The facts

Unfortunately, some misinformation exists in our community about the information presented by Keep Austin Affordable. This page outlines the inaccuracies we’ve encountered and corrects the record.

Accusation: Keep Austin Affordable is scaring the public and acting prematurely.
Fact: We’re engaging the public early to ensure we’re ready to act.

Some have alleged that Keep Austin Affordable is acting prematurely by discussing this issue before a formal proposal is presented. We disagree. While it’s true no official recommendations have been made, it is also true that the Energy Efficiency Retrofit Task Force could make its recommendations to the Austin City Council and our city leaders could vote on those recommendations immediately. That’s why we’re engaging consumers in this process early. We aim to ensure the task force can consider the opinions of Austinites as they formulate their recommendations and that our citizenry is informed and ready to act as soon as the opportunity for public input arrives.

Accusation: Keep Austin Affordable says the proposal is costly and wrong, and yet there is no proposal as of yet. How can they criticize what doesn’t exist?
Fact: We’re criticizing the approach that the city has taken.

It's true that, as yet, no proposal exists. What does exist is a task force to propose energy efficiency upgrades. The charter for that task force stipulates all recommendations made must be enforced at the "point-of-sale." This takes the power out of the task force's hands to operate in the best interest of Austinites and that is part of the approach that concerns Keep Austin Affordable.

Specifically, Austin City Council Resolution No. 20070215-023 was passed on December 13, 2007. It created the Energy Efficiency Retrofit Task Force and charged it with developing a proposal to bring before the full city council by August 1, 2008. However, as described above, that task force was told what to do and how to do it. Because of the way it was written, this resolution dictated the approach that the task force would take. Item 2d says, “That the task force shall produce recommendations reflecting the following guidelines and mandates: Protocols shall apply to owner-occupied residential properties at the point of sale.”

Adding mandated energy upgrades to the cost of buying a home in Austin will make it even more difficult for many people to afford a home in our city, hitting hardest those who can afford it least.

• Point-of-sale fees like this are highly regressive, meaning higher burdens for low-income people.
• Young, growing families and seniors on fixed incomes would also be heavily affected.
• If the City of Austin mandates costly energy upgrades, some buyers will choose to, or be forced to, buy homes outside the city limits.

Accusation: Keep Austin Affordable is inflating cost estimates of proposed upgrades.
Fact: No one yet knows how much these upgrades will cost.

The cost estimates for the upgrades under consideration have ranged broadly. The fact is they may all be true, for a few reasons: 1) the specific upgrades discussed have varied widely, from changing light bulbs to replacing air conditioning units and 2) Austin boasts homes of every age and condition, meaning even the simplest upgrades could cost thousands. Even if the mandates include the spending caps currently proposed, they will still be expensive for Austin homeowners (find out why).

Accusation: The costs associated with the upgrades will not be substantial enough to keep Austinites from buying homes.
Fact: Even a modest increase in the money homeowners must produce at closing will diminish homeownership opportunities for our citizens.

In 2004, the Real Estate Center at Texas A&M University conducted an analysis of the impact of a real estate transfer tax in our state. The proposed tax ranged from .05% - 1.5% of the value of the home (very similar to the caps in upgrade costs being discussed by the City of Austin now). That study asserted that closing costs are the biggest constraint first-time and low-income homebuyers face to homeownership. The following outlines how much even these modest caps would require that homeowners produce out-of-pocket, which could limit homeownership opportunities for some residents:

Accusation: Point-of-sale is a legitimate trigger for energy-efficient retrofits. Why are you so against it?
Fact: Point-of-sale will directly affect the seller or the buyer. Probably both. Either way, consumers pay.

Some proponents of the proposal have suggested the cost of improvements simply be rolled into the home mortgage. Title companies have said that is not an option, but even if it were, it would make the energy improvements more costly. Rolling the costs into the mortgage sounds like an easy solution, but comes with its own set of problems.

• A homebuyer is being forced to finance energy upgrades for as long as 30 years.
• Consider $923 of energy upgrades included in a 30-year fixed-rate mortgage. After 10 years, a homeowner will still owe $779 on that $923 part of the loan, despite having already paid $664 of loan payments toward it.

Accusation: This measure wouldn’t impact as many homes as alleged by Keep Austin Affordable.
Fact: If the measure wouldn’t have a significant impact, why would the city pursue it so aggressively?

We can produce estimates of how many homes would be impacted by this measure (for example, the Multiple Listing Service logged 25,000 residential real estate transactions in Austin last year), but what’s really important is that the city isn’t pursing this measure so only a few Austinites have to comply. If we open the door to energy efficiency mandates, even for just a few, we know more will follow. Mandates for energy efficiency are simply the wrong approach, regardless of how many citizens would be affected.