SIDEBARS
How Home Star Works
Introduced in the House this past spring by several sponsors including Representatives Edward Markey (D-Mass.), Peter Welch (D-Vt.), Vern Ehlers (R-Mich.), and Dennis Cardoza (D-Calif.), Home Star (sometimes referred to as “cash for caulkers,” due to its similarities to last summer’s “cash for clunkers” program for automobile dealers) authorizes up to $6 billion worth of tax rebates for homeowners for installation of energy-efficient products.
The retrofit work is divided into two programs: Silver Star, which will offer rebates to consumers for purchase and installation of various energy-efficient measures, and Gold Star, which bases its rebates on whole-home energy savings.
Those who know and study the remodeling industry agree that the Silver Star level is the place where existing remodelers will be readily able to use their skills and participate. “We can all play at the silver level,” says Dan Taddei, director of education and certification at the National Association of the Remodeling Industry. “There’s less money, [per job] but an opportunity for our people to work.”
In the Silver Star program, a consumer would hire a “qualified contractor” to install attic insulation, for example. A “qualified contractor” is defined as one who has a state license, or a state’s equivalent; has general liability insurance coverage of at least $1 million; provides warranties for at least one year after completion of work; and agrees to pass on the rebate to the homeowner. That qualified contractor would connect with a “rebate aggregator,” then proceed with the project. The rebate aggregator will most likely be a big-box store, utility company, or other large entity that will be the financial liaison between the retrofitter and the federal government. The contractor would provide the rebate directly to the homeowner and would receive payment from the rebate aggregator within 30 days.
Keep in mind that this is not a tax credit but a direct rebate to homeowners for up to $3,000 for materials and installation of specific energy-saving technologies, including insulation, air and duct sealing, windows and doors, and water heaters.
At least 20% of a “qualified” contractor’s retrofits will be randomly subject to field verification by an “independent quality assurance provider.” Only 10% of your retrofits will be subject to verification if you are a “qualified contractor” using a “certified workforce,” i.e., “all employees performing installation work” have been certified based on standards set by the Building Performance Institute (BPI), North American Technician Excellence (NATEX), Laborers’ International Union of North America (LIUNA), or another approved entity.
While the Gold Star track has similar parameters, it specifies that those performing the work be accredited by BPI or another approved agency. And it includes a before-and-after comparison of energy consumption. Quality assurance providers, certified by the International Code Council; BPI; the Residential Energy Services Network (RESNET); a state; a state-approved residential energy efficiency retrofit program; or any other approved entity, will verify the work using approved home simulation software programs. Consumers will not have to save energy bills to show improved performance.
Fifteen percent of the work done by an accredited contractor is subject to verification. If that same contractor uses a “certified workforce,” just 10% of the work is subject to verification.
Like last summer’s cash for clunkers, the Silver Star program will be in place for one year or until the money runs out. Clunkers was so popular it could only be sustained for two months. Yet, according to the Council of Economic Advisors, that short span not only spurred high summer 2009 car sales, it increased the subsequent yearly rate of sales.
Home Star’s Gold Star track will continue for two years subject to availability of funds. Proponents of the bill ? numerous and on both sides of the political aisle ? hope that by raising consumer awareness and spurring retrofit work, Home Star will engage the public to go further and change the way we build.
?Stacey Freed, senior editor, Remodeling.
What’s in It for Me?
Although more information about the Home Star bill is forthcoming every day (check Efficiency First’s website, efficiencyfirst.org/home-star, for updates) many home improvement contractors are still wondering what’s in it for them. One issue often brought up is the cost of accreditation and certification. Bracken Hendricks, senior fellow at the Center for American Progress and a founding member of the Home Star Coalition, a group that has lobbied intensively for the legislation, believes that 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.”
But many contractors remain 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,” says remodeler David Merrick. “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 contractors, 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,” Merrick says, echoing the sentiments of many.
“The Gold level basically cuts remodelers out unless they want to go to the expense of getting accredited,” says Dan Taddei of the National Association of the Remodeling Industry. “The accreditation requirement will hold back the people who can do this work from doing it.” While Taddei acknowledges that it’s critical for contractors to understand building performance, he doesn’t see why a home improvement contractor can’t just use a certified HVAC person, for example, instead of having to go to 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 companies who 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 National Association of Home Builders, 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, contractors can simply go the Silver Star route. 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.
Long term, one way to make home performance work for your company might be to set up a separate division or a separate business, based on testing and a whole house rather than a single solution approach. Many home improvement companies have already added insulation to their menu of products, and, if certified, could work with allied companies such as HVAC contractors. Sir Home Improvement, in Kalamazoo, Mich., has crews trained in air sealing. But adopting those practices takes time and money.
One additional criticism of the bill has to do with the language regarding who will be doing post-project audits. The original language was vague, and it’s still not clear whether the person who does a Gold Star retrofit will be the same person who tests out afterward. The Senate version of the bill 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. ?S.F.
