Living in a coastal community like San Diego, the threat of climate change has consequences that would have a greater impact on us than other communities. To address these potential challenges and to create an overall more environmentally friendly city, San Diego has implemented Climate Action Plans. Most recently a plan was implemented in 2004. “The 2004 Climate Action Plan tracked greenhouse gas emissions from city operations and the community in three broad areas: Power (gas and electricity); Transportation; and Waste.”
For the past few years work has been taking place to draft a new Climate Action Plan (CAP.) There have been community meetings, working group meetings, committee meetings and more to come up with solutions to do our part in tackling issues related to Green House Gas (GHG) emissions. Earlier this year in February a Draft Climate Action Plan was put forth by then i Mayor Todd Gloria.
Recently City Councilman David Alvarez put forward a resolution (R-2015-68) in support of the cities efforts to put together a Climate Action Plan, INCLUDING STRATEGIES to reduce GHG emissions. While I agree that as a city it is critical that we take action to reduce GHG emissions, this resolution directed at the Mayor isn’t without concerns for me as a real estate professional.
Mass Transit, Clean energy, empowering our workforce, reducing waste, increasing urban parks, and improving our infrastructure to better handle climate change impact are all very important. However, there was an item in the resolution that reads: “significantly reduce energy demand from existing buildings through enforceable mechanisms.” This item has me concerned as both a consumer advocate and Realtor.
As you are well aware, our housing market is in a fragile recovery period. “The pace of annual home price appreciation in San Diego County increased in August, breaking a streak of six consecutive months of slowing.” So we are definitely not out of the woods in regards to housing recovery. I worry that there is not safeguards to protect the low income homeowners in our city that could be hurt by this “enforceable mechanisms?”
Here are a few scenarios that worry me….
A homeowner who has been underwater for 7 years and is finally at the break even point where they can sell and get into a home that makes more sense for their family size, is more affordable, and meets the families need. However, a point of sale mandate could hold this homeowner back from taking the needed action to better their life by adding a burden that could set them back. This could put a home sale on hold if they don’t have the financial resources to comply with any “enforceable mechanisms.”
Another example is a homeowner who has unsuccessfully attempted to modify their mortgage and is facing foreclosure. A short sale would allow them to sell the home before they go into foreclosure. This puts them on a much shorter road to financial recovery. The time frame before they can become a homeowner again is much shorter with a short sale on their credit report than a foreclosure. There is also the dignity issue of selling a home on your own terms, rather than waiting for the bank to take it from you. In many cases a home owner facing foreclosure can’t afford any point of sale expenses resulting from “enforceable mechanisms.” I understand this is intended to reduce energy demand of a particular home. The issue is that it could have an unintended consequence of forcing people into foreclosure that would otherwise have been able to sell their home as a short sale.
These concerns expressed, there is a real opportunity here as well. Not only is reducing energy demand from buildings good for GHG emission reductions, it is also important in creating and sustaining affordable housing. In this city we are in a continued state of emergency due to severe shortage of affordable housing in the City of San Diego, pursuant to California Government Code Section 8630; this is an opportunity to make housing more affordable. As a Realtor I’ve noticed that many homes in some of San Diego’s older communities, particularly the neighborhoods south of the 8, are also the least energy efficient. This puts an additional financial burden on these families to try to make home comfortable when it gets hot or cold. The solution is often the use of less efficient appliances like window a/c units and plug-in heaters to tolerate heat and cold weather.
Finding ways to increase the energy efficiency of our cities housing stock is important to our environment, the financial well being of our residents, and the long term sustainability of our city. I just hope that the “enforceable mechanisms” don’t burden those who are in the most fragile of situations with insurmountable restrictions that will hurt those who need help the most.
Resolution (R-2015-68) is well intended; I just think that there is a way to achieve the goal without creating an added burden on homeowners. A suggested alternative to meet the same goal would be for item D to read “significantly reduce energy demand from existing buildings through education and outreach.” There are opportunities at the point of sale that do not burden the seller and that is by outreach to the buyer. Perhaps instead requiring that a brochure informing consumers about the environmental impact they could make by having a more efficient more sustainable home.
In addition to education, there are really practical solutions that the federal government already has in place to support the cause of a more energy efficient housing stock. For example, FHA has an Energy Efficient Mortgage option. This allows home buyers using FHA financing to include energy upgrades without having to income qualify for the additional expenses. This is possible because the energy savings will offset the cost of financed upgrades. For more extreme cases which require more drastic measures to retrofit a home to meet energy standards, there are programs like the FHA 203k that allow home buyers to finance major renovations at the point of purchase.
An education and outreach approach to inform home buyers could have real impacts. This is something that could also be integrated into the cities down payment assistance programs. If some minor changes were made to these programs through guideline updates, they could be paired up with renovation financing in a partnership that would empower homebuyers to make their homes more efficient at the point of purchase. A successful education campaign would highlight the financial benefit to home affordability by investing into the energy efficiency of the home. This concept could also be incorporated into the CAP.
I want to support the goal of reducing energy demand from the buildings in our city. I just know that what could be taking a step back for our housing market if a Point of Sale mandate is put into the plan. I also would love for this to be an opportunity to educate the community and encourage homeowners to voluntarily invest into the efficiency of their homes to do their part in meeting the GHG emissions goals without burdening those in our city that can’t afford to shoulder another burden. A successful outreach and education efforts would avoid a point of sale mandate aka: “enforceable mechanisms.”
Rafael Perez, Realtor