If you are looking to either buy or sell a home within the confines of the City of Minneapolis, you will want to be aware of a new requirement that went into effect on January 15 that calls for the City’s mandatory seller’s Truth in Sale of Housing evaluation (TISH) to include an Energy Disclosure Report providing an “energy score.” According to the City’s January 15 press release, this is akin to knowing the miles per gallon of a car. The higher the score, the more efficient and resilient the property is to weather extremes.
During the TISH evaluation, energy data (resulting in an energy score) will now be collected by the TISH evaluator on four components that affect a home’s energy efficiency: wall insulation, attic insulation, the heating system, and single-pane windows. There are no required repairs related to the Energy Disclosure Report.
This requirement applies to all one and two-unit properties, townhomes, and first-time condo conversions.
Why is the City adding an energy disclosure to the TISH?
The ordinance was passed in order for Minneapolis to make progress toward its community-wide greenhouse gas reduction goals outlined in their Climate Action Plan. The City asserts that the new Energy Disclosure Report helps buyers and sellers determine what energy efficiency improvements they can make to lower their energy use and reduce carbon emissions.
Public kept in the dark
City Director of Sustainability Kim Havey said the City did not consider phasing in the new disclosure because they had six months of outreach prior to the ordinance passing, in addition to engaging in an active ongoing outreach effort. This included seeking input from the Minneapolis real estate community.
Eric Myers, Director of Government Affairs for Minneapolis Area REALTORS (MAR), reported that the organization had been engaged in open dialogue with the City on the proposed energy disclosure changes since June 2018. MAR is committed to solutions that enhance sustainability and energy efficiency, and had made a number of recommendations to the City that might bring about more transparency surrounding the energy efficiency of a home. These included increased ease of utility bill disclosure, voluntary home energy audit programs, leveraging Multiple Listing Service (MLS) data by adding new fields, and strengthened appraisal valuations for energy efficient properties.
Myers said he believed that their professional membership (MAR is the largest local REALTOR association in Minnesota with over 9,000 members) were well prepared for the new energy reporting requirements as a result of a comprehensive internal communications campaign. However, my individual efforts to learn more about the new energy disclosure requirements in advance of the launch date were thwarted on every front.
In October of last year, a 311 operator confidently assured me there were absolutely no changes on the books that would impact the TISH for the sale of single-family homes. A subsequent email to the City’s TISH office asking for confirmation of the accuracy of this statement went unanswered for over a month (there is no direct phone number to the Truth in Housing office listed on the TISH website page.) A reply was received by email only after more insistent follow up on my part. And until mid-December (only weeks away from the program becoming effective), the City still had nothing posted to their TISH-related pages about the upcoming change.
So, let’s take a look at the key elements of the new requirement. Contact information and links to resources are provided within this article.
Exceptions to TISH Energy Disclosure Report requirement
The City’s Truth in Sale of Housing Energy Disclosure Policy Frequently Asked Questions (FAQs) indicates that there are currently two exceptions to the TISH Energy Disclosure Report requirement:
- If a TISH evaluation was completed prior to January 15, 2020 it remains valid for two years and/or one sale and does not have to include an Energy Disclosure Report.
- If you have an audit report with energy score from the Home Energy Squad. In order for your evaluator to bypass collecting the TISH-required energy data, show them a copy of your Home Energy Squad audit report and display that report with your completed TISH during all viewings. A Home Energy Squad audit is valid for five years after completion.
The cost to homeowners
TISH evaluators are private contractors licensed by the City and they set their own prices. Sources are reporting that the new energy disclosure requirement (which adds time and complexity to the TISH inspection) will result in higher charges. Operations Manager Milind Angolkar of Structure Tech (a Twin Cities’ home inspection company) says they have had to increase the TISH evaluation fee from $200 to $300 for a single-family home.
A visit from the Home Energy Squad is typically $100 and includes a much more thorough energy efficiency evaluation than that provided by the TISH energy disclosure. Home Energy Squad visits are currently available to anyone with a CenterPoint Energy or Xcel Energy account. The City offers free Home Energy Squad visits to qualifying households based on income, and residents living in a Minneapolis Green Zone are eligible for a free visit regardless of income. Visit mncee.org/home-energy-squad/minneapolis/ to learn more about the program.
How the energy score works
The FAQS state that the Energy Disclosure Report will arrive at an energy score that rates the energy efficiency of the home on a scale of zero to 100, with 100 being the most efficient. A sample Report is included at the end of the FAQs which is linked on the City’s TISH page at minneapolismn.gov/ccs/ccs_tish.
The points assigned against each of the four evaluated areas (labeled as “Improvement points”) work like penalty points, reducing your score downwards based on your TISH evaluator’s findings. The energy score graphic shown in the sample Report includes a home with a 49-point score, placing it in what the City has marked as the “Inefficient house” bracket. It appears you have to be at 50 or higher to get into the “Efficient house” range. The Report also shows the score for the homes that fall into the top 10% in your neighborhood. There is no discernible way to know from this data how many homes make up this category.
Angolkar, who had already completed his first TISH inspection with the Energy Disclosure Report when we spoke, explained that the City-created online system for TISH evaluators automatically generates points as the form is completed.
A homeowner receives an energy score (per the sample on the FAQs) but without the benefit of access to the guidelines being used to arrive at that result. You can find guidelines on the TISH evaluator at minneapolismn.gov/ccs/TISH/ccs_evaluatorinfo.
Heating System: In the sample Report, the home’s heating system is under 20
years old and has been allocated 13 penalty points. Angolkar
said that the age range falls into two buckets – under or over 20 years old. It
is unclear how a homeowner could reduce the points in this high-impact area, or
how much you would be penalized for a furnace that was over 20 years old.
Emails to City staff remained unanswered on this topic at the time of
submission of this article.
Attic Insulation: Two home inspectors, including Angolkar, told me that measuring a home’s attic insulation per the City’s directions was challenging and did not seem to allow for a consistent application of standards.
Wall Insulation: For homes built before 1980, insulation levels must be visually verified by drilling and capping a single hole in an exterior wall (typically in a closet), or utilizing an existing hole from a previous evaluation. City Media Relations Coordinator Casper Hill explained that it’s “… extremely rare for a home that is built after 1980 to not have wall insulation.” Which suggests the related score for homes built after 1980 is based on assumption rather than measurable data.
What about that hole?
What if you have insulated the walls of your pre-1980s home? The FAQs, sample Energy Disclosure Report, and Evaluator Guidelines are silent in this respect, but I found the following in the City’s related ordinance, 248.75. – Energy disclosure report: “Documentation from a licensed contractor showing installation of wall insulation, or other reasonable forms of proof as determined by the director may also be used as an alternative for compliance for this portion of the report. If other technologies for determining wall insulation R-value are approved by the building official they may also be used.”
Further, it would seem that you can appeal the wall insulation check by filling out the TISH Appeals form found under “Wall Insulation Appeal” on the main TISH page at minneapolismn.gov/ccs/ccs_tish.
Why the lack of clarity and transparency surrounding this invasive part of the evaluation?
Cost and returns of making improvements
The Energy Disclosure Report provides projected costs, available rebates, potential annual savings and recommendations for improving the four evaluated areas.You can contact a Center for Energy and Environment (CEE) Energy Advisor at 651-328-6225 or email@example.com with questions about the Report, and to receive free recommendations on trusted contractors, utility rebates, and competitive financing such as low-interest or no-interest loans.CEE is a Minneapolis consulting firm who works closely with the City on many energy-related projects. They are also the exclusive Home Energy Squad contractors for Xcel and CenterPoint.
Will the Energy Disclosure Report make it harder to sell older homes?
Stephanie Gruver, a longtime Camden resident and REALTOR with RE/MAX Results with over a decade in the business, said she’d seen a trend in recent years with first-time buyers appreciating energy efficiency improvements.
The City’s FAQs tell us that sellers of older homes will now be able to convey the energy efficiency investments they have made, and buyers will have confidence in the energy efficiency enhancements made. However, there are numerous energy-saving areas that are conspicuously absent from the Energy Disclosure Report’s evaluation process. The TISH energy score is very much presented as an indicator of a home’s whole energy efficiency picture, and as such can be misleading. Especially so for inexperienced first-time home buyers, who may be alarmed by an “Inefficient house” label without appreciating other energy efficiencies that either exist or could be cost-effectively implemented following purchase.
There are steps that sellers can take to prepare for the new reporting requirements and maximize communication of all energy efficiency improvements made to a home.
You can have a Home Energy Squad audit performed in advance of the TISH. You may qualify for a free visit! Since the audit is good for five years, if you are satisfied with your report and related score, you can use that energy audit in lieu of having the Energy Disclosure Report completed on the required TISH. In the meantime, you will have received some useful insight into opportunity areas for increased energy savings. A win-win.
Families living on limited means spend a high percentage of their income on energy costs. Openly sharing your utility bills with buyers provides an opportunity for increased transparency.
Gruver recommends that you make full use of the Seller’s Disclosure Statement (documentation required when selling your home) to disclose all energy improvements, adding that “… a flyer, a detailed list of improvements, a video, or detailed public remarks in the MLS (which in turn transfers to sites like Zillow) can also be helpful to promote the energy features of a property.” She also regularly encourages sellers to provide copies of paid receipts for major improvements to help demonstrate the reinvestment in the house.
The FAQs remind homeowners that if you make improvements after receiving a low energy score, you can have a new energy audit performed on your home. However, a TISH is costly and your improvements would have to be directly related to the four evaluated areas in order to increase this particular score.
Good idea, lacking implementation
I am not confident that the TISH Energy Disclosure Report as currently structured can go a long way to creating a legacy of more energy efficient homes in Minneapolis. The City’s lack of clear communication, the limitations and timing of the energy evaluation itself, and the questionable objectivity that is built into the City’s evaluation tool diminish the efficacy of this well-intentioned program.
While we should, as with any new policy, adopt a “wait and see” attitude, I believe Minneapolis home sellers may be facing a steep learning curve. As Eric Myers of MAR explained, when a homeowner puts a property on the market, they are not focused on making additional improvements to their home at that point in time. Surely, a phase-in period, during which the City could have engaged in an energetic education campaign, would have allowed homeowners to budget for and carry out improvements before the energy score disclosure became mandatory? Reducing the risk of blindsiding sellers and opening the door to price negotiations.
Only time will tell.
TISH office: 612-673-5840 or firstname.lastname@example.org
City TISH page: minneapolismn.gov/ccs/ccs_tish
TISH Evaluator Guidelines: minneapolismn.gov/ccs/TISH/ccs_evaluatorinfo
Property search (online look up for completed TISH reports): ci.minneapolis.mn.us/propertyinfo/index.htm
City ordinance 248.75. – Energy disclosure report: library.municode.com/mn/minneapolis/codes/code_of_ordinances?nodeId=COOR_TIT12HO_CH248TRSAHO
Energy Advisors: 651-328-6225 or email@example.com
Scheduling a Home Energy Squad visit: 651-328-6220 or firstname.lastname@example.org
CEE (Home Energy Squad): homeenergyhub.org/Home/