Bill Would Mandate Home Efficiency Disclosure

By Alan Panebaker

A bill that would require homeowners to disclose the efficiency of their homes to prospective buyers will likely see debate in the Senate Finance Committee this week.

S.143 squeaked out of the Senate Committee on Natural Resources and Energy on a 3-2 vote Friday. The finance committee should decide on it by the end of the week.

The bill mandates that, upon request, a home seller must disclose information such as the house’s age, when it was last insulated, when windows were last replaced and other information that shows the home’s energy efficiency. A state program would rate homes and a database would allow buyers to compare homes. Appraisers could use the database as well.

Committee chair, Sen. Ginny Lyons, said the bill will help identify which homes in the state need to tighten up their thermal efficiency and demonstrate the value of efficiency in real estate prices.

“This bill is absolutely critical for us if we’re going to start moving away from inefficient over-utilization of fossil fuels in heating our homes and businesses,” Lyons said.

Homeowners would submit information and a computer program would calculate the home’s efficiency score. In theory, this efficiency rating would help determine the property’s cost since it would indicate the home’s energy costs.

George Twigg, co-chair of the state’s Building Energy Disclosure Working Group, said disclosing a building’s efficiency puts a dollar value on efficiency. The working group proposed the idea to the Legislature.

Twigg, who is deputy policy director for the Vermont Energy Investment Corp., said the disclosure is like a miles-per-gallon sticker for a home. Having that information will help consumers determine which home is the best value.

“The basic concept in why we’ve been involved in supporting this proposition is that energy efficiency unlike other attributes in a home like a granite countertop or a remodeled bathroom is that it’s largely invisible in the marketplace,” Twigg said.

Putting some sort of objective value on efficiency may encourage homeowners to invest in efficiency measures because, theoretically, they will be able to recoup those costs when they sell.

Sen. Randy Brock, one of the two members of the committee to vote against the bill, is not convinced. He said it’s not a good use of taxpayer money. Developing a system to compile and organize all the information would cost the state an estimated $100,000.

Given the small number of houses sold in the state each year, Brock said, Vermont would not be able to obtain enough information to have an accurate picture of enough homes in the market to be useful.

According to the Vermont Association of Realtors, there are around 5,000 homes sold annually in the state out of about 314,000 total. If half of those sold used an energy audit, it would still constitute less than 1 percent of the housing stock.

Brock said at that rate it would take more than 100 years to compile data for all the homes in the state.

“The whole idea is for people valuing houses to have a basis for which to compare them,” Brock said. “It’s a small number, used sporadically but made mandatory. It’s not a wise use of tax money or a wise expenditure in general.”

Brock said he was also disturbed by the error rate in determining the efficiency of a home. It’s likely to be off by around 30 percent on either end.

Dennis Brown, president of the Vermont Association of Realtors, said his group is opposed to the bill so far as it makes the disclosure mandatory.

Brown said requiring the disclosure could taint older properties.

“About 30 percent of the housing stock in Vermont is pre-1940s,” Brown said. “We’re afraid an energy audit, especially on older properties may stigmatize properties and make them stay on the market longer. That’s exactly what we don’t need especially in this marketplace.”

Brown said the Vermont real estate market continues in a trend of decreased number of sales and decreased average price for the homes that do sell.

The bill as passed out of the Senate committee would also double the gross receipts tax to 1 percent of the retail sale of heating fuels to fund low-income weatherization.

Lyons said the increase will help replace federal funds that will run out this year. With funding from the American Recovery and Reinvestment Act, the state has been able to ramp up its weatherization program.

With the dip in federal funding, the state would have to pull back on the program without an additional funding source.

“All these people are ready to go to work, but there’s no money for weatherization,” Lyons said.

Matt Cota, executive director of the Vermont Fuel Dealers Association, said the increase in the tax will mean consumers could pay five cents a gallon in tax for fuels like heating oil with the petroleum cleanup fee included.

“For people who are just making ends meet, five cents a gallon is a lot,” Cota said.

He said it’s also a hidden tax since fuel dealers are not allowed to itemize it on customers bills.