Minneapolis City Council Approves “Home Energy Score" Requirement for Real Estate Transactions

Posted by: Allison Friedman // Rate It Green Admin

Home energy data collection is now a part of required Truth in Sale of Housing (TISH) evaluations in Minneapolis, Minnesota.  The data is used to generate an Energy Disclosure report to be used in the City’s TISH report, which must be available to the public and displayed at all open houses.  All 1-2 unit properties, townhomes, and first-time condo conversations must collect this data, unless an energy audit has been conducted within the past 5 years.  

The Energy Disclosure Report provides a score that rates a home on a scale of 0 to 100, with 100 being the most efficient and resilient to weather extremes.  A comparison is often made to knowing the miles per gallon of a vehicle.  According to Kim Harvey of the Minneapolis Division of Sustainability, "This will help you understand whether your home is expensive to heat, or not. It gives an estimate of your yearly bill savings.” According to Healey, a goal is to help consumers be able to reduce their energy bills on average by 30%, to lower their carbon emissions, save money, increase their comfort in response to wide temperature variances. 

Areas evaluated include: attic insulation, wall insulation, heating system, and windows.  The report also includes options or recommendations for improving these areas and the overall score.  Improvements are prioritized in terms of return on investment.  Information is provides on the average cost, energy bill savings, and utility rebates for each improvement, as well as the energy score increase from making that improvement.

Impressively, energy advisors are available for free to homeowners and real estate agents at 651-328-6225 or energyadvisor@mncee.org.  Advisors can answer questions, recommend contractors, and provide information on utility rebates and assistance and competitive financing such as low-interest or no-interest loans.

Additional cities with Home Energy Score or similar requirements include Portland, Oregon, Austin, Texas, and Berkeley, California.  Massachusetts was the first US state to consider a mandatory statewide home energy score in 2018 as a part of an omnibus energy bill, but the measure was not included in the final bill.  Home energy ratings appeared in the EU more than ten years ago, and every home in Germany, Denmark and Britain is required to have an efficiency label.  

Energy disclosure benefits include:  

• Home sellers and buyers will be aware of the energy performance of a home and the steps to make improvements before attempting to sell a home or making a purchase
• Areas for energy efficiency improvement as well as information how much these improvements will cost will now be available
• Home sellers can now communicate prior investments made with regard to energy efficiency
• Energy efficiency improvements can be significant, lowering climate impacts and helping to reach climate commitments 
• Home energy scores can help lower-income borrowers access special mortgage products to help with financing energy efficiency related home improvements 

There can be some concern, particular in advance of a home energy score requirement, that the evaluations or information might slow a home sale or make some homes less competitive.  In Austin, Texas, more than ten years of data shows that the real estate sales market has not been negatively impacted by the energy scores.  HES scores are required at the time of sale, so that they do not slow a closing.  The audit itself requires about an hour, and then the report will typically follow with a few days.  As for the competitiveness argument, there's a strong argument that buyers have a right to know what they are getting into and to know the full cost operating a home.  In many areas, energy expenses can be substantial, especially for lower income households.  Hidden information does not make housing more affordable and can in fact cause great harm.  In the long run, greater disclosure means that all homeowners will make more informed buying decisions and that information about potential improvements can help all homes operate more efficienly and affordably.  

 

For more information:

http://www.minneapolismn.gov/www/groups/public/@cped/documents/webcontent/wcmsp-222012.pdf

https://betterbuildingssolutioncenter.energy.gov/home-energy-score

https://orderhomeenergyscore.com/2018/09/03/home-energy-scores-around-the-country/

https://kstp.com/news/homes-for-sale-in-minneapolis-will-now-get-energy-efficiency-score/5611004/?cat=1