The 2013 Vision 2020 chair for Economics + Financing, Robert Sahadi, is the director of energy efficiency finance policy for the Institute for Market Transformation
(IMT), the U.S. arm of the Global Buildings Performance Network. This nonprofit organization supports policies to reduce energy consumption and carbon emissions in the building sector—the single biggest consumer of energy worldwide. IMT identifies strategies and provides expert services to policymakers and leaders in the real estate, mortgage-lending, and financial sectors.
Sahadi leads IMT’s work in developing innovative energy-efficiency financing solutions, such as appraisal and underwriting techniques, for homes and commercial buildings. The goal of these efforts is to develop long-term strategies, rather than short-term incentives or subsidies, which will move the market toward full valuation of energy efficiency and make energy efficiency a standard in the real estate marketplace.
Why is this a pivotal time in the way we finance energy in homes and commercial buildings?
I’ve spent many years at Fannie Mae and in the federal home loan bank system at HUD [the U.S. Department of Housing and Urban Development], and I‘ve been in all the different aspects of the housing finance industry. I think we’re in a paradigm shift here in what we’re doing in energy efficiency. We’re going to have to make choices, husband our resources, and do more with less.
What does IMT do to help further sustainability?
Our big things [include] being involved in the whole code-development process, and [commercial] building ratings—we don’t do the rating, we develop the policies and work with [cities] on implementing them. And we’re affiliated with the Global Building Performance Network, so we do international kinds of information sharing and strategy.
Would you describe IMT as a “think tank"?
You could say that, but we’re more on the policy side. And we have an advocacy bent, in that we’d rather see things done than talked about, whereas a lot of think tanks just write papers and put them out for the world and sort of wash their hands of it. We’re a little of both.
What do you do at IMT?
I run the finance group. We have our hands in three different areas—commercial, the multi-family area, and we spend quite a bit of our time on single-family. What we’re trying to do is break down barriers within the financial industry that might preclude energy efficiency being financed. On the commercial side, a lot of our activity has been in appraisal standards—getting energy efficiency incorporated into appraisal standards so the building could be recognized for this. On the single-family side, we’ve done a lot of work on the SAVE Act [S.1737 proposed legislation, which would allow homeowners to borrow additional mortgage funds to enable energy efficiency improvements]. We’re also working with appraisal standards, green multiple listing services, and other things, to really make this a viable market.
What have been the obstacles up to now?
We went through a period—the subprime mortgage crisis—where we went overboard on financing, but during that period nobody was doing much on energy efficient financing—they were doing all these other crazy things. Now that people see the need for energy efficiency financing, underwriting standards have become very locked down and it’s very difficult, so we have an uphill battle here in that regard.
Now that the residential finance market is improving, what are your goals for 2013 and beyond?
I think there are a lot of very, very good things happening. The stage is set to finally do some positive things in the market, so we’re working on a number of fronts. We have the SAVE Act, which will be reintroduced in a month or so. We have been doing research that shows how homes that are energy efficient are performing better. We’re working with HUD to revitalize its energy efficient mortgage product. And we’re working with the appraisal industry to develop green appraisal addendums, and with the realtors on the green mortgage listing service. So there are a lot of nice pieces that are coming together and, hopefully, it could be a real meaningful year in terms of pushing this [agenda] forward.
What obstacles do you see ahead?
There’s always obstacles. I would say there’s friction, in a sense, that this is not a mainstream [agenda]. The mortgage industry has a modicum of interest in this—it’s not like the new apple iPhone, and if we introduce this people are going to be waiting in line. It’s going to be an uphill battle. It will be a few years off before we get to some kind of real transformation. But we’re thinking that we can get over the initial friction and get this thing going.
What opportunities do you see?
The SAVE Act could be enormous. It introduces energy efficiency into the single-family underwriting process. It will hopefully pass, which will trigger regulatory procedures at HUD to start writing regulations for new underwriting for that—and this would cut across all mortgages, not just “boutique” mortgages. We’re guardedly optimistic. We have bipartisan support for this. And because some of the other major issues with mortgage lending have been resolved, I think it’s going to get serious attention.
What is your vision of success?
That every home purchase or remodel purchase becomes an energy-efficiency opportunity.
Building on its successful launch in 2012, ECOHOME’s Vision 2020 program continues in 2013, focusing on eight critical areas in sustainability: Energy Efficiency + Building Science, Building Design + Performance, Materials + Products, Sustainable Communities, Water Efficiency, Codes, Standards + Rating Systems, Indoor Environmental Quality, and Economics + Financing. Track our progress all year as our panel of visionary focus-area chairs, our editors, and leading researchers, practitioners, and advocates share their perspectives on initiating, tracking, and ensuring progress toward sustainable priorities and goals in residential construction between now and 2020. The program will culminate in an exclusive Vision 2020 Forum in Washington, D.C., in September 2013, and with a special edition of ECOHOME in Winter 2013. Click here to see the 2012 Wrap-Up.