Energy Incentive Money… How Would YOU spend it?
September 10th, 2009 categories: Buyers, EnergyWise Renovation, Financing, Incentives & Rebates, Investors, Politics and Programs
As you know, there is a flood of Federal Money descending on cities everywhere and very few are equipped to WISELY go out and spend all that money. Unfortunately, a lot of what gets cobbled together will be the result of who had the best salesman or lobbyist, or simply who got there first. Like Von Bismark is reported to have said, “to retain respect for sausages and laws, one must not watch them in the making.” 
I just learned of one such program being offered in Sacramento, The Vacant Properties Program, which uses Neighborhood Stabilization Funding. The program:
Targets low income neighborhoods that might be hard to help otherwise,
Mentions Green Building with minimal PRESCRIPTIVE standards and no mention of PERFORMANCE.
Employs a unique mix of private investment guaranteed by the Federal Funding. After becoming an “Approved Builder” you can purchase an REO property that meets the Sacramento Housing & Redevelopment Agency (SHRA) guidelines. Then you put $15,000 to $60,000 of improvements in and list the property for the lower of the two:
Appraised After Repair Value (ARV) or
Costs including the Purchase Price, Building Costs & Developer Fee
After the process is completed, you get your “Developer Fee” which is $30,000. If the costs are more than the ARV, No problem, the shortfall will be forgiven and you will just get your $30,000 Development Fee anyway.
Here is a program with some major flaws (my opinion) as well as some creative use of public – private collaboration. One good aspect of the program is that the Developer is not paid until they deliver a final product. Which means that a new homeowner is in a renovated home with a sustainable mortgage. That’s better than what it was before, a boarded up foreclosed home with grafitti. So that’s a good thing….
But the program could be so much better with just a little tweaking. The program is committed to being “Prescriptive” instead of Performance Based, but even still it could be improved by
1. Requiring shell sealing with at least a test out. For those of us who test houses, we usually find this to be the biggest Energy Culprit
2. If you seal, you must ventilate “on purpose” rather than just let the leaks take care of things. Carbon Monoxide needs to be tested as well.
3. Adding Insulation Standards
4. Requiring Duct Replacement, not just sealing, engineered to Manual D then sealed and tested and covered.
If these simple things were done, the final product would be greatly improved, while retaining the simplicity that SHRA desires.
IF I WERE IN SACRAMENTO….. Yes, I would hustle on down to the Housing Authority and start getting myself qualified for the program. Just because it is not a perfect program, doesn’t mean I should stay away. I would go ahead and add the 4 items mentioned above and take the $30K. Remember the Lesser Golden Rule, “Whoever has the gold, Makes the rules.” SHRA has the gold and you might consider playing in their game.
All you guys and gals in Sacramento, let me know how it goes. For those in other towns, if you are called on to help draft programs in your city, here are at least 4 ways this program could be made better from an Energy Efficiency perspective.
Here’s the Vacant Properties Program Handbook. Take a look. It’s a lot of bureacracy, Davis Bacon, WMBE, etc but if you can handle that sort of thing, they do have some gold. You can always build better than the minimum… and still sleep at night.
My final comment. This program shares some similarity with the Solar Subsidies of the late 70’s. When the subsidies went away, so did the Solar business. This program will do some good things for some neighborhoods but when the money is gone, this is not the type of activity that will build a continuing industry. For ideas on how to do that, Click PLANET SAVERS UNIVERSITY, above.
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