Hurricane Sandy Relief Bill "Blows In" Opportunity for States to Adopt Better Building Codes

The fifty billion dollar (yes, that's $50,000,000,000) Hurricane Sandy Relief Bill (the "Relief Bill") is headed to President Obama's desk for his signature. The Full Text of the bill is available here http://www.gpo.gov/fdsys/pkg/BILLS-113hr152rds/pdf/BILLS-113hr152rds.pdf 

The Relief Bill provides several different opportunities for the Federal government to encourage states to adopt up-to-date building codes by tying distribution of the funds to commitments from the states to adopt the most up-to-date building codes. 

 According to studies by the Multi-Hazard Mitigation Council, for every dollar invested in building code adoption and enforcement, four dollars are saved in recovery costs.  As a result, FEMA has been very public about the critical role building codes play in reducing building damage from natural disasters. 

David Miller, the Associate Administrator for Federal Insurance and Mitigation Administration at FEMA, testified before the House Committee on Transportation and Infrastructure last year on this issue, concluding:

Post-disaster assessments of many communities have shown a direct relationship between building failures, the codes adopted, the resources directed toward implementation and enforcement, and the services available to support those codes.

Tying emergency relief funds to code adoption would not be new.  Department of Energy state energy block grants from the American Reinvestment and Recovery Act (ARRA) were tied to governors' commitments to adopt the 2009 version of the International Energy Conservation Code (IECC) and ASHRAE 90.1-2007, as I posted in greater detail here http://www.greenbuildinglawblog.com/2013/01/articles/codes-1/2009-energy-code-adoptions-required-by-arrawhere-are-they-now/

Two allocations which could logically be tied to building code adoption commitments are the $5.4b allocated to the Federal Emergency Management Agency (FEMA) for the Disaster Relief Fund and the $16b allocated to the Department of Housing and Urban Development (HUD) for "necessary expenses related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization..." (Bill at 74)(emphasis added).

However, in tying emergency fund allocations to code adoption, FEMA and HUD should incorporate some lessons learned through the ARRA commitments.  First, the ARRA commitments only related to a one-time adoption of the 2009 energy-related code provisions.  Second, there was no reporting required from the states on their progress with adoption and enforcement of the codes.  Finally, as I posted here (http://www.greenbuildinglawblog.com/2013/01/articles/codes-1/2009-energy-code-adoptions-required-by-arrawhere-are-they-now/), enforcement of the commitments has been weak.  To be effective, any code-related commitments must require regular code updates, and a mechanism for reporting and recapture of funds for failure to fulfill the code commitments.

Hurricane Andrew ushered in a new era of code adoption on the Gulf Coast.  With some encouragement by the Federal government, Hurricane Sandy could have the same effect. 

 

HUD Announces Energy Efficient Home Loan Pilot Progran

Today HUD announced a pilot program to finance $25 million in home efficiency upgrade loans:

Backed by the Federal Housing Administration (FHA), these new FHA PowerSaver loans will offer homeowners up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.
 

Under the Pilot Program, HUD, through FHA-approved lenders, will insure loans for homeowners who are seeking to make energy improvements to their homes. 

This pilot loan program is interesting in the wake of the PACE controversy, wherein property tax-based financing of home efficiency improvements were rejected by Fannie Mae and Freddie Mac, among others.  More information on the PACE controversy is available here.

A big issue with the PACE structure was that the PACE loans were superior in priority to the mortgages. Will the FHA Powersaver loans be subordinated to the mortgages on the homes? The guidance does not say.