Private capital also has other reasons to be hesitant. First, many multifamily 

buildings that could realize substantial energy efficiency savings have not been analyzed by an engineer to identify which improvements are most needed: this information cost artificially limits demand in the market. Second, no large, representative 

multifamily portfolio has tested these projections and established a proven investment model for the industry. Although some small portfolios and individual buildings have experienced dramatic energy savings, doubts remain about the applicability of these results to all types of buildings in varying climates across the country. 
60 

Finally, in federally assisted buildings, rents and utility payments are typically 

set by formula. While owners of market-rate multifamily buildings can pass the initial cost of energy- and cost-saving improvements to consumers, owners of federally 

assisted buildings face split incentives. When residents pay utilities, these owners 

stand to receive no help paying for the initial cost of improvements, yet future economic benefits would be realized only by residents. When owners pay utilities, residents have no incentive to conserve energy. As a result, the common practice has 

been to build for low initial cost rather than minimizing energy costs over the building’s lifetime. These split incentives have led to lower efficiencies and higher costs 

than necessary throughout the HUD-assisted portfolio. 

SAHF Strongly Supports the Energy Efficiency in Housing Act of 2009 

SAHF is proud to support the Energy Efficiency in Housing Act. The Act will 

focus important Federal attention and resources on making neighborhoods, and the 

built spaces that give them structure, better places to live. SAHF also continues to 

strongly support this Act’s companion in the House, H.R. 2336—the GREEN Act. 

SAHF has worked with members and staff in the House since the GREEN Act’s introduction in 2009 to ensure that the legislation meets its stated project goals and 

is happy to provide similar support to the Energy Efficiency in Housing Act. SAHF 

is pleased that both the GREEN Act and the Energy Efficiency in Housing Act promote bold steps to promote energy efficiency and conservation in American buildings. 

In particular, SAHF strongly supports the energy efficiency and conservation 

demonstration program for existing multifamily affordable housing projects, embodied currently in Section 7 of the Act. This demonstration program will prove the 

benefits that reasonable energy efficiency improvements can have from financial, environmental, health, and energy security perspectives. When these investments 

begin to pay back their own cost, we know this program will lead to the identification of many more than the initial 50,000 units of affordable housing in which similar progress can be made. A wide application of the energy difference could have 

significant impacts on the Federal Government’s utility costs, reduce costs for preservation owners and tenants, and move the Nation forward in energy independence 

and climate security. 

Furthermore, SAHF supports paragraph (i) of Section 7, which would authorize 

appropriations for the demonstration program. We support including an authorization for each year the program operates, at the $50 million level. We also support 

the reporting requirements of paragraph (g) of Section 7. 

SAHF supports the Act’s changes to Fannie Mae and Freddie Mac: granting additional credit for meeting the standards set forth in Section 8, granting authority to 

introduce additional liquidity to the issuance of Energy-Efficient Mortgages (EEMs), 

and creating mandates to promote EEM and Location-Efficient Mortgage use. SAHF 

also supports granting Community Reinvestment Act credit for energy efficient 

mortgages and green building efforts, collecting related information under the Home 

Mortgage Disclosure Act, and the establishment of Green Banking Centers. 

SAHF also supports the concept of an energy loan designed to enhance energy efficiency and conservation in different federally assisted projects, with financial benefits shared by the project owner. These programs will help address the problem of 

split incentives which I mentioned above. 

SAHF is supportive of increased sustainability in HOPE VI development delineated in the bill. SAHF also supports the measures designed to increase funding for 

rural housing, to encourage greater involvement from financial players, and to enhance the ability of the Federal Government to study and administer efforts to bring 

energy efficiency to the American home, whatever its form. 

SAHF recognizes the critical long-term importance of acknowledging energy efficiency improvements in appraisals. We strongly support Section 16 of the Act, and 

hope that the appraisal industry will adopt the concept more widely as an important 

change that would more accurately reflect properties’ value. The incentive to install 

energy efficiency improvements is substantially reduced as long as appraisals fail 

to reflect the value to future owners of energy efficiency improvements and consequent energy savings. 

At properties across the portfolio of SAHF’s Members, SAHF’s energy efficiency 

initiatives and other similar efforts raise the awareness of local staff and residents 

to the importance of energy efficiency measures and the potential for substantial 

savings. Education and outreach—whether to building staff, HUD development 

partners, or lenders—are essential elements of a plan which will make effective and 

lasting steps toward energy efficiency and greener neighborhoods. SAHF supports 

the related provisions of the Act. 
61 

1http://buildingsdatabook.eere.energy.gov/docs/1.1.3.pdf 

2http://buildingsdatabook.eere.energy.gov/docs/3.1.1.pdf 

3http://buildingsdatabook.eere.energy.gov/docs/3.1.1.pdf 

4http://www.eia.doe.gov/oiaf/ieo/pdf/ieoreftabl1.pdf 

Finally, SAHF is supportive of the concept embodied in the proposed revolving 

loan fund set forth in Section 19 of the Act. Providing additional money to finance 

renewable energy and energy efficiency improvements in single-family and multifamily residences is clearly an issue of national importance with economic, energy, 

and environmental benefits. Providing greater flexibility in financing and overcoming barriers posed by information inefficiencies and administrative costs is an 

appropriate role for Federal, State, and local governments. 

Thank you again for the opportunity to make these comments. 

PREPARED STATEMENT OF THE AMERICAN INSTITUTE OF 

ARCHITECTS 

Introduction 

The American Institute of Architects (AIA) strongly supports the Energy Efficiency in Housing Act (EEHA) (S. 1379). 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. In addition, this legislation would 

create as many as 84,500 jobs in the design and construction sector in the first year 

alone, helping to accelerate the economic recovery. 

Buildings and Energy Use 

The Department of Energy’s 2007 Building Energy Data Book reveals that the 

building sector accounts for 39 percent of total U.S. energy consumption, more than 

both the transportation and industry sectors. 1 According to the Department of Energy’s Energy Information Administration, buildings and their construction are responsible for nearly half of all greenhouse gas emissions produced in the U.S. every 

year. The same study found that buildings are responsible for 71 percent of U.S. 

electricity consumption and that buildings in the United States alone account for 

9.8 percent of carbon dioxide emissions worldwide. 2

In fact, according to the Department of Energy, U.S. buildings account for nearly 

the same amount of carbon emissions as all sectors of the economies of Japan, 

France, and the United Kingdom combined. 3 Therefore, if we in the United States 

want to be serious about energy reductions, buildings must become a significant 

part of the discussion. 

The data shows that the building sector is only going to become more critical to 

the discussion. Annual U.S. energy consumption is projected to increase by 32 percent over the next 25 years. 4 The AIA believes strongly that now is the time to act 

to reverse this course and start making significant reductions in the amount of fossil-fuel generated energy our Nation consumes through its buildings. 

Over the next 30 years, the character of the built environment will change dramatically. Currently, U.S. building stock sits at 300 billion square feet. Experts predict that between now and 2035, 52 billion square feet will be demolished, 150 billion square feet will be remodeled, and another 150 billion square feet will be newly 

constructed. Because buildings are such a major producer of greenhouse gases, the 

AIA believes that if Congress and our Nation want to reduce greenhouse gas emissions, addressing energy consumption in the next generation of buildings is a vital 

endeavor. 

To reduce energy consumption in the building sector, the AIA believes that architects must advocate for the sustainable use of our Earth’s resources through their 

work for clients. To support this principle, in 2005 the AIA adopted a position stating that all new buildings and major renovations to existing buildings be designed 

to meet an immediate 50 percent reduction in fossil fuel-generated energy (compared to a 2003 baseline) and that at 5 year intervals, that reduction target be increased by at least 10 percent until new and renovated buildings achieve carbon 

neutrality in 2030. 

Architects across the country have embraced this principle and are currently utilizing design practices that integrate built and natural systems that enhance both 

the design quality and environmental performance of the built environment. But in 

order to truly revolutionize the way our Nation designs buildings, the public sector, 

especially the Federal Government, must also play a role. Federal Government 

agencies, programs and sponsored enterprises have a major impact on the residen-
62 

tial building sector. Through a combination of regulation and incentives, we can 

achieve the goals of greatly reducing fossil fuel generated energy and improving energy efficiency nationwide. 

In the past, the AIA has worked with Congress to address energy use in Federal 

buildings. The 2007 Energy Independence and Security Act (P.L. 110-140) included 

a provision mandating that all new and significantly renovated Federal buildings 

meet strict energy-use requirements. The new energy targets required of Federal 

buildings will demonstrate to the private sector that the Federal Government is 

leading by example. It will help spur the development of new materials, construction 

techniques, and technologies to make buildings more energy efficient. And it will 

help show that significant energy reductions are both practical and cost-effective. 

The Green Benefits of EEHA 

The legislation (S. 1379) under consideration by this Committee is by far the most 

comprehensive attempt to promote energy efficiency at the residential level to 

emerge from the current Congress. The AIA strongly supports this legislation as it 

will set new energy efficiency standards for new residences and existing homes 

under the jurisdiction of the Department of Housing and Urban Development 

(HUD). 

The legislation requires the new or renovated structures to comply with the most 

widely accepted energy standards currently in existence. By requiring residences to 

be designed and constructed in accordance to the American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE) Standard 90.1 and the International Energy Conservation Code (IECC), the legislation rightfully prescribes energy efficiency standards that were developed under open, consensus-based process. 

And by offering additional credit to projects that achieve even greater energy efficiency, measured by the Leadership in Energy and Environmental Design (LEED) 

Gold Standard, the national Green Communities criteria checklist for residential 

construction, and the Green Globes assessment and rating system, the legislation 

truly incentivizes green design and construction in the most practically applicable 

manner. 

Establishing new energy standards for HUD-supported residences is a prudent 

and effective strategy to ensure that the benefits of energy efficiency reach the 

Americans who truly need them. Energy costs are soaring across the country, and 

many citizens are being pushed to the financial limit by skyrocketing utility bills. 

Designing and constructing energy efficient homes, complete with energy efficient 

appliances, as well as heating, air conditioning, and lighting systems, will provide 

an immediate financial benefit to homeowners and renters through reduced utility 

costs. 

The demonstration program authorized by the bill will highlight this by showing 

the effectiveness of providing Federal assistance for energy efficiency measures for 

multifamily housing. Increasing energy efficiency and decreasing utility bills will 

provide direct benefits to the economy as well as the intrinsic advantages that reduced energy consumption offers our natural environment. 

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 economy-wide energy savings. In order to truly bring 

about meaningful changes in individual, corporate, and institutional behavior (relating to energy use), a multifaceted approach is necessary. EEHA 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, 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 are effective financial tools that provide 

incentives to homeowners to purchase energy efficient homes or renovate existing 

homes to make them more energy efficient. As owners of energy efficient homes will 

pay significantly less in monthly utility bills due to reduced energy use, EEMs allow 

borrowers to qualify for a higher mortgage limit because the homeowners will spend 

less on monthly energy costs and decreased energy costs increase the security of the 

mortgage. LEMs, meanwhile, are directed toward borrowers who live in high-density 

areas near transit and will likely have reduced transportation costs. Those who 

qualify for LEMs will face reduced monthly transportation costs, allowing borrowers 

to qualify for higher mortgages. EEMs and LEMs are currently offered by many 

lenders across the country, but in order for them to truly expand across the economy, the Federal Government must play a role. 

The AIA strongly supports policies that will promote the use and availability of 

EEMs and LEMs. We are therefore especially pleased by provisions in this bill that 
63 

5http://www.bls.gov/news.release/pdf/empsit.pdf 

6http://www.agc.org/cs/newslmedia/presslroom/presslrelease?pressrelease.id=568 7 7 U.S. Census Bureau and Bureau of Economic Analysis. 

8 Bureau of Labor Statistics. 

9www.aia.org/aiaucmp/groups/aia/documents/pdf/aias076074.pdf 

will result in more EEMs and LEMs in the marketplace. This bill requires both 

Fannie Mae and Freddie Mac to increase their commitment to EEMs and LEMs and 

creates a public awareness, education, and outreach campaign to inform and educate residential lenders and prospective borrowers regarding the availability, benefits, advantages, and terms of energy efficient mortgages. This is a critical endeavor 

as many lenders and borrowers simply do not understand EEMs and LEMs or in 

some cases, realize that they even exist. 

As stated above, this bill represents Congress’s most comprehensive effort to promote energy efficiency across the residential sector of our Nation’s buildings, using 

a multifaceted and multiprofessional approach that integrates all players in the residential building field in the process of building and retrofitting energy efficient 

housing. For example, the bill includes provisions that will require appraisers to 

consider renewable energy sources for or energy efficiency improvements to the 

property being appraised. This provision will ensure that the energy efficiency 

achievements that designers and builders accomplish will be valued in the price of 

the home. This is a necessary step that will in time, change the way our Nation 

thinks about energy use and will result in energy savings across the economy. 

The Economic Impact of EEHA 

This legislation not only will foster more energy efficient homes; it will create 

jobs. As a result it could not come at a better time. The current economic crisis has 

affected every American, but the impact of this recession on the design and construction industry has been simply devastating. 

According to the U.S. Department of Labor, the unemployment rate in the construction industry in March 2010 was 24.9 percent, the highest by far in any industry. 5 The Associated General Contractors of America (AGC) reports that in the last 

year, 48 out of 50 States and the District of Columbia lost jobs in the construction 

industry. 6 This situation has major impacts on the economy as a whole, as this industry accounts for nearly one in nine dollars of Gross Domestic Product. 7

The Labor Department reports that employment at architectural firms has 

dropped by 18 percent between 2008 and 2009. 8 That is only counting those who 

have applied for unemployment insurance. Many architects report being underemployed or working without pay for as long as 18 months. That is an enormous 

burden for skilled workers who have families to feed and mortgage bills to pay. 

Worse, many young architects are simply leaving the profession, looking for opportunities elsewhere. Once economic conditions improve, a dearth of young talent will 

hamper the ability of our country to design and construct high-quality buildings for 

years. 

Although economists believe the country has entered a recovery phase, the good 

news has not reached the design and construction industry. The AIA Architecture 

Billings Index (ABI), which surveys work on the drawing boards, is a leading indicator of construction activity 9 to 12 months down the line. 9 The most recent ABI 

shows continued weak demand for architectural work than the month before. This 

means that the construction industry should expect soft demand for its service for 

the next 9 to 12 months. Clearly, the green shoots of economic recovery are not 

bearing fruit in this important sector. 

The AIA supports legislation that puts architects and other design and construction personnel back to work. That is why the AIA is pleased to note that in its analysis (Attachment A) of EEHA, it found that the legislation would crate as many as 

84,500 jobs in this sector in the first year alone. Promoting energy efficient housing 

not only lowers energy bills and improves our Nation’s energy independence; it also 

can help accelerate our economic recovery. 

The AIA strongly supports 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, preserve 

our natural environment, and create much-needed jobs in the design and construction industry. 
64 

Attachment A 
65 
66 
67 
68 

1 Energy Information Administration (2008). Assumptions to the Annual Energy Outlook. 

2 Energy Information Administration (2008). EIA Annual Energy Outlook. 

3 U.S. Geological Survey (2000). 2000 data. 

4Lenssen and Roodman, 1995, ‘‘Worldwatch Paper 124: A Building Revolution: How Ecology 

and Health Concerns Are Transforming Construction’’, Worldwatch Institute. 5 U.S. EPA Characterization of Construction and Demolition Debris in the United States, 

1997 Update. 6 U.S. EPA Characterization of Municipal Solid Waste in the United States, 1997 Update. Report No. EPA530-R-98-007. 

PREPARED STATEMENT OF ROGER PLATT, SENIOR VICE PRESIDENT, 

GLOBAL POLICY AND LAW, U.S. GREEN BUILDING COUNCIL 

On behalf of the U.S. Green Building Council’s (USGBC) nearly 17,000 organizational members and 80 local chapters, I would like to thank Chairman Menendez 

and Ranking Member Vitter for convening a hearing on the important issue of green 

housing and ‘‘The Energy Efficiency in Housing Act’’ (EEHA). The U.S. Green Building Council is proud to have included EEHA earlier this year in the USGBC ‘‘Top 

10 Pieces of Green Building Legislation’’ Scorecard and look forward to working 

with the Committee to ensure swift passage of the bill. 

The Imperative 

Green homes are inherently affordable homes. Constructing and rehabilitating 

residential projects to green standards can measurably reduce a resident’s financial 

obligation to a utility bill, result in long-term durability and ease of maintenance, 

and have a positive impact on individual and community health and well-being. 

Green homes offer similarly significant benefits for our environment—comprising a 

critical part of our Nation’s strategy for addressing climate change. 

On the aggregate, buildings are responsible for 38 percent of U.S. CO2 emissions 

per year. 1 In addition, buildings annually account for 39 percent of U.S. primary 

energy use; 2 use 13.6 percent of all potable water or 15 trillion gallons per year; 3

and consume 40 percent of raw materials globally (3 billion tons annually). 4 The 

EPA estimates that 136 million tons of building-related construction and demolition 

debris are generated in the U.S. in a single year. 5 (By way of comparison, the U.S. 

creates 209.7 million tons of municipal solid waste per year. 6) It is clear that we 

must act quickly to reduce the impact of the built environment on our planet. 

Critically, sustainability is not limited to environmental performance alone, but 

rather, hinges on the creation of buildings and neighborhoods that are also socially 

and economically sustainable. As such, USGBC strives to integrate the theories and 

practices of social and economic justice within those of sustainable building. The Energy Efficiency in Housing Act (S. 1379) makes important and necessary progress 

toward achievement of these broader goals while targeting the hard realities of affordability and climate change. 

USGBC is particularly encouraged by provisions in the legislation that promise 

to advance the market transformation to sustainability by: 

• Providing needed financing mechanisms, such as energy- and location-efficient 

mortgages, to assist consumers in accessing more efficient properties and establishing mortgage incentives for energy efficient multifamily housing (Sections 5– 

6); 

• Supporting States and Indian Tribes in their efforts to improve efficiency and 

generate clean energy in homes and buildings through the establishment of the 

Alternative Energy Sources State Revolving Fund within the Dept. of Treasury 

(Section 19); 

• Providing needed education to consumers and lenders about the benefits of energy efficiency through green banking centers (Section 22); and 

• Empowering the private market to move further and faster by advancing the 

Federal commitment to green and energy efficient affordable housing (Sections 

4, 15, and 16). 

By allocating funds through competition based on a host of priorities in the public 

interest, HUD plays a critical role in both defining and delivering affordable housing. The Energy Efficiency in Housing Act establishes energy efficiency and green 

building generally as key public priorities, and provides a framework whereby developers can compete to provide the highest quality housing. This public sector leadership sends a powerful message to the rest of the housing industry, incentivizes private businesses to become experts in green building generally, and ensures that lowincome families will maintain access to decent, safe, and affordable housing, even 

as our society’s standards for what is decent and safe continue to rise. 
69 

7 Harvard University Graduate School of Design, Public Housing Operating Cost Study, June 

2003 available at www.gsd.harvard.edu/research/researchlcenters/phocs/documents/ 

Final%20Report.pdf. 8 National Fuel Funds Network, National Low-Income Energy Consortium, et. al, The Cold 

Facts: The First Annual Report on the Effect of Home Energy Costs on Low-Income Americans 

(2001–2002), available at www.nliec.org/facts.pdf. 9 U.S. Government Accountability Office, Green Affordable Housing, GAO-09-46, October 

2008, available at www.gao.gov/products/GAO-09-46. 10Presentation by the DC Housing Authority at D.C. HUD Field Office Energy Forum, March 

18, 2009. 11GAO, Green Affordable Housing, p. 15. 

Demonstrating That Green Is Affordable 

Affordable housing is not a special building type. Instead, the term describes a 

relationship between people and buildings. Congress has determined that for federally subsidized programs, the costs to inhabit a residence should not exceed 30 percent of the gross annual income for the family living in that residence. This calculation includes payments for water, gas, and electricity, which can be significant and 

unpredictable. Compounding these potential costs, more than 80 percent of housing 

units assisted by HUD are 15 to 30 years old, 7 and many low-income housing units 

are among the least efficient housing in the country. 

When paid directly by low-income residents, high utility costs erode and in some 

cases entirely undermine affordability. Indeed, low-income households spend on average 19.5 percent of annual income on home energy costs, while the average for 

median-income households is just 4.6 percent. These costs can become an even 

greater burden on low-income families during the winter months, when home energy costs may climb as high as 70 percent of monthly income. 8

Affordability is similarly in jeopardy where utilities are paid by HUD or another 

public agency, as these recurring costs limit the public funds that are available for 

the construction and maintenance of affordable housing. Indeed, HUD spends more 

than $5 billion annually in direct and indirect utility costs. 9 Green building offers 

opportunities to reduce energy and resource consumption, enabling lower utility 

costs and critical savings for agencies and residents alike. 

An affordable housing project developed in Michigan by the Genesis Nonprofit 

Housing Corporation demonstrates the economic and environmental savings that 

are possible through green building. The project was built in two phases utilizing 

the same basic design and the same builder, but phase two was built to LEED 

standards and certified by USGBC. Compared to phase one, the LEED building 

added just 2 percent to the initial construction cost, but the owner reports that in 

its first 2 years of operation the LEED certified building produced an impressive 26 

percent savings on electricity and 41 percent savings on gas. 

Public housing agencies have experienced similar successes. Over the past 3 

years, the District of Columbia Housing Authority (DCHA) has implemented major 

green building improvements in 5,000 units of public housing across 31 separate 

properties. These improvements included HVAC upgrades, new lighting, appliances, 

and water fixtures for residents. As a result, DCHA has reduced its overall utility 

budget by 24 percent, from $16 million annually to $12.1 million in 2008. After paying capital costs for these improvements, DCHA expects to net approximately $1 

million per year indefinitely. Additionally, DCHA has estimated $2.3 million in annual operating and maintenance savings from fewer emergency repairs and replacements. 10

Nationally, nearly 200 energy performance contracts have been undertaken by 

public housing authorities, resulting in gross savings to HUD of about $50 million 

annually. 11 Due to program requirements, there is currently no means of encouraging similar cost-savings in the 1.6 million units of privately owned housing receiving project-based subsidies from HUD. The EEHA provides HUD with the needed 

congressional authority to develop such an initiative. 

USGBC commends Senator Whitehouse for his leadership in introduction of S. 

1379, or EEHA. We are committed to advancing policy that will efficiency of public 

housing and that will begin the necessary transformation of the home mortgage 

market to encourage and value efficiency. EEHA would save energy, taxpayer dollars, and maintain affordability in our Nation’s housing stock. We look forward to 

assisting the Committee in swift passage of the bill, and are happy to work with 

the Senator and the Committee on making the attached recommendations for S. 

1379. 
70 

1 According to the EPA, if one out of every 100 homes in the U.S. were retrofitted with waterefficient fixtures, we could save 100 million kWh of electricity per year—the GHG reduction 

equivalent of removing nearly 15,000 automobiles from the road. 2 HUD is already collecting data on occupant comfort and control in multifamily housing 

through the Green Initiative of the Mark to Market Program. 

Attachment: USGBC Comments on The Energy Efficiency in Housing Act 

(EEHA), S. 1379 

The U.S. Green Building Council Recommends that: 

Section 3(3)(C)(ii) on Definitions of Green Building Standards be revised to include the LEED for Neighborhood Development rating system. 

Section 3(3)(C)(i) be revised to include the phrase ‘‘and rehabilitation’’ in the reference to Green Communities, so that the provision reads: ‘‘The national Green 

Communities criteria checklist for residential construction and rehabilitation, which 

provides criteria for the design.’’ 

Section 2(b)(1) on Purposes be adjusted to include the phrase ‘‘sustainable practices’’ to reflect the many opportunities presented by green building, so that the provision reads: ‘‘To encourage the use of energy efficiency, and conservation methods, 

and sustainable practices in Federal housing programs.’’ 

Similarly, Section 7(b) on Energy Efficiency and Conservation Demonstration Program for Multifamily Housing Projects goals be revised to reflect the energy saving 

and cost-saving opportunities of green building practices such as water conservation 1 as follows: 

• 7(b)(3) reads: encourages energy efficiency, and conservation, and sustainable 

practices by owners and residents of multifamily housing projects and installation of renewable energy improvements, such as improvements providing for use 

of solar, wind, geothermal, or biomass energy sources; 

• 7(b)(4) reads: creates incentives for project owners to carry out such energy efficiency and water efficiency renovations and improvements by allowing a portion 

of the savings in operating costs resulting from such renovations and improvements to be retained by the project owner, notwithstanding otherwise applicable 

limitations on dividends; 

• 7(b)(6) reads: promotes the installation, in existing residential buildings, of energy and water efficient and cost-effective improvements and renewable energy 

improvements, such as improvements providing for use of solar, wind, geothermal, or biomass energy sources; 

• 7(b)(9) reads: creates a database of energy efficiency and conservation, and renewable energy, techniques, energy savings management practices that include 

consideration of indirect energy usages such as water use and transportation and 

resident behavior and environmental control factors; 2 and energy efficiency and 

conservation financing vehicles. 

Section 7(c)(4) on the Secretary’s authority in carrying out the demonstration program be revised to reflect the goals of this bill to maintain affordability so that the 

provision reads, ‘‘Waive or modify any existing Federal regulatory provision that 

would otherwise impair the implementation or effectiveness of the demonstration 

program under this section, including provisions relating to methods for rent adjustments, comparability standards, maximum rent schedules, and utility allowances, 

keeping with the intention that assisted families pay no more than 30 percent of 

gross annual income in rent plus utilities. Notwithstanding the preceding provisions.’’ 

(This recommendation seeks to preempt an unintended impact of 7(c)(4) where in 

carrying out the demonstration project, owners of rental housing may charge additional rent for rent-restricted units based solely on projected utility savings. If these 

projections are overly optimistic or simply incorrect, residents may end up shouldering the additional costs.) 

Section 15(a)(4)(C)(i) on HOPE VI, identification of green building rating systems, 

be revised to minimize confusion and to include a reference current law, The Energy 

Independence and Security Act of 2007 (Public Law No: 110-140) as it directs identification of a green building rating system for Federal buildings, so that the provision 

reads: ‘‘IN GENERAL—For purposes of this paragraph, the Secretary, in consultation with the Secretary of Energy, shall identify rating systems and levels for green 

buildings that the Secretary determines to be the most likely to encourage a comprehensive and environmentally sound approach to ratings and standards for green 

buildings, with consideration of the findings of Public Law 110-140 as it pertains 

to green Federal buildings in that determination.’’ 
71 

Section 15(a)(4) on HOPE VI, green developments requirements be revised to reflect consistency with the efficiency standards for residential and nonresidential construction as specified by this Act in sections 3(6)(B) through 3(6)(C). 

(Section 15 should apply equally to the HOPE VI program and to the Administration’s Choice Neighborhoods Initiative, and this clarification may be useful in report 

language.) 

Inclusion of S. 2897, The Energy Efficiency Modernization Act of 2009 introduced 

by Senator Bennet in this Act. The legislation is supported by USGBC and a coalition of affordable housing groups and would encourage owners of assisted multifamily rental housing projects to undertake utility cost-saving measures by providing loans funded from residual receipts already associated with the projects. 

PREPARED STATEMENT OF LEANNE TOBIAS, MANAGING PRINCIPAL, 

AND MARTHA PASCHAL, MANAGING DIRECTOR, MALACHITE LLC 

Malachite LLC is a boutique, woman-owned green real estate advisory company 

headquartered in Bethesda, MD. Our company works with developers, real estate 

funds, nonprofit organizations and Government entities on sustainable building 

matters. Our multidisciplinary team includes professionals drawn from the fields of 

architecture, construction management, engineering, development, property operations, investment, and finance. 

Our company works with clients on all aspects of green real estate development 

and retrofit, including: 

• Green project retrofit, development, and certification 

• Finance, tax, and investment advisory 

• Leasing and building operations 

• Policy and program development 

• Research and education 

Our team members are experienced with single-family and multi-family green 

housing, including market rate, mixed-income and affordable projects, and with diverse commercial real estate. We are the author of the ‘‘U.S. green building finance 

study of the Commission for Environmental Cooperation’’, a U.S.-Canada-Mexico trilateral commission, as well as the Urban Land Institute’s new book, ‘‘Retrofitting 

Office Buildings to be Green and Energy-Efficient.’’ We were recently selected to 

help write the building retrofit guidance for Federal agencies under the Energy Information and Security Act of 2007. 

Members of our staff serve on numerous Government and industry leadership 

groups for green building. Among them: the U.S. Department of Energy’s Commercial Building Initiative, the U.S. Environmental Protection Agency’s Environmental 

Finance Advisory Board, ASTM’s Building Energy Performance Assessment Task 

Group, and the advisory board of the Green Building Finance Consortium. 

We appreciate the opportunity to submit this statement on S. 1379, the Energy 

Efficiency in Housing Act (EEHA). This legislation helps to establish new mechanisms that would accelerate market development and deploy private capital for 

green housing, and support additional growth in the commercial sector. Among 

these transformative provisions are: 

• The establishment of incentives for energy-efficient and location-efficient mortgages and for the construction of energy-efficient single- and multi-family housing under the National Housing Act. 

• The development of an energy-efficiency and conservation demonstration program for 50,000 units of multifamily housing over a 4-year period. The program 

will test the efficacy and establish a database on a variety of renovation techniques. 

• The development of an assisted housing pilot loan program for energy-efficiency. 

• The amendment of the Home Mortgage Disclosure Act of 1975, to collect information on lending for energy-efficient and location-efficient mortgages. 

• The establishment within the U.S. Treasury Department of an Alternative Energy Revolving Fund, with authorization for $5 billion in loan capital. 

• The establishment of an energy-efficiency credit as a component of Fannie Mae 

and Freddie Mac housing goals. 

• The establishment of appraisal guidelines under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to require consideration of the 
72 

effect on real estate value of renewable energy savings and energy-efficiency or 

energy conservation improvements or features. 

• The establishment of energy-efficiency outreach programs and, within federally 

insured financial institutions and credit unions, green banking centers, to educate consumers on energy-efficient retrofit practices and financing alternatives. 

• Initiatives to encourage the use of energy-efficient and renewable features for 

home construction in rural areas and in distressed communities. 

There is strong reason to implement these provisions of S. 1379. Planning experts 

estimate that 75 percent of current building stock will be in place for the next 50 

years, so green and energy-efficient retrofits are a critical component in maintaining 

the quality and functionality of the U.S. housing supply. 

Controlling energy costs is also a critical component of housing affordability. Rent 

restricted housing is especially hard hit by rising energy prices, such as the uncontrollable expense swings suffered when energy prices increased several years ago. 

The need to conserve energy is particularly important for those affordable rental 

projects which, unlike project-based Section 8 housing which can have budget-based 

mechanisms to absorb unexpected expense increases, are encumbered with rent restrictions and lack the mechanisms to absorb energy cost increases. Indeed, energy 

cost increases have a disproportionate impact on moderate- and lower-income families. The inability to afford energy cost increases has been a significant factor in 

evictions from U.S. public housing during periods of rapidly escalating energy 

prices. 

As well, the U.S. lags the European Union and a number of Asian economies in 

the development of renewable energy technologies for the building sector. Investment and innovation in residential energy efficiency and renewable energy is also 

an investment in American competitiveness. 

In sum, enactment of S. 1379 would improve the quality, functionality and affordability of housing in the United States, which enhancing American competitiveness 

in the development of building features related to energy economy and the use of 

renewable energy. 

Retrofit and Lending Programs. S. 1379 is also beneficial in that it provides for 

the development of pilot retrofit and lending programs that will assist the private 

sector identify the most cost-effective housing retrofit and loan underwriting approaches. These initiatives, along with the bill’s Revolving Loan Fund for States and 

Indian tribes, will help the retrofit industry mature, support economic stimulus, and 

provide lenders with the data and models needed to develop new energy retrofit programs. We notice that the pilot lending program proposed under S. 1379 is restricted to participation by 3–5 lending institutions. In order to ensure that one or 

more smaller or rural institutions participates in the pilot study, it might be appropriate to consider increasing the number of lending institutions in the pilot program, or requiring that the 3–5 lending institutions include at least one smaller or 

rural-based financial institution. Residents in rural housing can be disproportionately impacted by high energy costs, as job availability and thus income levels cannot absorb large fluctuations in energy pricing. This is a problem seen in tribal 

areas, with the prevalence of poor-quality construction. 

An additional class of lenders and properties to add to the pilot programs might 

be Low-Income Housing Tax Credit (LIHTC) properties financed by lenders under 

the Community Reinvestment Act (CRA). HUD’s most recent survey (as of 2007) of 

the Low-Income Housing Tax Credit (LIHTC) portfolio, showed that the private sector has successfully developed 30,000 properties with over 1.843 million units with 

LIHTC support. Community Reinvestment Act-motivated lenders and investors are 

by far the larger providers of LIHTC financing. Most of the LIHTC portfolio are vulnerable to increases in energy costs, and must navigate complex approval processes 

and transaction structures to engage in energy efficiency retrofits. LIHTC properties 

would very much benefit from green and energy-efficient retrofits, and should be included in the pilot programs included in S. 1379. We recommend that LIHTC properties and one or more lenders engaged in CRA lending and investing be included 

in the pilot programs. 

Secondary Mortgage Market Provisions. Another provision of S. 1379 that should 

help move the housing market toward energy-efficiency is the incentive for Fannie 

Mae and Freddie Mac to underwrite energy-efficiency loans in fulfillment of their 

housing goals. Additional participation by Fannie Mae and Freddie Mac in the energy retrofit market for single- and multi-family housing would accelerate lenders’ 

provision of retrofit loans. In this context, the Senate also might consider inserting 

a provision in S. 1379 that would direct the Federal Housing Finance Agency to require Fannie Mae and Freddie Mac to develop underwriting standards permitting 

their participation in property-assessed clean energy (PACE) programs. PACE pro-
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grams, developed to mainstream energy-efficient lending, have been a significant 

focus of the American Recovery and Reinvestment Act (ARRA) and have been enacted or authorized by numerous local or State governments. In the absence of underwriting standards, Fannie Mae and Freddie Mac have refused to participate in 

PACE programs as the superior PACE lien takes priority over their first-lien mortgages. Attention to this issue is advisable to further encourage Fannie Mae and 

Freddie Mac to engage in energy-efficient lending and cooperate with State and 

local governments on this front. 

Home Mortgage Disclosure Act. We strongly support the amendment of the Home 

Mortgage Disclosure Act to track the incidence of energy-efficient lending, as provided for in S. 1379. Lenders have been utilizing the Home Mortgage Disclosure Act 

for over 30 years to develop meaningful statistical data about their lending practices. In light of the importance of energy-efficiency to U.S. economic welfare and 

energy security, it is appropriate to amend the Act to encompass energy-efficient 

lending. 

Appraisal, Consumer Outreach, and Green Banking Centers. Another beneficial 

provision of S. 1379 is the development of energy-related appraisal standards for 

FIRREA transactions. The enactment of appraisal standards that explicitly recognize the impact on value of renewable energy and energy-efficient features will help 

to mainstream the retrofit, development and financing of sustainable real estate 

throughout the U.S. Additional aspects of S. 1379 that will encourage broad-based 

private sector development of green and energy-efficient mortgage programs are the 

consumer outreach and education and green banking center portions of the bill. Together, these provisions help the real estate industry and the financial services sector develop the standards and practices that will support energy retrofits and associated lending programs. 

Conclusion. S. 1379, the Energy Efficiency in Housing Act, enhances the 

functionality, quality and affordability of the U.S.’s housing stock. The legislation 

also encourages American competitiveness in the development of the building retrofit products and services for domestic and global markets. As well, the Act supports building retrofit and lending programs, including important pilot initiatives 

that will provide models for private investment in building retrofits and associated 

financial products. By encouraging the private sector to develop new retrofit approaches and financing products, S. 1379 will support economic growth and energy 

independence. 

As a leader in the green building industry, Malachite LLC appreciates the opportunity to submit this statement in support of S. 1379.