The City of Minneapolis is getting serious about implementing a Time of Sale Energy Disclosure, which would add information about energy efficiency to Truth-In-Sale of Housing (TISH) evaluation reports. The goal is for this information to be collected at the same time as the TISH evaluation, ideally by the same TISH evaluator.
Climate Action Plan
In 2013, the Minneapolis City Council adopted the City's Climate Action Plan. Part of that plan calls for a 15% increase in energy efficiency for residential buildings by 2025. To get there, there are several items listed to help achieve that goal, but the one that we're talking about today is the following:
Create time-of-sale and time-of-rent energy label disclosure. New homeowners and potential tenants are a target group to promote energy upgrades, as they can be more receptive to making these investments (particularly when financing is available). Tenants could also use an asset rating label to make comparisons about energy performance and cost between units or buildings. Minneapolis currently requires a home inspection prior to any Minneapolis home being put on the market (the Truth-in-Housing program). The City could green the Truth-in-Housing program by including the collection of data sufficient to generate an energy label as well as other easily accessible data such as lead paint, history of superfund site, etc. In order to be cost-effective, data collection would need to be as limited as possible while providing useful information to the homeowner. The Center for Energy and Environment has developed an energy label that is particularly relevant for Minneapolis housing stock that is currently being used in the Community Energy Services residential program, and could be expanded for use in the Truth-in-Housing program. A label for multi-family structures does not yet exist.
So that's what's driving this whole thing. Minneapolis is committed to implementing a program that discloses information about energy use in buildings at the time that the building is offered for sale. The analogy I've heard is that we don't buy vehicles without MPG ratings, but we're perfectly accustomed to buying homes without energy ratings. The logical counterpoint to this argument, however, is that we're perfectly accustomed to buying used vehicles without MPG ratings.
Center for Energy and Environment
In 2016, I met with a representative from the Center for Energy and Environment (CEE) to hear more about this proposed program, and I expressed interest in being involved in the test program. CEE began rolling out the test program in 2017, starting with some meetings to explain the program.
We attended an information meeting on the program in 2017 and decided that we were not willing to participate in the pilot program. The pilot program required blower door testing and a bunch of data collection for $75 per home, which was not feasible for us. My company backed out of the program at that point, and I've heard little about it since.
In September of 2018, CEE published a document explaining how and why this whole program could work, titled TRANSFORMING THE MARKET FOR ENERGY EFFICIENCY IN MINNEAPOLIS: Recommendations for Residential Energy Efficiency Rating and Disclosure.
Energy Disclosure Public Meeting
A public meeting was held on January 7th to discuss the details of these plans. Three energy disclosure policies were presented at this meeting; rental, multi-family, and time of sale / Truth in Housing. The only one to have any discussion was the part about Truth in Housing.
Holes in Walls
The Time of Sale energy disclosure program is a tough pill to swallow. The first challenge with the proposed program is that TISH evaluators would be required to drill a 2" hole in an exterior wall (from the inside) to determine the type and depth of insulation in the walls at the home. This detail has a LOT of potential problems. Here are a few:
- TISH evaluators aren't insured to drill holes in walls.
- What happens when asbestos falls out of the wall?
- How is dust containment supposed to happen?
- What happens when a knob & tube wire in a wall is drilled through?
- What happens when homeowners are upset about having a hole drilled in their wall?
That's for starters. Even if we could get past a dozen more objections like this, is there really value in drilling through the wall? I seriously question the benefit of drilling a hole in the wall. What if you just happened to drill the one area where insulation was added? Or vice versa?
In order for this program to be viable, I believe that the additional cost to homeowners will need to be minimal. The folks designing this program seem to think so too. According to the CEE paper that I linked to above, "a Minneapolis homeowner can expect to pay about $150 ‐ $250 for a Truth‐in‐Housing inspection from City‐licensed inspectors. Ideally, any disclosure requirement would not add significant cost to this."
Amen to that. The cost of this program should not add any significant cost to TISH evaluations. Additionally, the report that was released by CEE in October said the following about data collection without blower door testing: "Home sellers would not have to pay more for TISH inspections if this data is added, because it does not take extra time for inspectors to collect it."
Sounds sweet, right? The problem is that the proposed program requires the TISH evaluator to perform blower door testing at every home, which is a time-consuming process. This will jack up fees on TISH evaluations...big time. Add on the cost for the needed blower door equipment, and the fees for TISH evaluations will at least double. I say this as a licensed TISH evaluator, and I think I'm being conservative.
My two cents
Energy disclosure is a good thing, reduced energy consumption is a good thing, and improved energy efficiency for homes is a good thing. Here at Structure Tech, we spend a lot of time talking about energy usage during our home inspections. We're passionate about this stuff, and we support the City's Climate Action Plan.
I'm concerned, however, that the proposed methods would force home sellers through an undue hardship when selling their home. If we're going to be drilling big holes in walls and performing blower door testing, the disclosure requirement will significantly increase the cost of TISH evaluations.
What do you think?
A Time-of-Sale energy disclosure program is going to happen, but exactly how it happens has yet to be determined. What do you think of this program? What could make it better? Minneapolis will be having another public meeting coming up in February. I'll post the details here once I have them.
Links and Related Documents:
- Minneapolis Climate Action Plan
- CEE White Paper
- Residential Energy Disclosure (from Minneapolis)
- Residential Energy Disclosure: Time of Sale (from Minneapolis)
- REALTORS Comments on Energy TISH 11.27.2018
- Minneapolis Response Letter 12.04.2018