Title
Approval of an Ordinance Adopting a Residential Energy Performance Rating and Disclosure Policy
Recommended Action
Committee Recommendation:
The Land Use and Environment Committee recommends that the City Council consider the proposed ordinance for a Residential Energy Performance Rating and Disclosure Policy.
City Manager Recommendation:
Move to approve the proposed ordinance adopting a Residential Energy Performance Rating and Disclosure Policy.
Report
Issue:
Whether to approve the proposed ordinance adopting a Residential Energy Performance Rating and Disclosure Policy.
Staff Contact:
Pamela Braff, PhD, Director of Climate Programs, 360.753.8249
Presenter(s):
Pamela Braff, PhD, Director of Climate Programs
Background and Analysis:
Since early 2023, the City of Olympia has been working with the cities of Lacey and Tumwater and Thurston County, through the Thurston Climate Mitigation Collaborative (TCMC), to develop a model ordinance for a home energy assessment and disclosure policy. The proposed ordinance is intended to provide homebuyers with transparent information about a home’s energy performance and encourage cost-effective energy-efficiency upgrades.
The proposed ordinance requires sellers to obtain and disclose a Home Energy Score (HES) before listing a residential property for sale. The HES is a standardized energy assessment and rating tool developed by the US Department of Energy. It evaluates a home’s energy efficiency on a scale of 1 -10, estimates annual energy costs, and recommends cost-effective upgrades to improve the home's energy performance. The score is provided by a trained energy assessor, who evaluates a home’s physical characteristics, such as insulation, heating and cooling systems, and other elements that impact home energy use.
The proposed model ordinance was developed collaboratively across the TCMC jurisdictions to provide consistency throughout Thurston County and reduce complexity for real estate professionals working across multiple jurisdictions.
Policy Context
Energy use in residential buildings accounts for more than 25 percent of inventoried greenhouse gas emissions in Thurston County. While recent updates to the Washington State Building Code significantly increase energy performance requirements for new residential development, these codes do not address existing homes, many of which were built to less efficient standards.
Providing energy performance information during real estate transactions can help buyers make more informed decisions about the total cost of home ownership, including energy costs. While the Home Energy Score does not require improvements, it provides information that may guide future investments in home efficiency upgrades. Studies show that in communities with energy disclosure requirements, 12-37% of buyers implement energy-saving upgrades after receiving home energy assessment recommendations (ACEEE, 2025).
Benefits and Impacts
Staff estimate that the first year of a county-wide home energy assessment and disclosure policy would lead to approximately 550 home retrofits, more than $300,000 in total energy cost savings, and a reduction of 580 mtCO2e. Total energy savings and emissions reduction would accrue over time as more homes are assessed and retrofitted each year.
In addition to greenhouse gas emissions reduction, other co-benefits of this policy include:
• Improving transparency in real estate transactions by providing clear, standardized information about a home’s estimated energy use and efficiency.
• Helping buyers understand likely energy costs and energy performance before purchasing a home.
• Expanding access to energy efficiency financing by providing documentation that can help homeowners and buyers access rebates, incentives, and energy-efficient mortgage products.
The proposed policy does not require upgrades or improvements. The only implementation cost for sellers is the HES assessment, which typically ranges from $150-$350. For low-income sellers, the City will subsidize the cost of the assessment.
Research from jurisdictions with home energy disclosure requirements indicates that disclosure policies do not disrupt housing markets or delay transactions. Homes with higher energy performance ratings may experience modest price premiums or shorter time on the market. However, observed impacts on sale prices align closely with actual operating cost differences over 20 - 25 years.
• A $100 increase in estimated annual energy costs is associated with a 0.4% decrease in sale price (about $2,000 on a $500,000 home; ACEEE, 2025).
• A one-point increase in the HES is associated with an average 0.5% increase in sale price (approximately $2,500 on a $500,000 home; ACEEE, 2025).
Land Use and Environment Committee Recommendation
The Land Use and Environment Committee received a briefing in July 2023 on Home Energy Score Disclosure. At that time, staff recommended delaying consideration of an energy assessment and disclosure policy until the TCMC completed work to develop the regional model ordinance.
In February 2025, the Committee reviewed the proposed model ordinance and recommended that the ordinance be forwarded to the full City Council for discussion at a City Council study session.
City Council Study Session
The Olympia City Council reviewed and discussed the proposed ordinance during a Study Session on March 11, 2025. During the study session, staff presented the proposed policy and answered clarifying questions from Councilmembers. There have been no substantive changes to the policy since the March 2025 study session.
Climate Analysis:
Residential buildings are one of the largest sources of greenhouse gas emissions in Olympia, and reducing energy use in existing buildings is a key strategy to achieve the City’s emissions reduction goals. The proposed ordinance directly supports the Olympia 2045 Comprehensive Plan Climate Policy PL5.5: Partner with regional jurisdictions to develop and implement a local policy for assessment and disclosure of residential energy performance ratings at the time of lease, sale, or rent.
Equity Analysis:
The proposed ordinance supports energy equity by providing homebuyers and sellers with clear and easily comparable information about a home’s expected energy use and costs. This can help households better understand the total costs of homeownership and identify opportunities to improve comfort and reduce utility bills over time.
While energy cost transparency may be particularly beneficial for low-income households, the upfront costs of the energy assessment may also be a barrier for low-income sellers. To mitigate potential impacts to low-income households, the proposed ordinance also requires the City to provide subsidized assessments for low-income sellers.
Neighborhood/Community Interests (if known):
TCMC staff have engaged the community on the proposed ordinance through several forums, including advisory committee meetings, public comment, and stakeholder focus groups. The TCMC Executive Committee and Community Advisory Workgroup (CAW) reviewed project plans and draft ordinance language throughout 2024. TCMC staff also convened four in-person focus group discussions with targeted stakeholder groups in September 2024.
Many stakeholders expressed support for the proposed ordinance, noting that clear and actionable home energy assessments can help buyers make informed home purchasing decisions and encourage energy-efficiency improvements over time. Some stakeholders expressed concerns about impacts to housing costs, delayed real estate transactions, and enforcement challenges, emphasizing the need for integration with existing processes. Stakeholders also shared that voluntary participation would not generate meaningful uptake and that education and incentives should accompany any mandate.
A summary of focus group feedback is provided in the attachments. Additional comments received in 2026 are also provided in the attachments.
Options:
1. Move to approve the proposed ordinance to adopt a Residential Energy Performance Rating and Disclosure Policy, as proposed.
2. Move to approve the proposed ordinance to adopt a Residential Energy Performance Rating and Disclosure Policy, with specific modifications.
3. Do not approve the proposed ordinance to adopt a Residential Energy Performance Rating and Disclosure Policy.
Financial Impact:
Program development and implementation costs are designed to be shared equally across all four TCMC jurisdiction partners:
• Program Development: The total estimated cost for regional program development (one-time program launch costs) is $100,000. If the proposed ordinance is adopted by all TCMC jurisdictions (Lacey, Olympia, Tumwater, and Thurston County) and costs are split equally across the jurisdiction partners, the estimated cost per partner would be $25,000.
• Program Management: The total estimated ongoing program management costs are $25,000 per year ($6,250 per partner).
• Subsidized Assessments: The total estimated ongoing cost to provide subsidized assessments for City of Olympia residents is $5,000 per year, beginning in 2027.
Implementation costs would only be shared by TCMC jurisdictions that adopt the proposed policy. Sufficient funding has been allocated in the 2026 City budget to cover 50% of all program development costs ($50,000 for program development and $12,500 for program management), in the event that the ordinance is only adopted by two of the TCMC jurisdictions.
Attachments:
Ordinance
Focus Group Summary
Public Comment
Policy Review Memo