Tom Sullivan is an attorney with a background in small-business and regulatory matters who works as the National Association of the Remodeling Industry’s lobbyist. He spoke with REMODELING about the issues he’s working on now and what small-business owners in the construction industry can expect in the near future.
REMODELING: In June the federal court denied a construction industry petition to review the Environmental Protection Agency’s elimination of the opt-out provision, which would have allowed contractors to forgo lead-safe remodeling practices with the homeowners’ consent if no pregnant women or young children lived in the home. What are next steps?
Tom Sullivan: First, NARI is very supportive of legislation that would restore the opt-out when jobs present no risk to pregnant women and children ... NARI and its members have no problem shouldering the costs to protect customers and their children when there’s a risk. But they have a big problem when additional costs are forced on homeowners when there is no risk. Legislation has been introduced in the Senate and the House and NARI is working to build support.
RM: How else are you working with the EPA?
TS: EPA has been enforcing LRRP by focusing on paperwork discrepancies (distributing brochures and stapling the Renovate Right pamphlet to job folders). That approach really doesn’t get to the heart of protecting women and children. NARI keeps pushing EPA to go after non-certified contractors who are endangering homeowners and their families. I think we have successfully convinced EPA to move away from concentrating on paperwork and going after egregious violations. Our hope is that an effective EPA enforcement strategy will undercut the price advantage of contractors who have decided to avoid the law and underprice bids to the detriment of NARI members and others who have become certified. We’re slowly getting there, but the reality is EPA has only filed five national lead cases for work practice violations.
Also, NARI is supportive of EPA’s willingness to have states run the LRRP program. EPA wants to hand it over to the states. They acknowledge that what may seem great in D.C. may not work in Milwaukee. I give EPA credit for thinking this way.
RM: Are remodelers taking lead paint seriously? Are they getting certified?
TS: As of mid-May 2012, there are 122,476 firms in the construction and remodeling sector that are EPA Lead-Safe Certified Firms. According to NARI, there are 652,000 remodeling businesses in the United States.
Not all the 122,476 firms that are EPA-certified are remodeling firms (they may be painting firms, window firms, etc.). However, even if they were all remodeling firms, that means EPA has certified less than 20% of the remodeling firms nationwide.
RM: What other issues are you working on?
TS: Tax issues are important to NARI members. The IRS headaches faced by most small businesses are the same for NARI members. Also, NARI is very involved with energy efficiency issues.
RM: Tell us about tax policy.
TS: There’s a lack of understanding of how tax policy impacts small business. Whenever you hear someone say how great [lowering the corporate rate is] for business, red flags should go up.
You have to have individual rates in the discussion when people are talking about tax reform. ... The vast majority of small-business owners file as individuals. Over 50%of NARI members are S-corps. Over 80% of NARI members file taxes as individuals ... Job creation [w]on’t happen until you look at the individual rates, lowering them and simplifying them (there are seven different rates for individuals).
The debate on tax reform will happen between December and February, and NARI will make sure that reforms to individual rates are part of the discussion in Washington, D.C.
RM: Why no tax reform until next year?
TS: Because the partisan back and forth between the presidential campaigns will make near-term compromise almost impossible. President Obama says that he wants tax cuts for the middle class, and Governor Romney says that Obama’s tax proposals will hurt the middle class. Distinguishing rhetoric from reality may become impossible until after November 6th.
Tax Credits & More
RM: How about the energy efficiency tax credits?
TS: At 2009 levels [the 25C Home Energy Efficiency Tax Credit] resulted in $25.1 billion in tax credits. NAHB did the calculations for job creation for every $100,000 spent on remodeling. They say that in 2009 ... 278,610 jobs were created from the tax credits. About half those jobs were for the construction and remodeling sector.
Unfortunately, that 2009 [tax credit] level got cut by two-thirds. Now it’s a $500 tax credit and it’s not moving the dial for people to get HVAC systems and windows. NARI is trying to push that number back up to $1,000 to get the program working again.
RM: What other legislative initiatives should remodelers be concerned about?
TS: There are two others:
The SAVE Act makes such good sense. [This Act pushes to get lenders to consider energy savings when underwriting loans.] It’s almost embarrassing to say it hasn’t been passed into law. But it has to be nudged along. NARI is pushing for its passage.
My favorite legislation is Small Business Regulatory Flexibility, HR-527, passed in the House around Christmas time and Senator [Olympia] Snowe from Maine introduced S-2010. NARI wants this to be Senator Snowe’s legacy bill. If passed, it will give small business a bigger role in the regulatory process.
Right now when a rule is developed, many times small businesses don’t have a bite at the apple. This would force agencies to be more sensitive to how their regulations impact small business.
—Stacey Freed, senior editor, REMODELING.