Biden administration updates minimum energy standards for affordable housing

The Biden Administration is rolling out new minimum energy standards that will impact homes built using federal funds for homeowners and renters. The new standards are based on the 2021 International Energy Conservation Code (IECC), updating a 15-year-old previous iteration. The code applies to single-family homes and small apartment buildings, impacting up to 25% of new homes across the nation and is estimated to be 34% more efficient than the current code being used by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture. HUD estimates the standards will reduce up to 6.35 million metric tons of carbon emissions over 30 years, or the equivalent of taking 46,000 cars off the road annually. In dollars, the Department estimates that annual energy cost savings will be around $1,000 per single-family household and over $400 per year for low-rise multifamily building units. The savings come at the expense of higher construction costs, with HUD estimating an additional $7,200 needed per single-family home. HUD noted that despite the increased cost, over a 30-year mortgage the standards will save the average family $25,100 in energy bills. For multifamily units, the standards will add around $3,002 in costs per unit and save families around $10,500 over 30 years. The rule was met with scrutiny from homebuilders.

“Without adequate review and consideration of how it will affect home buyers or renters, HUD and USDA have rammed through a rule that will do little to curb overall energy use in the U.S. but will exacerbate the housing affordability crisis,” said Carl Harris, chairman of the National Association of Home Builders (NAHB). “Studies have shown that building to the 2021 IECC can add up to $31,000 to the price of a new home and take up to 90 years for a home buyer to realize a payback on the added cost of the home. This unreasonable trade-off for a new home buyer will do little to offer meaningful energy savings for residential homes and apartments.”

Other groups, like the Rocky Mountain Institute, are celebrating the move as a way to lower bills and make homes safer. Some are also noting that the cost of upgrades can be offset by tax credits offered through the Inflation Reduction Act.

“This long-overdue action will protect homeowners and renters from high energy costs while making a real dent in climate pollution,” said Lowell Ungar, federal policy director at the American Council for an Energy-Efficient Economy. “It makes no sense for the government to help people move into new homes that waste energy and can be dangerous in extreme temperatures.”

Implementation of the rule varies across programs, ranging from 180 days after the effective date to 24 months.

Supreme Court hears arguments for case that could criminalize homelessness

The Supreme Court is in the process of hearing the oral arguments for the case of City of Grants Pass, Oregon v. Gloria Johnson, that will determine whether or not local government policies that prohibit sleeping or “camping” in public spaces violates Constitutional protections against cruel and unusual punishment under the Eighth Amendment. The initial case ruled in favor of Gloria Johnson, who sued the city of Grants Pass when it passed ordinances in 2013 that criminalized camping in public outdoor spaces. Earlier this year, the National Alliance to End Homelessness (NAEH) issued a statement condemning the possibility of overturning the initial ruling. “Should this standard be overturned, however, it will provide a pass for elected officials who choose fining and arresting people over providing evidence-based solutions for people who have nowhere else to go. These practices are harmful to people experiencing homelessness, costly to communities, burdensome on law enforcement, and wholly ineffective at ending homelessness,” it said.

“The Johnson vs. Grants Pass case is monumental,” stated Donald Whitehead, Jr., Executive Director of the National Coalition for the Homeless. “It has the potential to instigate a barrage of draconian policies that cause significant harm to people experiencing homelessness in our country.”

NAEH released a brief in response to the case that strongly argues for full funding of homelessness service systems rather than criminalization policies. It reiterates that investing in services is a superior and more cost-effective approach to resolving homelessness, and notes that cities drain their budgets through spending on encampment evictions and criminalization efforts. The National Coalition for Homeless Veterans also submitted an Amicus Brief alongside the UCLA Veterans Legal Clinic that passionately argues for the Supreme Court to consider the broader implications of its decision, further emphasizing the need for policies that support unsheltered people rather than penalizes them.

Ranking Member Maxine Waters also released a statement in response to the oral arguments and called for legislation to address housing issues. “Let me be clear, homelessness is a housing problem and criminalizing the homeless won’t end homelessness. The only solution that will help us effectively end homelessness is investing in the development of affordable housing for the lowest income families, paired with supportive services to help stabilize individuals. Federal, state, and local government must work together to advance cost-effective, humane solutions to end cruel cycles of poverty and homelessness,” it reads. “The Supreme Court has the opportunity to help define our nation’s approach to homelessness and civil liberties for generations to come. America needs long-term housing solutions, not cruelty and punishment.”

A final ruling on the case is anticipated in June.

Alanna McCargo resigns as President of Ginnie Mae

Alanna McCargo, President of the Government National Mortgage Association (Ginnie Mae), announced that she will resign from her position on May 3. Principal Executive Vice President (PEVP) Sam Valverde will serve as the Acting President after her departure.

“The past 3.5 years in public service with the Biden-Harris Administration has been the most important and fulfilling work of my 25-year career in housing finance, and I am deeply grateful for the opportunity to serve my country and advance a bold housing agenda across the globe as President of Ginnie Mae. I am incredibly proud of what we have accomplished together and grateful for the housing leadership this Administration and agency have demonstrated since our first day in office. This has been a deeply personal decision to return to private life,” said McCargo in a statement. “I am pleased with the progress and accomplishments Ginnie Mae has achieved during my tenure, the precision with which the team executes on our obligations and authorities, and the groundwork that we have laid for Ginnie Mae to grow and build the capacity needed to meet its crucial affordable housing and capital markets mission on behalf of the United States Government.”

NHC President and CEO David Dworkin applauded the service of McCargo and the temporary appointment of Sam Valverde. “McCargo emphasized the imperative of addressing the racial homeownership gap, a commitment she carried into her role at Ginnie Mae through targeted programs and initiatives tailored to diverse borrower needs. We extend our sincere gratitude to President McCargo for her dedicated service,” he said in a statement. “Incoming Acting President Sam Valverde has worked tirelessly behind the scenes, supporting the stability and health of Ginnie Mae amidst unprecedented interest rate growth. His appointment signifies a commitment to maintaining continuity in addressing housing affordability and economic equity.”

HUD issues final rule on flood risk standards

HUD issued a final rule for the Federal Flood Risk Management Standard (FFRMS) aimed at shielding communities from floods and the impact of natural disasters, as well as curbing rising insurance expenses. The FFRMS rule seeks to assist communities in fortifying against flooding, storms, and changing development patterns. Flooding is the most common and costly weather-related disaster. According to the Congressional Budget Office, annual flood damages to homes with federally backed mortgages were $9.4 million in 2020 and are projected to increase to $12.8 billion annually by 2050. The final rule updates HUD regulations, enhancing floodplain management and minimum property standards, and requires elevations and flood-proofing for properties in flood-prone areas receiving federal funding.

“HUD’s announcement today lessens the burden these disasters have on people,” said HUD Acting Secretary Adrianne Todman. “As climate change progresses, flooding disasters will continue to become more frequent, more severe, and more costly for families and taxpayers. This final rule will increase awareness for renters and homeowners, saving lives and reducing costs for years to come.”

The Mortgage Bankers Association (MBA) issued a statement in response to the rule that while it appreciates the intent behind the rule, it is concerned about its actual impacts. “We are disappointed that several aspects of the final rule will slow housing production and ultimately increase costs for homeowners, renters, and builders,” said President and CEO Bob Broeksmit in a statement. “While MBA appreciates the eight-month implementation timeline, we remain deeply concerned that expanding floodplain areas, implementing new elevation requirements for some new single-family and multifamily homes, and requiring higher levels of flood insurance will make FHA financing more expensive and less competitive. Additionally, implementing CISA (climate-informed science approach) tools is putting the cart before the horse, as the maps are not yet available nationwide, creating inconsistencies and confusion in complying with the final rule.”

NAHB also issued a critical statement, noting that “by establishing a higher flood risk standard, this rule generates inconsistencies with the National Flood Insurance Program, and contrary to HUD’s claims, may not have the intended benefit of reduced insurance costs.”

HUD says this move is expected to lower flood insurance costs, minimize damage, and protect lives. It acknowledges that the final rule will increase building costs between 0.3-4.8%, but argues that the cost is outweighed by the savings in property losses and damage.