"Green" Light For Energy-Efficient Home Construction in Maryland

April 23, 2014

By: Matthew T. Vocci

For those who believe that government programs may provide a stimulating effect on the private economy and promote positive changes in the ways in which we work and live, an enrolled bill, not yet signed into law, coming out of the 2014 Maryland General Assembly session should be given tempered applause. It deserves modest praise because the program is relatively small in size at $3,000,000 but it is scheduled to grow each year.

House Bill 553 is aimed at advancing construction of energy efficient homes and contains a mandate to adopt regulations designed to increase participation of Minority Business Enterprises (MBEs) in the program. One of the interesting aspects of the bill is how the legislature chose to invest in this sector of the homebuilding market. The bill, which enjoyed bipartisan support, creates the Energy-Efficient Home Construction Loan Program which will provide loans on favorable terms to those who develop and build “low-energy” and “net-zero” homes here in Maryland.

A low-energy home is defined as one that achieves a Home Energy Rating System index rating of 50 or lower, which equates to a home 50% more efficient than a standard new home, or a home that meets another to-be-determined standard. A net-zero home is one designed to produce an amount of energy in 1 year that is equal to the amount of energy that the home uses in 1 year. While there may be several means and methods supportive of developing low-energy and net-zero homes, it appears those businesses selling residential solar panels and wind turbines are the likely secondary beneficiaries of the new Loan Program.

The Loan Program will be administered by the Department of Housing and Community Development (DHCD), which is tasked with establishing eligibility standards for the loans and the terms of the loans. Within the bill, it is noted that the interest rates for the program loans may be as low as 0% or as high as is reasonable to make a project viable. The statute also mandates that the DHCD adopt regulations to carry out the Loan Program, including regulations designed to increase participation of MBEs in the program.

The proof will be in the pudding regarding whether the Loan Program is a success and whether significant MBE participation is reached. At this point, what should be lauded is the creation of a government program that is designed to spur growth in an innovative portion of the private industry home construction sector in a responsible manner (i.e., loans that are to be repaid and secured). We will follow the bill and provide more analysis on the Loan Program after it becomes law and regulations are proposed. Stay tuned.

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