WASHINGTON — Being a reputable, qualified and honest contractor is always tough. Let's add the current economy. New construction is nearly frozen. People are hanging on to what they own.
The National Association of Realtors said, "Sales of previously occupied homes plunged last month to the lowest level in 15 years." According to the Associated Press, "The drop in July sales was led by 35% plunge in the Midwest. Sales were down 30% in the Northeast, 25% in the West and 23% in the South."
This seems to indicate people are putting money into their homes. That's not the case. Mortgages, equity loans, and second mortgages are tougher to get. Simply, people don't have the money for repairs and improvements.
At first glance Home Star looks like a solution to the cash problem. So it seems, but it includes what should be scary words for a contractor — "accredited contractor" and "certified workforce." Here's why.
Under the current version of Home Star (part of Senate Bill 3663, "Clean Energy Jobs and Oil Company Accountability Act of 2010"), to qualify for the Gold Star program, a contractor must be an accredited contractor with a certified workforce. What exactly does that mean?
According to Home Star: "Accredited contractor means a residential energy efficiency contractor that meets the minimum applicable requirements established under subsections (a) and (b) of section 3004."
"Certified workforce" is defined as the term 'certified' means a residential energy construction workforce in which all persons performing installation work in the areas of building envelope retrofits, duct sealing, or any other additional skill category designated by the Secretary of Labor, in consultation with stakeholders and the Secretary of Energy, are certified through an existing certification that covers the appropriate job skills under:
(A) an applicable third-party skill standard established
(i) by BPI;
(ii) by North American Technician Excellence;
(iii) by the Laborers’ International Union of North America;
(B) and applicable third-party skill standard established in the state in which the work is to be performed, pursuant to the program operated by the Home Builders Institute in connection with Ferris State University, to be effective beginning on the date that is 30 days after the date notice is provided by those organizations to the Secretary that the program has been established in the state unless the Secretary determines, not later than 30 days after the date of the notice, that the standard or certification does not equal in quality to the standards and certifications described in subparagraph (A); or
(C) other standards that the Secretary shall approve not later than 30 days after the date of submission, in consultation with the Secretary of Labor and the Administrator."
Confused yet? If not, read on.
Remember the reference to Section 3004? Section 3004 lists the contractor qualifications for Silver Star and Gold Star.
Gold Star contractors must meet the requirements for Silver Star and "(B) is accredited by BPI;" or "…under other standards that the Secretary shall approve…" and it drones on several more paragraphs describing the requirements and processes to qualify.
At this point, it is fair to say that to qualify for Gold Star a contractor must be a BPI Accredited Contractor with a BPI certified workforce. What does that mean to a contractor?
Under the bill, an accredited company must demonstrate continued compliance to the BPI requirements to maintain its accredited status, and accredited companies must remain in compliance with BPI's Quality Assurance Program requirements in order to qualify for renewal consideration.
To apply for or to renew BPI accreditation all contractors must pay an annual fee consisting of an accreditation fee and the quality assurance fee. The quality assurance fee is determined by the company's gross income from BPI-standards related work. The table of fees goes from $1,000 to $7,000 and up. To renew accreditation, a contractor must pay BPI $1,500 to $7,500 and up.
Beyond the money, there are some other requirements.
A BPI Accredited organization shall:
- Participate in the BPI Quality Assurance Program;
- Employ BPI Certified professionals;
- Provide certain records or financial data that can substantiate BPI Standards-related work volume to BPI upon request;
- Accredit each business location.
- Employ a minimum of one full-time building analyst and one full-time specialty designation according to the work performed as required. The same individual can hold both these designations.
- Must have an email address and Internet connection.
- Must agree to use the courts in New York.
The part about a "certified workforce" requires that all employees be BPI certified in any covered specialization they perform. Additionally, a BPI Building Analyst is required at each company location. For example, if you have branches in two cities that provide HVAC services, you are required to have a your workforce certified in HVAC and one BPI Building Analyst at each branch.
There are the two options for BPI Certification: with classes or without classes. Although BPI does not require classes, it does recommend them. Classes are available through BPI Affiliates at $1,595-$2,150 and up (not including employee wages, travel expenses, lost time, etc.).
The "without class" direct examination option requires a written examination and a field examination, both provided by BPI accredited proctors. Price: $500 plus. To qualify for Gold Star, a typical three-truck, three-technician contractor running an HVAC business out of the same location would pay:
Accreditation fees: first year $1,500, second year $2,500-$5,000 (assuming a gross income of $750,000-$2 million).
Certification fees: initial for three technicians plus the mandatory Building Analyst certification Exam only: $2,150 ($550 x 3 + $500 x 1[Building Analyst]) Class option: $6,780 ($1,695 x 4)
Renewal (CEU credits + exams): Please note this does not include cost of obtaining BPI-approved CEU credits. Thirty CEUs each: $1,050 ($350 x 3); 10-29 CEUs each: $1,500 ($500 x 3); less than 10 CEUs: $1,650 ($550 x 3).
During the expected two-year life of Gold Star, the example contractor must pay BPI (and its affiliates) between $7,200 to $14,930 in order to be eligible.
The bottom line is, after paying to become a BPI Accredited Contractor with a BPI Certified Workforce a contractor has the privilege of adding an additional 30 days (some say "30-days plus") to your cash flow timeline.
Can anyone see problems with Home Star as written?
TOM MEYER
DIRECTOR OF GOVERNMENT & PROFESSIONAL RELATIONS
ESCO GROUP