Remodeling Trade Partners and the ARRA

“None of us embrace change by nature, and many trades are not enthusiastic about jumping into new things,” says Mark Scott of Mark IV Builders, a 21-year-old design/build company in Bethesda, Md.

In some cases, the wariness is warranted. Scott remembers one established insulation company facing between five and 10 lawsuits a week over asbestos-related illness. Insulation contractors stopped using asbestos in the early 1970s and switched, in most cases, to fiberglass. Many remain reluctant to look beyond this reliable, readily available, and relatively affordable product.

Scott himself dismissed many principles of green remodeling until his recent plunge into all things green, including getting certified by the Building Performance Institute (BPI). He is now a self-described “air-sealing zealot,” and is grateful that his primary insulation contractor, Accurate Insulation, of Upper Marlboro, Md., is proactive about new products and methods.

Bob Burgess, owner of Accurate Insulation, suggests that, for starters, remodelers should confirm that their trade partners are experienced with existing homes; not only do older homes typically have the greatest need for energy upgrades, but they tend to present challenges that don’t exist in the new construction that occupied most installers during the building boom. They also tend to require more problem-solving and good manners. (See “ Trade Contractor Best Practices” for more about this.)

Talking contractors out of any kind of old-school mindset — or even shaking their inertia — can be challenging. Calfayan Construction, of Huntingdon Valley, Pa., has been using advanced framing techniques for two years, but operations manager Reis Calfayan still faces skepticism that the methods can’t possibly be strong enough. (Advanced framing per se is not affected by the ARRA tax credits but is a core green-building principle.)

“What they don’t understand is that I’m building exactly to the engineered specs,” Calfayan says. “It’s hard for most contractors to look beyond what they’ve always done,” especially when the alternative methods or materials “aren’t big fancy things with blinking lights.”

Other remodelers gently coax their partners along, banking on the notion that their long-term patronage will inspire a willingness to do what it takes to stay in good standing with loyal patrons.

“We help our trade contractors understand how we want the work done and why we want it that way,” says Doug Selby of Meadowlark Builders, in Ann Arbor, Mich. “Most are happy to learn something new and have the work. We generally don’t work well with subs that are resistant to change or are surly.”

If you need to exert initial pressure, they’ll probably come around quickly with a little education and hands-on experience. “With our first full green build,” a new home in Falls Church, Va., “we kind of forced it on our contractors, and they were all willing to jump in and help,” says Kyle Benjamin, production manager at Carnemark Systems + Design, in Bethesda, Md. Now the company’s long-term painting contractor, for one, is proactive about researching new materials.

“I think it’s easier to get our long-term trade contractors to want to research the green movement” than to seek out new partners solely for their green commitment, Benjamin says. “They understand where we’re coming from,” and appreciate the steady work.

Besides holding impromptu conversations with his trades about green building methods and materials, Benjamin reiterates expectations at trade contractor luncheons that he hosts before significant projects, as well as in written specifications for everything from a specific low-VOC paint to three insulation types for different parts of the house.

Scrutinizing Types

It’s not enough to communicate specifications to trade contractors. The general contractor, as the homeowner’s primary point of contact, must also ensure that trades do the work properly — and then double-check their results.

Sustainable remodeling typically means upgrading standards of quality, and that might require you to step up your supervision.

The trade partners of Mark IV Builders “know they’re more scrutinized now,” says production manager Andy Hannan. The company has always been careful about whom it hires, but “it used to be an insulation company would come in, do their thing, and say, ‘OK, I’m done,’” he says. “Now we go back and visually spot-check everything,” right down to the caulking of joints, regardless of whether the local jurisdiction requires it. The company is also creating checklists to be used in conjunction with its new energy services division, which Scott was inspired to create after his BPI training.

Is this degree of oversight necessary, under the terms of the ARRA? No, but it shows forward thinking. Under the stimulus legislation, remodeling work is largely prescriptive: That is, the law specifies windows’ maximum U-factor, natural gas furnaces’ minimum AFUE, and insulation’s minimum R-value, for instance.

But, with few exceptions, the ARRA does not require proof that the desired results were achieved and the home is performing to a greater standard. Momentum is growing to enact standards that make homeowners eligible for additional incentives based on measured improvements in their home performance. (See MarketWatch, for more on this.)

For now, however, the money may be too good and the bar set too low for remodelers to safely presume that their subcontractors will do the work safely and effectively.

“Half the challenge is getting people to do the work right,” says Carl Seville of Seville Consulting, in Decatur, Ga. “It’s good that homeowners can get credits for doing certain prescriptive things, but it can be done badly.”

“We’re concerned that people who may not be qualified to do this work will come rushing in,” says Larry Zarker, CEO of the Building Performance Institute. His analogy: “It’s like a hurricane hitting and becoming a magnet for all the old pickup trucks in the country.” On the plus side, he says, BPI’s training programs, which cover the building envelope, heating, and HVAC, have grown dramatically. Around 400 individuals were certified in 2005, but as many as 12,000 are on track to be certified in 2009, Zarker says.

Will you have to pay more for trade contractors who invest in continual training? Possibly, but think long-term — and reserve a special place in your imagination for the vision of an angry homeowner who turns to you when things don’t work out as planned.

“What does it cost you to deal with problems and warranty issues?” asks Michael Anschel, of Otogawa-Anschel Design-Build, in Minneapolis, and consulting and training company Verified Green. He goes so far as to predict a wave of lawsuits — in some cases because the IRS denies the homeowners’ tax credits, in others because their homes don’t perform as expected, in others because of health risks, particularly with building-envelope work. “If this energy-efficiency stuff isn’t done with the right kind of oversight, then we are looking at dying homes and sick people,” Anschel says. (See “ Five Not-So-Easy Pieces,” for more.)

Protect yourself, Anschel says. He suggests that remodelers include, or advise homeowners to include, a third-party auditor in their services. “Tell them, ‘Don’t just hire an insulation company. Hire an auditor or a building scientist to assess the value and determine what should be done.’” (See “ Setting Priorities,” for more about this.) And have that professional come back and verify the results, to be sure the work was done properly.

“We’re dealing with systems, and you can’t lowest-bid systems,” Golden says. “For remodelers to guarantee performance, we have to make sure all the components are installed properly.” —Leah Thayer, senior editor, REMODELING.

Seekers of Truth

Ensure that your trade contractors promote tax credit work accurately and that they jump through whatever hoops are necessary to make sure that your clients will get the credits.

Within weeks after the stimulus legislation took effect, reports began circulating of homeowners believing, mistakenly, that certain products and services were eligible for the tax credits. Such widespread confusion has been tracked back, in some cases, to misleading, unclear, or flat-out misrepresented advertisements and marketing messages from installers and manufacturers.

And it can put remodeling contractors in the uncomfortable if not money-losing position of needing to put projects on hold while trying to sort out the truth, or being the bearer of the bad news that those windows or labor costs, for instance, are not in fact eligible for the tax credits.

Review all product specifications prior to signing off on or ordering any products, advises remodeler Alex Iosa of Iosa Construction, in Dunedin, Fla., who learned this the hard way. It may seem onerous, but he advises to check with the manufacturer and the installer, and to review the legislative language itself to be sure the products do, in fact, qualify.

Also bear in mind that the homeowner tax credit is just $1,500 total for most types of improvements (see the “ Stimulus at a Glance” chart for specifics). Given the aggressive promotions of many manufacturers and installers, your clients may be under the mistaken impression that they get a $1,500 tax credit for their new windows, another $1,500 tax credit for their new roof, another $1,500 for their new insulation, etc.

Again, protect yourself. You may not know if the taxpayer has already made other improvements that qualify. To be safe, advises Efficiency First in an ARRA summary for contractors, discuss the credits with clients by saying: “By installing qualified equipment, the taxpayer may be qualified to claim 30% of the installed costs (up to a $1,500 limit) in tax credits.”

Save your receipts and manufacturers’ certification statements or be sure that your trade contractors do if they bill the client directly. ( Click here for more information.)

And, to be doubly careful, stick to your knitting: You’re a remodeling contractor, not an expert in taxation or legislation. “You can’t sell the tax credits like they’re real,” says Matt Golden of Sustainable Spaces, nor should your valued trade partners. Give your clients as much useful information as you can, but tell them to see their tax professionals with specific questions. —Leah Thayer

Trade Contractor Best Practices

Simple checklists can go a long way toward ensuring that your trade partners do energy-retrofit work properly. “It’s our job to create the standard,” says Andy Hannan of Mark IV Builders. “We can’t expect trades to come to our job and follow our standards if they’re used to [new-home production building techniques].”

Develop your own checklists, or download green-savvy templates, such as Seville Consulting’s “trade contractor management system” and “field-tested checklists” for a broad range of areas. Carl Seville also recommends the Thermal Bypass Checklist, downloadable free from Energy Star at www.energystar.gov.

Encourage trade contractors to be proactive. Long before the 2009 ARRA, Accurate Insulation started retraining its workers with an eye on retrofit as “the growing part” of its business, says Bob Burgess, the company’s president. That training covers simple on-the-job behavior, such as language and jobsite cleanliness, as well as a one-page checklist that requires the signatures of the homeowner, the installer and, if possible, the supervisor. —Leah Thayer

Five Not-So-Easy Pieces

Five errors are especially common when an unseasoned trade contractor tries to build green, according to Mark LaLiberte, a leading expert in building science. In the January/February issue of ECOHOME (also published by Hanley Wood), LaLiberte lists the following:

• HVAC ducts installed in unconditioned attic or other spaces.

• Tight homes built without intentional ventilation.

• Improper flashing and drainage planes for water management.

• Poorly selected and installed insulation.

• Wasted resources. Invest the extra time with your trade partners to calculate and specify precisely the quantities you need. —Leah Thayer