What’s in It for Me?
Although more information about the Home Star bill is forthcoming every day (check Efficiency First’s website, for updates) many remodelers are still wondering what’s in it for them.
One issue often brought up is the cost of accreditation and certification. (For specifics on certification and accreditation click here.) Hendricks believes the cost is a relatively low barrier to entry. “You can get people trained in two weeks,” he says. “It’s an important long-term investment.”
Yet remodeler David Merrick, who does see the upside of the bill, is still hesitant to buy in. “When I look at it as a business owner trying to put together a business plan, it’s hard to make this work,” he says. “The customers might be getting a rebate, but the amount of money you need to put into being BPI certified and the equipment you have to buy, the return on investment just isn’t there.”
While Merrick is in favor of a certified workforce, he does not see the need for company accreditation. He, like many other remodelers, is feeling particularly put out because of the recent enactment of the Environmental Protection Agency’s Renovation, Repair and Painting rule. There’s a sense of too much government regulation. “No sooner did we get finished [being] run over by the lead bus, then this comes along. The people writing this have such strong opinions, they’re not listening to anybody,” Merrick says in a sentiment echoed by other remodelers.
“The Gold Level basically cuts remodelers out unless they want to go to the expense of getting accredited,” Dan Taddei of NARI says. While he acknowledges that it’s critical for remodeling company owners to understand building performance, he doesn’t see why a remodeler can’t just use a certified HVAC person, for example, instead of going through the time and expense of accrediting his or her company.
The other expense to participate in either the Silver or Gold Star programs will be out-of-pocket costs for floating the rebates for 30 days until getting reimbursed by a rebate aggregator — a process that can be difficult for small remodeling companies that often work on thin margins and have limited cash flow. Aggregators will be responsible for reviewing contractor qualifications and accreditation.
Paul Emrath, vice president of survey and housing policy research for the NAHB, thinks the rebate structure is too complicated: “The system of [requiring] qualified contractors and a certified workforce and having to process this through a rebate aggregator and give it to the federal government so they can check to [make sure there’s no] double dipping with existing energy efficiency tax credits [like those approved in last year’s stimulus package] — it’s a question of how quickly you can do this.”
Of course, remodelers can stick to the low-hanging fruit and travel the Silver Star track. Yet even there it will be difficult to make money. “You might have to do 30 or so [retrofit jobs] in a month to be profitable,” Taddei points out, and most remodelers aren’t set up to work that way. They would have to start up a separate division or a separate business. In any event, they’d need to create a new business model. Organizations such as Recurve, which is creating software to help companies transition to doing home energy or building performance work, and GreenHomes America, a franchising entity ( click here to read more about home performance franchises), are gearing up to help remodelers figure out how to make this profitable. But again, adopting those practices will take time and money.
Remodelers’ other criticism of the bill has to do with the language regarding who will be doing post-project audits. The original language in the House bill was vague, and it is still unclear whether or not the person who does a Gold Star retrofit will be the same person who tests out afterward. The Senate version clearly states that the quality assurance provider will be “independent of the contractor.”
The intention, according to Hendricks, has always been to have a separate entity follow up. “You wouldn’t want a remodeler doing the work and then checking it out,” he says. “You’d want a home energy auditor who has the certifications to do the energy audit just as you’d want an electrician who is certified to do [or check] the electrical work.”
Next Steps
Home Star has a lot of congressional support. According to Rep. Welch’s office, the congressman is optimistic that the strong bipartisanship during the House vote is a good sign that this bill has momentum going into the Senate. But as of mid-May there were no immediate plans for a Senate vote. No surprise, there are unanswered questions about how the bill will be funded. After a May 20 lobbying effort by Efficiency First, a trade association for those connected with the home performance workforce, group member Doug Selby, owner of Meadowlark Builders, in Ann Arbor, Mich., says, “I came away with the perception that nothing is going to move until after the elections unless [Home Star] somehow gets put into an omnibus spending bill. [Senators] kept asking, ‘Where’s the money?’” Hendricks believes that, in the end, what eventually will pass will be something close to whatever language comes out of the Senate bill.
When and if it does pass, is $6 billion really enough to make a difference in what is now a $250 billion industry? NARI’s Harris believes it’s “not really a lot of money and won’t create much of a bump.” Kermit Baker, director of the remodeling futures program at the Joint Center for Housing Studies of Harvard University, agrees, yet thinks that for replacement contractors or HVAC firms this will quickly make a noticeable difference. “But not for the regular residential remodeler,” he adds.
NAHB’s Emrath points out that there could be a ripple effect into more “traditional” forms of remodeling — kitchens, baths, additions. “It’s likely to be about $5,500 [homeowners spend] on the kind of core energy-efficiency remodeling [we’re talking about],” Emrath says. “If we look at how much those same people spend in a given year on all sorts of remodeling activity … [Silver Star retrofits] might leverage another $5,500 [per project].”
Which brings us back to the big-picture people such as Bracken Hendricks and remodeler Devon Hartman, of Hartman Baldwin Design/Build, in Claremont, Calif., who has been working for years on home performance issues. What Home Star represents is a “fantastic goal, a true ‘big, hairy audacious goal,’” Hartman says. “President Obama and [secretary of energy] Steven Chu get how powerful this whole home retrofit program can be in terms of reducing greenhouse gases and the amount of energy used. We produce more carbon in our homes and businesses than with our cars.”
Both Hartman and Hendricks site McKinsey Global Institute studies, which indicate that the U.S. economy could potentially reduce non-transportation energy consumption by about 23% by 2020, eliminating more than $1.2 trillion in waste, with an up-front (not including program costs) investment of $520 billion by consumers in energy efficiency.
“We could be doing 10 million homes a year for a decade. The demand is very large. My hope is that a lot of different kinds of contractors will see this as an attractive business. It’s an excellent position for selling their work,” Hendricks says.
Regardless of whether you choose to market retrofit work, the industry is shifting; you’ll need to be engaged and knowledgeable about building performance. “This is a win-win for everyone,” Hartman says. “The bar has been raised and we need to have the remodeling industry set the pace.”
—Stacey Freed, senior editor, REMODELING.