ARRA Tax Credits
Breathing New Life into Energy Star®—Not
Ringing the Death Knell
by Arlene Zavocki Stewart
When I earned my Home Energy Rating System (HERS) certification,
I was determined that it would be a real credential. My small ratings
practice continues to be one of the most valuable parts of my consulting
firm. Seeing how all the codes, standards, rules and regulations get played
out in the field is priceless. So I had a distinctly different reaction
from the rest of the fenestration industry when .30/.30 hit at the end
I went through the same hullabaloo on the Energy Star Homes side when
the $2,000 builder tax credit came out a few years ago. My builder clients
and colleagues all wanted to know what they needed to do to get the credit,
which turned out to cost twice the credit amount. None of them pursued
the tax credit but at least half started taking a more serious look at
building Energy Star homes. Not all actually did, but definitely more
did than before. The tax credit provided the jolt.
Since history is doomed to repeat itself, I tend to think this tax credit
will not ring the death knell of Energy Star. Rather, it’s the warning
bell—the bellwether of the storm to come. The tax credit doesn’t provide
the same jolt to the building industry. For my home builder association
colleagues, $1,500 for remodeling is nice, but more disposable cash has
to be spent to get the credit—dollars people are concerned about spending,
even if it does save them money later. They are interested but not excited.
Weatherization Program: Worth Participation
So, if the tax credit is only a small squall, what is the real storm?
That would be the Weatherization Assistance Program (WAP) for low-income
families. Many in the industry may have never even heard of it, as historically,
it has been very difficult for windows to participate. This is due to
limited funding and low return on investment (ROI) ratios compared to
other energy-saving provisions. My experience is that the low-income participants
wanted new windows, but windows almost never rank high enough on the proposed
improvement list to be approved by the auditor.
With the stimulus package, the WAP rules, qualifications and available
dollars have been expanded. For my state, by the end of 2008, the program
will grow by 5,000 percent. No, that’s not a typo—there really are three
zeros in that number and millions of dollars allocated.
This is the jolt the homebuilders need. Roughly $5,000 government dollars
are available per house for improvements. Contractors are paid directly
by the community action agency that engages them, and that, in turn have
to spend the dollars within 36 months. Many WAP auditors will be directed
to bundle as many other available state and utility rebates and grants
into each audit recommendation as they can. Auditors will most likely
look into the windows tax credit, but just as with Energy Star homes,
a readily available Energy Star window may actually turn out to be more
cost-effective with a bigger return on investment. Everyone knows Energy
Star provides value.
If you haven’t talked to your dealers about this program yet, you should.
If your dealers’ installers are not already participating, they will need
to find out how to become approved, because the program is highly regionalized.
WAP generally requires its contractors to lock in rates for 12 months
at a time, because fixed pricing is critical to determining which measures
yield the biggest bang for the buck. Work with your suppliers and dealers
to create an attractive package to compete with all the other provisions
from which an auditor can choose. After all, they’re the same competitors—HVAC,
insulation, etc.—you have for the tax credit.
So, while Energy Star may no longer be at the top of the heap, second
is sometimes the better place to be.
Arlene Zavocki Stewart is president of AZS Consulting Inc., specializing
in sustainable building advocacy, certification, training and promotion.
She can be reached at firstname.lastname@example.org. The views and opinions
expressed in this article do not necessarily reflect those of this magazine.
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No reproduction of any type without expressed written permission.