News

Contracting Organizations Recommend “Home Star” Improvements to Benefit Small Business

Six Associations Serving Over 193,500 Small Businesses Say “Home Star” Needs a Stronger Foundation

July 19, 2010

Dear Majority Leader Reid and Minority Leader McConnell:

The undersigned small business organizations are writing to express our support for the goals of the Home Star Retrofit Rebate program. However we want to raise some significant concerns about the format and structure of S 3434, the Home Star Energy Retrofit Act of 2010. We wholeheartedly support energy and water conservation retrofit programs and agree on the need to provide consumer incentives to upgrade the energy performance and water usage of their homes; we are very concerned about the implications of the legislation as currently crafted. As national trade associations that represent hundreds of thousands of contractors across the nation charged with effectively implementing the Home Star program, we believe the following issues must be addressed in order for all small businesses to be able to effectively participate in the program and ensure the job creation potential is fully recognized as envisioned by the legislation.

Rebates Should Be Provided to Homeowners, Not Contractors

Section 103 (a) (4) of S. 3434 requires contractors to “provide the owner of a home, through a discount, the full economic value of all rebates received.” This provision forces any contractor wishing to offer home owners retrofits eligible for Silver Star or Gold Star rebates to extend the value of the rebate on an invoice as a discount, then wait for reimbursement from an approved Rebate Aggregator. This provision naturally puts smaller businesses at a disadvantage to larger and more capitalized businesses.

As we are sure you’re aware from the many discussions in Congress about access to credit, many small businesses in the construction and home services industries are struggling with cash flow issues in the current economy. With potentially thousands of dollars in Silver Star and Gold Star rebates available on each project, contractors will be limited in the number of projects they would be able to carry, if any. The Home Star Retrofit Rebate Program, in the current form, would force homeowners to only use contractors who have the financial resources to float the rebate amount to a homeowner as a short term loan.

While the current version of the legislation requires the rebate to be paid to the contractor within 30 days, the clock also does not begin ticking until the project is complete, not when the project is bid or the materials have been purchased. The time to complete the project and submit a completed rebate application must be factored into the delay for a participating contractor.

Contractors not able to “float the loan” would opt out of the program all together, thereby not allowing themselves the opportunity to take advantage of the program. If contactors and retailers—in rural areas in particular—are forced to make this choice, which also means that homeowners dependent on their participation may not have the opportunity to take advantage of the program as well. This limited consumer choice will impact the bill’s job creation potential and effectiveness in helping homeowners make the desired energy efficient retrofits.

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. Changing the intended recipient of the rebate from the contractor to the homeowner will not affect the volume of rebates or success of the program. In fact, it will encourage more contractors and retailers to participate and therefore offer more options to homeowners to take advantage of the program.

The House-passed version of the Home Star legislation (H.R. 5019) had it right by requiring rebates to be sent directly to the homeowners. A homeowner rebate does not require the contractor to float the rebate, creates better opportunities for good paying jobs, while still granting the homeowners a substantial incentive to reach for higher efficiency improvements that will lead to lower utility costs. We urge you to support a similar modification to S. 3434.

Expand Contractor Certification Opportunities under Gold Star

We are also concerned that, under section 103 (b), only contractors who meet the definition of a qualified contractor and who are accredited by the Building Performance Institute (or who meet the requirements not yet set by the Secretary of Energy and the Administrator of the Environmental Protection Agency) may offer homeowners the more valuable Gold Star rebates.

Further, the new tax incentives proposed under Title II, Section 201 seek only to promote a singular organization – the Building Performance Institute (BPI) – and disallow equal access by all qualified and highly-trained workers, particularly small businesses that can legitimately undertake high-quality retrofit work. Not only is it unnecessarily expensive to attain and retain accreditation with BPI, but the geographic reach of the organization is highly limited, with few states having any meaningful saturation of BPI-accredited companies actually able to use the proposed incentive. We object to allowing a singular organization (BPI) to be the only eligible entity to participate in a federal tax incentive program for retrofits, particularly since such organization charges costly and inordinate fees to small businesses to achieve and maintain accreditation.

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 the whole home energy improvements. Despite exaggerated statements from some about the capacity for rapidly growing the number of BPI-accredited companies, the reality is that twenty nine states currently do not have a single contractor who could offer homeowners a pathway to Gold Star rebates. For those select few that may choose BPI accreditation – which essentially involves paying administrative fees and pledging good business practice – the training and accreditation costs can be thousands of dollars. Even if the promise of significant job growth actually materializes with Home Star, the enormous upfront administrative cost for contractors who are otherwise qualified based on job skills, licensing and/or workforce certification is a tremendous barrier.

In order to remedy this situation, we urge the Senate to expand the opportunities for homeowners to obtain Gold Star rebates for energy saving retrofits in the legislation. Otherwise, the job creation benefits of the Home Star Retrofit Rebate Program may not fully materialize. 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.

Sincerely,

Air Conditioning Contractors of America

Green Mechanical Council

National Association of Home Builders

National Lumber and Building Material Dealers Association

National Roofing Contractors Association

Plumbing-Heating-Cooling Contractors – National Association

cc:
Members of the Senate Committee on Finance
Members of the Senate Committee on Energy and Natural Resources
Senator Mark Warner
Senator Lindsey Graham
Senator Jeff Merkley
Senator Scott Brown
Senator Chris Dodd
Senator Kirsten Gillibrand
Senator Mark Pryor
Senator Mark Begich
Senator Amy Klobuchar
Senator Tom Harkin