Contracting Organizations Call for Improvements to "Home Star" Legislation

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Six National Associations Representing 193,500 Contracting Businesses Express Support for Program Goals, But Concern Over Details, Recommend Improvements on Rebate Structure and Accreditation Requirements to Benefit Small Business

Home retrofit rebate legislation under consideration in the Senate has worthy goals, but some of the details are highly problematic for small businesses, according to a coalition of contracting trade associations in a letter sent to the Senate leadership yesterday.

A version of the "Home Star" rebate legislation has passed in the House but is awaiting action in the Senate. The legislation would spend approximately $6 billion on rebates for high-efficiency improvements to American homes, in two programs known as "Silver Star" and "Gold Star."

In its letter, which may be read online at http://homestarfacts.org/, Small Businesses for Job Growth in Energy Efficiency wrote Senate leaders to say that they are supportive of the legislation's goals, "but we want to raise some significant concerns about the format and structure of S 3434, the Home Star Energy Retrofit Act of 2010."

Members of Small Businesses for Job Growth in Energy Efficiency include the Air Conditioning Contractors of America, the Green Mechanical Council, the National Association of Home Builders, the National Lumber and Building Material Dealers Association, the National Roofing Contractors Association, and the Plumbing-Heating-Cooling Contractors National Association. Collectively these organizations serve over 193,500 small businesses in every state in the country.

Specifically, the associations raised concerns about two facets of the program: the proposed rebate structure, and the limitations of the "Gold Star" program accreditation requirements.

The way in which the rebate would be paid out favors large businesses over small contractors. Requiring the installing contractor to "front" a loan of several thousand dollars to a homeowner, and then wait for payment from a "rebate aggregator," would place an enormous burden on small contractors, who have been deeply affected by the ongoing credit crunch facing small businesses. Most of the money from the program would flow to larger companies able to shoulder the financial burden, and deprive highly-qualified, skilled small businesses of job-growth potential.

"While the current version of the legislation 'requires' the contractor to be paid within 30 days, the clock does not begin ticking until the project is complete, not when the project has been bid or the materials purchased," the associations wrote.

The associations pointed out that the House version of Home Star required the rebate to be paid to the homeowner after sale, not the contractor, and said that the House version "had it right."

"Homeowner rebates have been, and are currently being, used in several states for state and federal energy efficiency incentive programs with great success, in part due to their simplicity," the associations continued. "Changing the intended recipient of the rebate program from the contractor to the homeowner will not affect the volume of rebates or the success of the program. In fact, it will encourage more contractors to participate and offer more options for homeowners to take advantage of the program."

Expand contractor participation in the "Gold Star" program. The associations wrote that they are very concerned about the requirement that only contractors accredited by the Building Performance Institute (or who meet some not-yet-set requirements by the administration) may be eligible to participate in the "Gold Star" rebate program.

"We are concerned that the accreditation requirement will limit the choice for homeowners who may want to take advantage of the Gold Star rebates that are determined by whole home energy improvements," the associations wrote. "Despite exaggerated statements from some about the capacity for rapidly growing the number of BPI-accredited contractors, the reality is that 29 states do not currently have a single contractor who could offer homeowners a pathway to Gold Star rebates.

"And for those few who may choose BPI accreditation - which essentially involves paying an administrative fee and pledging good business practices - the training and accreditation costs can be thousands of dollars."

Further, the associations objected to the structure of tax incentives included in Title II, Section 201 of the bill, which they said "seek only to promote a singular organization, the Building Performance Institute, and disallow equal access by all qualified and highly-trained workers, particularly small businesses that can legitimately undertake high-efficiency retrofit work … We object to allowing a single organization to be the only eligible entity to participate in a federal tax incentive program for retrofits."

The associations concluded, "We hope that changes can be made to the Home Star proposal moving through the Senate to maximize the job creation and energy efficiency benefits of the bill. We look forward to working with you to address this issue as soon as possible."

The full text of the letter may be read at http://homestarfacts.org/.

ORGANIZATIONAL CONTACTS:
ACCA: Charlie McCrudden, charlie.mccrudden(at)acca(dot)org
NAHB: Elizabeth Odina, eodina(at)nahb(dot)org
PHCC: Kevin Schwalb, schwalb(at)naphcc(dot)org
NLBMDA: Jeremy Stine, jeremy(at)dealer(dot)org

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