Zapping real estate with Cap and Trade
With so much stuff going on in Washington, it’s not easy to keep track of where proposed legislation is in the process and what exactly is being proposed. The House of Representatives passed the health reform bill and sent it on the Senate last month, and we can look forward to a healthy debate about the content of the bill.
Another bill, however, that passed the House of Representatives in June has been quietly sitting in the Senate without too much discussion, but homeowners should be paying attention to this one and make their feelings known.
The American Clean Energy and Security Act of 2009 (HR2454) better known as Cap and Trade passed the House of Representatives with a narrow margin of 219 to 212. For the first time, a Congressional body passed legislation that would place mandatory limits on the emissions of the greenhouse gases that cause global warming. If it becomes law, the measure would require a massive switch to cleaner sources of energy over the next four decades.
Although there may be many beneficial requirements contained within the bill that will lead us in the direction of a cleaner environment, for the American homeowner it could be a disaster. In Section 202 of the bill entitled Building Retrofit Program you can read what you as a homeowner will be required to do to your private residence if this passes the Senate and is signed by the president in its current form.
Section 202 states that state administrators in consultation with the secretary of energy will establish standards for a national energy and environmental building retrofit policy for single family and multifamily residences. The program will be called Retrofit for Energy and Environmental Performance (REEP) and will follow high-performance green building standards. The purpose of the REEP Program “is to facilitate the retrofitting of existing buildings across the United States to achieve maximum cost effective energy efficiency improvements and significant improvements in water use and other environmental attributes.”
In addition, homes will be rated utilizing the existing Energy Star program, similar to the one now in use for appliances, based on the green modifications made to the home. Presumably homes that do not have a sufficient Energy Star rating will not be granted the proper paperwork and inevitably be more difficult to sell or become totally unmarketable.
What this program, which by the way will become mandatory within a year of becoming law, will do to an already shaky real estate market is too scary to consider. Homeowners will be required to spend thousands of dollars or more installing green retrofits determined and inspected by the government, none of which so far are specifically outlined in the bill. The impact on the real estate market could range from lenders not granting financing on homes that do not meet the mandates to condominium complexes, mobile homes, public housing and assisted living housing trying to find the funds in their budgets to comply.
We have had many government mandates regarding housing during the past 50 years. Regulations regarding radon, lead paint, asbestos, aluminum wiring and elevated homes were all good legislative actions improving the safety and lifestyle of individuals. But mandating that an existing home be retrofitted to comply with what many Americans still believe is an unproven theory, will place an unacceptable burden on homeowners in an already difficult real estate market.
Utilizing sustainable energy for new residential and commercial construction is certainly something we should strive for, but placing this burden on existing homeowners is indefensible. If it looks like a duck and walks like a duck, you can be sure it’s just another tax.