Q1. Why is the City pursuing this now?
Q2. What other cities have passed similar policies?
Q3. Does this policy affect housing affordability?
Q4. Does this policy harm vulnerable people, like elders on fixed incomes, who may need to sell a home they have lived in for decades?
Q5. Will this policy lead to more demolitions of older homes?
Q6. Will this policy help Portland to reduce carbon emissions?
Q7. Is the City proposing any exemptions to the policy?
Q8. What is a “home energy performance report”?
Q9. When will the policy take effect?
Q10. Would the policy apply to accessory dwelling units (ADUs)?
Q11. In what geographic area would the policy apply?
Q12. Once a home is assessed and scored, who will see this information?
Q13. How much does it cost to obtain a home energy performance report?
Q14. What software tools will be eligible to produce a score in Portland?
A. The energy efficiency industry has developed scores and labels for building energy performance, but their use has not been widespread. Requiring home energy scores is one of the policy tools the City has available to catalyze change in the residential sector.
In 2010, the City established Clean Energy Works, now known as Enhabit, to provide access to low-cost financing for energy upgrades. Stakeholders considered this an important prerequisite to an energy scoring policy. Enhabit’s activity in the energy upgrade financing market has resulted in local banks and credit unions offering specialized financing products for energy efficiency.
Energy Trust of Oregon, in partnership with non-profit lender Craft3, now offers a moderate income energy upgrade financing program. There are also new specialized energy efficiency mortgage products available exclusively to buyers of homes that have a U.S. Department of Energy Home Energy Score.
In addition, until a few years ago, the housing market was severely affected by the Great Recession. Recognizing this, the City directed initial policy efforts at the commercial market. Now that the housing market has bounced back and commercial disclosure is in effect, it is time to address the residential market.
A. Several U.S. cities have passed similar disclosure policies for the homes market, including Austin, Texas; Berkeley, California; Santa Fe, New Mexico; and Boulder, Colorado. Internationally, residential disclosure policies are in effect in the United Kingdom, Denmark and Australia.
A. In today’s market, it costs between $150-$250 to obtain a home energy performance report. The policy does not require upgrades. According to Home Mortgage Disclosure Act data for Multnomah County, the majority of people transacting in the real estate market – almost 80 percent – are not low income. In many instances, these buyers are paying a premium for Portland homes. The modest cost of acquiring the score will be a very small line item in the total transaction. The City is working on solutions to cover the cost of the home energy report for low income-qualified sellers.
An information policy requirement like home energy scoring will not constrain the supply of affordable housing. Housing affordability is primarily a function of supply and demand. The City currently faces a shortage of housing options, especially affordable housing, and is helping to increase supply through zoning and direct investment in affordable housing. The requirement, however, will help those buyers understand the full costs of home ownership, including energy costs.
A. Long-time owners in Portland have benefited significantly from the market’s overall appreciation. Between 2011 and 2016, the median home sale price increased by 51 percent to $354,500. The cost of getting a home energy score is low ($150-$250). The cost of doing an upgrade to increase the total value and selling price of the home, as well as giving the home a better home energy score, ranges from $5,000-$15,000 on average.
The policy will begin to help the market more correctly value homes by clearly recognizing energy costs as a component of the cost of owning a home. In a down market, homes that have below-average home energy scores may not compare as favorably to similar homes that have better energy scores. Oregon fortunately has a robust set of service offerings and financial incentives aimed at assisting low-income sellers and homeowners with upgrading their homes for energy efficiency. The City of Portland has strong relationships with these service providers and will continue to assist Portlanders in accessing these resources.
Q5. Will this policy lead to more demolitions of older homes?
A. No. In analyzing all the scores delivered nationwide to date, the U.S. Department of Energy has found a very weak correlation between home vintage and low home energy scores. This means that smaller, older homes will not necessarily score lower than newer homes. DOE found a much stronger correlation between square footage and low home energy scores. This means that larger homes of any age are likely to score lower than smaller homes.
A. Yes. The City of Austin passed an energy audit report disclosure requirement in 2009. The City found that from 2009 to 2011, about 6 percent of homes undertook home energy retrofits as a result of disclosure. To accelerate consumer action in favor of energy upgrades, the City of Austin moved the time of disclosure earlier in the transaction to better inform consumer decision-making. Berkeley also moved its disclosure requirement earlier in the sale process for a similar reason. Portland has learned lessons from the experience in Austin and Berkeley and is thus specifically requiring disclosure at time of listing to maximize the positive benefits of the policy.
In the commercial buildings sector, a number of jurisdictions have passed disclosure or benchmarking policies. Commercial disclosure requirements work under the same principle as residential; by providing access to information, commercial building owners and managers can make more informed choices about how to manage energy use. Results from New York City’s program showed a 6 percent energy savings from 2010 to 2013, and San Francisco’s program showed an 8 percent reduction in energy use between 2010 and 2014.
OPower, a customer engagement and energy efficiency technology company, applies behavioral science to motivate changes in energy use. OPower provides utility customers with information about their energy use in context to their neighbor’s energy use, similar to the type of comparison provided by the US DOE Home Energy Score. Evaluations of OPower’s business model have demonstrated reliable and persistent energy savings in the range of 1.5-2.5 percent, simply by providing consumers with information on energy use in comparison to their neighbors.
A. Yes. See the Exemptions, Waivers and Deferrals information.
A. A home energy performance report is defined in Oregon Revised Statutes 469.703 and 469.040 and in Oregon Administrative Rule OAR 330-063-0000, and includes the following information:
- A score and an explanation of the score.
- An estimate of the total annual energy used in the home, by fuel type.
- An estimate of the total monthly or annual cost of energy purchased for use in the home, in dollars, by fuel type.
- The current average annual utility retail energy price, by fuel type.
A. The proposed effective date for the policy is January 1, 2018. Rulemaking is proposed to begin in July, 2017.
A. ADUs that are part of the primary residence will automatically be captured in the home performance energy assessment, which is based on all the rooms within the outer envelope of the home. Detached ADUs will not be covered by the policy.
A. The policy would apply to all single-family homes sold within Portland city limits.
A. Any real-estate listing(s) for a home in Portland, Oregon must include the Home Energy Score. This includes the Regional Multiple Listings Service, Redfin, Zillow, Trulia and other third-party listing services. In addition, sellers will need to provide a copy of the report and score to any real-estate agent working on their behalf, and to any prospective buyers who visit their home while it’s listed for sale.
A. As of July 2016, the market rate cost to obtain a home energy performance report is between $150-$250. This is the cost of having a trained, certified home energy assessor conduct a 45-minute, in-home assessment and generate the report based on the data gathered from the home visit. The information obtained through a home energy assessment goes beyond a typical home inspection, including a review of the home’s mechanical systems, insulation, air sealing and opportunities for cost-effective energy efficiency upgrades. Sellers pay a private-sector home energy assessor for the cost of the home energy performance report, not the City. Home energy scores are a market-based solution for making home energy performance more transparent in the homebuying process.
Experience from Austin, Texas suggests that as the volume of home energy assessments increases, the retail cost of the assessment declines. The cost of a home energy performance assessment in Austin is currently stable at $125.
A. The City will align with tools and software that are compliant with Oregon House Bill 2801, which became law in 2013 and gives authority to the Oregon Department of Energy (ODOE) to approve home energy scoring tools in Oregon. The City will provide temporary waivers to homebuilders using software tools that do not meet the Oregon standard, including new homes with Energy Trust of Oregon Energy Performance Scores (EPS) or Home Energy Rating System (HERS).
The U.S. Department of Energy’s Home Energy Score tool supplies the energy data as required by HB 2801 for a home energy performance report. The report includes a score that is a number on a scale from one to ten, where ten represents a more energy-efficient home and five is the performance of the average home. This number provides an easy-to-understand reference point for the comparison of energy performance between single-family homes.
Like miles-per-gallon labels for cars, the Home Energy Score is an asset rating, which is based on how the home is built, not how the home is used. An asset rating considers the structural characteristics and large equipment in a building. Asset ratings rely on a home energy assessment, which includes an on-site inspection. Asset ratings provide the homeowner and perspective buyers with the ability to identify:
- Cost-effective energy efficiency improvements.
- Opportunities for more energy savings.
- Opportunities to improve comfort.
- Opportunities for improved indoor air quality.
Disclosure of asset ratings differs from disclosure of utility billing information. Looking at the utility bills of past occupants can be misleading, because energy usage can vary widely depending on occupant behavior, family size and other factors. Asset ratings enable different homes to be compared on an apples-to-apples basis.