Minneapolis is expected to adopt a residential energy disclosure ordinance Friday that would offer homeowners and renters in the city more information about energy costs before they buy a home or sign a lease.
The ordinance would expand an existing commercial building benchmarking program to include larger multi-family buildings and also add new requirements to presale inspection reports to cover things like windows, insulation and heating systems. Renters would get information on expected monthly energy costs and buyers would receive an energy score and list of suggested upgrades.
“These policies represent a significant step toward our climate action and housing affordability goals,” council member Jeremy Schroeder, one of the ordinance’s authors, wrote in a statement.
If the measure passes as expected, Minneapolis would join a growing list of American cities with energy disclosure ordinances and be among a small handful extending the rules to cover residential buildings and single-family homes.
Minneapolis has a goal of reducing greenhouse gas emissions 80 percent by 2050 compared to 2006 levels. Homes and apartments represent about a fifth of citywide emissions.
The ordinance up for a vote Friday at the City Council would extend an existing commercial building benchmarking program to include about 440 multi-family housing buildings more than 50,000 square feet. Owners of poorly performing buildings receive information on suggested improvements and programs available to help with upgrades.
Building benchmarking scores would be posted to a public website. So would data from utilities on per-square-foot energy use for smaller rental properties. And renters, before signing a lease, would receive a disclosure that contains average monthly utility costs for the property, allowing them to compare costs.
“We’re hoping renters become savvier and landlords say ‘wow, I could get renters more easily if my building was more energy-efficient,” said council member Cam Gordon, who worked with Schroeder on the proposed ordinance. “This may push them in the direction of getting them help.”
For homebuyers, the ordinance would expand existing truth-in-housing inspections to include information on windows, insulation, and heating systems. (An earlier version of the ordinance would have required a blower door test, but the requirement was dropped due to cost concerns.) Chris Duffrin, president of the Center for Energy and Environment, said the value of the energy disclosure ordinance will be in presenting homebuyers with an understandable and comprehensive list of potential retrofits, as well as a rating based on a 1-to-100 scale.
Inspectors “are already collecting a lot of this data but it’s just not presented to the homeowner in a meaningful way,” he said. “The reports will give them actionable information they can make on what to do with their home.”
The Center for Energy and Environment, which helped craft the ordinance, operates an inspection service called Home Energy Squad. The staff has done both blower door and insulation checks on thousands of homes, Duffrin said, and has a keen understanding of the energy retrofit market.
Part of the push comes from an acknowledgment that an aging housing stock and the difficulty of outreach to homeowners and renters have stymied the aggressive goals of the city’s Climate Action Plan, where the idea of a residential disclosure ordinance was first proposed.
“The reality is we have to hit on everything we can to reduce carbon,” said Kim Havey, the city’s sustainability manager. Benchmarking will allow people to make more informed decisions by providing transparency and disclosure, he said. The sale or purchase of a home also is a time when many people decide to invest in energy improvements, Havey added.
At least 70 percent of Minneapolis homes lack adequate insulation. A utility-sponsored energy efficiency program reaches 600 to 1,000 homes a year in a city with more than 76,000 single-family homes.
The sale of a home offers a rare chance for the city to interact with buyers and sellers on energy issues. About 7,000 homes are sold each year in Minneapolis, offering an opportunity to at least offer information on where a seller or buyer could invest to save on energy costs, Havey noted. Plenty of opportunities for retrofits exist because 90 percent of the homes were built before the city adopted an energy code in 1980.
Renters and buyers generally have little idea of energy costs. “The majority of people move over the summer months and may not have a good idea of energy use in a home or an apartment,” Havey said. “They may not have much idea now of how much utilities costs. We want to make sure people are aware of that. We’re hoping with some behavior nudging owners will make their apartments and homes more attractive and valuable to buyers and renters.”
Owners who have energy-efficient homes are likely to fetch premium prices, Duffrin said, but if they don’t, they are unlikely to make investments before they sell. “I doubt it will spur more action before sale,” Duffrin said. “I think it will spur action after sale, and that has been shown in other cities.”
Critics charge that Minneapolis will be the only city in the metro area to have an energy disclosure ordinance, but Duffrin said that could be an advantage: Homebuyers will have a better understanding of how homes perform in Minneapolis than they will of houses available in adjacent suburbs.
The Minneapolis Area Association of Realtors offered a set of different solutions to the problem of reaching more homes with energy efficiency solutions. Eric Myers, director of government affairs, said the city’s truth-in-housing ordinance is no longer effective or needed because all homes for sale already have appraisals that come with inspections due to financing requirements or buyers’ desire for an independent analysis.
Although the Realtors agree with the city’s desire to improve residential energy efficiency, the goal of retrofitting 75 percent of homes by 2025 cannot be achieved through the disclosure ordinance, Myers said. Only 6 to 8 percent of homes will be touched by the inspection, he added.
Instead, the Realtors suggest giving energy improvement credits to homes in reports commonly used by homebuyers to compare homes, such as the competitive market analyses and appraisals. Multiple listing services should also be broadened to include “green energy fields,” Myers said.
Those changes will have to come from the real estate community, he said, and those new data pools may emerge in the future. Although the Realtors disagree with the ordinance, the organization’s members understand that proposals in other cities are costlier than what has been proposed for Minneapolis, he added.
Elements of the ordinance will be rolled out gradually, with full adoption expected by 2021. The City Council is expected to vote on the measure at a meeting Friday starting at 9:30 a.m.