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Home Energy Efficiency Efforts In Kansas

New Home Energy Efficiency Efforts

For advocates of home energy efficiency, adoption of the latest energy

codes is only part of a larger strategy to achieve actual efficiency gains
for homes. To meet energy efficiency goals in Kansas, the State Energy
Office has undertaken two innovative state-wide programs that seek to
measure and improve the energy efficiency of single family homes. These
noteworthy programs are the Energy Disclosure Form, which requires
sellers of all new homes to provide homebuyers with a report on energy-efficiency specifications, and the Efficiency
Kansas loan program, a revolving fund which provides low interest loans to homeowners to retrofit their homes with
energy efficiency improvements.

Energy Disclosure Form for New Homes

The Kansas Energy Disclosure form is a two page summary of a new home’s energy efficient features. The state re-
quires sellers to provide the Energy Disclosure Form to prospective buyers at their request. The form contains speci-
fications on the building envelope and mechanical systems which the buyer can see alongside the required minimum
specifications provided by the 2006 IECC. Analogous to the sticker placed in a car window by manufacturers, the
form allows the buyer the chance to see what is “under the hood” of their new home. The form’s required entries
include R values (insulation levels) for walls, attics, and foundations, as well as window “u” values (which measures
the rate of heat loss), and specifications for the water heater and HVAC equipment.

The disclosure form also allows progressive builders the opportunity to go even further, by demonstrating a new
home’s actual building performance. By checking a box on the form, builders can indicate that the home has been
assessed by a HERS rater or that it has qualified as an EPA Energy Star Home. HERS raters are trained and certified by
RESNET (Residential Energy Services Network) to conduct inspections on homes to determine their energy efficiency.
After inspecting the building plans and conducting on-site testing of the home, HERS raters use a computer program
to generate a score between 1 and 100, with a lower score indicating a higher level of energy efficiency. While build-
ers are not required to complete this section, omission of the information signals to potential buyers that while en-
ergy-efficient features may be included in the home, they may not perform as advertised.

Developed through cooperation between the State Energy Office, the Kansas Homebuilders Association, and the As-
sociation of Realtors, the form is filled out by the homebuilder in collaboration with the realtor. Although completing
the form is required by statute, it falls entirely on the homebuilders and the realtors to complete the form and fur-
nish it to buyers. While the state energy office spot-checks the program, it makes no provision for enforcement or
penalty for non-compliance.

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The disclosure requirement is based on Kansas state law KSA 66-1228, which originally required the seller to provide
the disclosure form only upon the request of the buyer at closing. The law was amended in 2007, however, to re-
quire sellers to provide this document to buyers at their request as soon as the property is listed for sale – thus em-
powering buyers to weigh a home’s energy efficient features during the home buying process, rather than burying
this important information until closing. At present, disclosure forms are only required on newly-built homes, but
the program may be expanded to include sales of existing homes.

According to the state energy office, the disclosure form has been embraced by the building community in many
home rule jurisdictions as a way to show buyers what they are purchasing. While this effort stops far short of an
adopted energy code, the disclosure form provides a crucial first step for areas with no history of regulating home
energy use.

Efficiency Kansas Loan Program

The Efficiency Kansas loan program is a newly-created revolv-
ing fund that allows Kansas homeowners to receive loans of
up to $20,000 to make energy efficiency improvements to
their homes. Created with $34 million dollars allotted to the
state by the American Recovery and Reinvestment Act of
2009 (ARRA), the program was officially launched November
17th 2009 and is managed by the Kansas Corporation Com-
mission (KCC), an offshoot of the state energy office.
Kansas City, Kansas
To qualify for the program, homeowners must first commission
an energy audit of their home, which identifies possible improvements—including windows, insulation, and air seal-
ing—among others. After the home is inspected and tested, auditors provide the homeowner with an Energy Con-
servation Plan (ECP), which projects possible energy and financial savings. To receive funding, savings must be suffi-
cient to cover total improvement costs. While homeowners must cover the cost of the audit, the state is providing
refunds of $350 to the first 1,000 participants, which the state estimates will cover the fee charged by many audi-
tors. Homeowners can find accredited auditors on the program’s website: efficiencykansas.com. With the ECP and a
contractor’s bid in hand, homeowners may apply for a loan from two sources: a qualified bank or utility. For home-
owners, the maximum loan amount is $20,000. Small businesses can receive up to $30,000.

For loans originating from banks, the state sends funds to the bank sufficient to reimburse the bank for payments to
contractors working on homes. The bank collects the value of the loan over a term of up to 15 years from the con-
sumer, and is allowed to charge 4% interest. The bank then acts as a loan servicer, keeping the 4% interest, and
sending the principle in each loan payment to the state to replenish the revolving fund. To encourage the banks to
do the leg work to make these “micro” loans, banks also receive a $250 per loan origination fee from the state for
each loan they originate. If an owner of a home with an outstanding loan chooses to sell it, the owner must pay the
balance of the loan in full at closing (with no prepayment penalty).

At present, over 14 banks, totaling 90 branches across the state, have been qualified as lenders. For homeowners
electing to finance through a utility, the program works the same way, except repayment is made through the

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homeowner’s monthly utility bill. To date, no utilities have been certified by KCC, but a number of prominent utilities
are in the process of qualifying. For homeowners with bad credit, utilities may offer a better loan opportunity as,
unlike bank financing, homeowners with over a year of regular utility payments should qualify. For owners who sell
their homes before the loan is repaid, the initial borrower (the seller) will have to disclose the loan to the buyer, who
will continue payment through their monthly utility bill. To increase transparency, utilities are required to file a no-
tice that will appear during a home title search, which will clearly define the buyer’s obligation to repay the loan.

After construction of each project is complete, the energy auditor who performed the ECP is required to conduct a
post-retrofit audit to verify the project has been completed. The cost for the post-retrofit audit is included in the
cost of the initial energy audit. Participating homeowners are also eligible to receive federal energy efficiency tax
credits of up to $1,500 through the American Recovery and Reinvestment Act (Recovery Act). Eligible energy effi-
ciency improvements include upgraded windows, doors, roofs, insulation, and HVAC equipment that meet specific
federal standards. More information on energy efficiency tax credits is available from the Alliance to Save Energy.

As of February 2010, this nascent program has originated only three loans, although many additional homes are on
track to complete the program. With the program’s success and reach still to be determined, the state has worked to
start the program on a strong footing by hiring a marketing firm, creating scholarships for energy audit classes for
prospective auditors, and sponsoring trainings for auditors (so far, over 80 of 100 scholarships have been awarded).
The state has estimated that residents who participate in the program will reduce their heating and cooling bills by
20%. For 10% of homes participating in the program, the state will conduct an on-site audit of the ECP to ensure that
the initial energy audits were conducted correctly.

Detailed costs of the program follow:

Efficiency Kansas Loan Cost Breakdown

Loan Fund $34 million

Energy Audit Rebates to Homeowners $350,000
Loan Origination Rebates to Banks $481,000
Marketing Program $500,000
Training Sessions $100,000
Scholarships for Energy Auditor Training $150,000
Administration Costs $1,619,000
Total $37.2 million

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