Q2 MLS Fees are due by March 31

Minneapolis: Proposal Adds Residential Energy Scoring Disclosures to TISH

ISSUE ALERT!

All Minneapolis Area REALTORS® members should be advised of the following proposal:

The Minneapolis City Council has directed city staff to craft an ordinance that would add Residential Energy Scoring Disclosure requirements to the Truth-In-Sale of Housing. We anticipate that draft language will surface at the Public Health, Environment, Civil Rights and Engagement Committee on January 7, 2019 meeting and may be up for a public hearing from that same committee at its January 28, 2019 meeting. The proposal’s chief authors are Jeremey Schroeder, Ward 11 and Cam Gordon, Ward 2, who is also Chair of Housing Policy and Development Committee. The ordinance is also supported by Center for Energy and Environment, a Minneapolis based non-profit that operates research, programs, and policy work in the clean energy sector. Authors state the purpose of the ordinance is to “address two ongoing and worsening crises: a local housing affordability crisis and global climate crisis”.

Background

So, what would the additional inspection items look at? While the ordinance has not been developed yet and details remain unclear. We understand that the likely additional inspections items would include attic insulation, heating system age and venting type, window types, wall insulation inspections with a 2” inspection drill hole, and a blower door test. After inspecting these items, a home would be given an asset rating on a 100-point scale. This information would be required to be present just like the current TISH, there would be no required repairs. The cost of the TISH, now $275 would also likely increase by as much as $200 or more.   

Minneapolis AREA REALTORS® has been engaged on this issue from the beginning. Attending and hosting early stakeholder meetings. MAR submitted formal comments to all members of the Minneapolis City Council, Mayor’s Office, and staff on the issue on November 27, 2018 and listed six concerns and six alternatives to consider (see attached letter).

MAR’s Concerns:

  1. Presents Barriers to Homeownership—Especially First Time Buyers
  2. Increases Housing Costs
  3. Lengthens Inspection Times
  4. Offers Minimal Range of Effectiveness by focusing on only ‘For Sale’ Homes
  5. Creates Competitive Disadvantage for Minneapolis Homes
  6. Expands Original Scope of TISH beyond Health & Safety

MAR’s Recommended Alternatives:

  1. Increased Ease of Utility Bill Disclosure
  2. Voluntary Home Energy Audit Programs (i.e. Home Energy Squad)
  3. Low Interest Fix-Up Fund Programs with Interest Rate Reductions for Efficiency
  4. Leveraging Multiple Listing Service Data (i.e. Adding New Fields)
  5. Better Representation of Existing Energy Efficiency Systems in Competitive Market Analysis “CMAs”
  6. Strengthened Appraisal Valuations where Energy Efficiency exists

What action has taken place?

Minneapolis Area REALTORS® received a response letter signed by Council members Schroeder and Gordon on December 4. The letter defended the need to enact proposed ordinance citing affordable housing and climate change as crises. Supporting arguments on enacting Energy Scoring at TISH this list.

  1. Energy Disclosure will Increase Housing Affordability
  2. Faster progress on Reducing Carbon Emissions is needed
  3. Consumer Protection and Long-Term Costs

Council members Schroeder and Gordon agreed on a number of our assertions but view them differently. For example, they agree that only a limited number of homes are for sale in a given year but then respond that only 850-900 Home Energy Squad visits are occurring now. So, when they see 4,000 homes sold per year that four times as many possible inspections. They also agree the proposed ordinance increases transaction costs, but they also believe the long-term benefits out weight the one-time cost, paid by the seller.

Council members Schroeder and Gordon fundamentally disagree with the point about putting Minneapolis Homes at a Competitive Disadvantage. “We disagree that this level of consumer protection will create a competitive disadvantage for Minneapolis homes. In fact, we believe that over time, homebuyers will be drawn to Minneapolis homes specifically because of this level of transparency,” said Schroeder and Gordon.  

Council members Schroeder and Gordon did share areas where they identified that our interest align: “We will continue to advocate for improving the TISH inspection process and making it more relevant by adding the proposed energy report, as one of many strategies to reduce carbon emissions across all building types and industries. We look forward to working with you on issues where our interests align, such as improving Realtor and appraiser education about energy efficiency, incorporating energy information in the MLS, and more.”

“It’s encouraging that Council members Schroeder and Gordon are engaging with REALTORS® on this issue. Especially with regard to the issues where we do align,” said Eric Myers, Government Affairs Director, Minneapolis Area REALTORS®. “Overall, we do agree with the premise that homes should be more energy efficient we just do not believe it will be effective to focus on only ‘for sale properties’ since less than 4% of homes are for sale in any given year,” said Myers.  

Minneapolis AREA REALTORS® plans to be continually engaged on this issue. Stay tuned for more details as the draft ordinance language emerges.

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