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January 27th, 2010

Miller-Meeks: Green Housing May Turn Homeowners Red

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Written by: The Iowa Republican
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millermeeksRegardless of whether people believe the entire global warming scare, most understand that we must transition away from fossil fuels, become energy independent and protect our planet and with minimal alteration of our lifestyle. But H.R. 2454 [American Clean Energy and Security Act] imposes conditions upon our most basic necessity, shelter, which unfavorably impact seniors and average working families.

The most glaring items that affect the average homeowner or renter will be the energy efficiency standards beginning within 1 year of enactment. The Building Energy Performance Labeling program establishes a labeling program for residences and public buildings identifying the required energy efficiency performance that must be achieved within 5 years. There will be a charge for the inspection and certification and that cost will increase from inception.

Under H.R. 2454, prior to any home sale, any deficiencies will have to be addressed and retrofit and then re-inspected. This will add considerable cost to the homeowner, estimated to be $6800. The average senior may not have the resources to pay this. It may also impact the availability of reverse mortgages and require lending institutions to require updates and inspections even without selling the home.

This will be a constant cash drain on homeowners and property owners to upgrade appliances and the building itself at the same time as electricity rates may be rising. If electricity rates increase, materials cost for retrofitting or certification will also increase. The energy standards can be altered or increased by the EPA administrator or Secretary of the Department of Energy (DOE) and the DOE will see an additional $20 million to enforce the labeling program.

The costs of compliance with the building codes and labeling will be passed off onto the next homebuyer if possible and that will lead to inflation in housing prices. By passing costs through, we can anticipate prices will rise substantially. If realty prices increase, the assessed value is also altered.

Property taxes are based on the assessed values, so one can infer that these taxes will increase. Add to this the cost of upgrading all public buildings and it is readily apparent that property and income taxes will increase. However, it is not only seniors who will be affected.
Property owners who rent will find that their costs are greater, both from compliance and property taxes, which will translate into higher rental prices. Rental price inflation affects low-income families greatly and could potentially create a greater housing burden through less availability of affordable housing. It may also put the desire of home ownership out of reach of many who try to create financial security through home ownership.

Although well intentioned, H.R. 2454 creates additional burdens on those on fixed or low income. The past year has seen increased Medicare premiums for seniors but no cost of living allowance increase in social security. It will also have an effect on those least able to afford higher rental prices and electricity rates concurrently. The increases in energy efficiency won’t necessarily offset the rise in energy prices.

This does not factor in the costs of upgrading and “greening” public buildings that will surely be passed off to the average working person or family through taxation. The combination of higher energy prices, its’ effect on building materials, cost of inspection and labeling, upgrading appliances and will have a deleterious effect on the economy. One could suppose that jobs will be created to retrofit houses, but it may have the opposite effect of reducing demand for housing at a time when the construction sector has been decimated. Subsequently, it will have equivalent effect on the realty sector of our economy which has also had a brutal year.

The goal of “green” housing and public buildings is commendable, and a movement to less energy consumption, more efficiency and renewable energy sources is desired, but the impact of these mandates, especially on those least advantaged, cannot be underestimated. Enforcement will be through the mortgage lending institutions or eviction or jail time. Perhaps a more thoughtful approach can reach the same goal without harming those with the fewest resources needed to comply.

Written by Mariannette J. Miller-Meeks M.D.

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The Iowa Republican

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