For immediate release
July 23, 2010
Media contact: Melissa Broadus
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The following letter was sent to the leaders of the United States Senate from ACCA Chairman John Sedine and ACCA President Paul Stalknecht.

Dear Senators,

We understand that last week you received letters from the Home Star Coalition (HSC) and the Building Performance Institute (BPI) that specifically referenced our organization, the Air Conditioning Contractors of America (ACCA).

We are writing to clear up several inaccurate statements included in those letters, further explain our position on the proposed "Home Star" legislation under consideration in the Senate, and seek your support in making the Home Star program a successful one. The way to do this is to simply change two small provisions in the existing draft language.

We are sure that the Home Star Coalition has the very best intentions, but since the success of the Home Star program will depend on its implementation by qualified contracting businesses, we want to make sure that you hear from those of us with an understanding of actual contracting operations.

The Home Star Rebate Structure

First, the HSC is correct when they write that there is "consensus among contractors" regarding the ideal structure of a rebate incentive. However, the contractor consensus is the opposite of the HSC's position!

In fact, on July 19 the Senate leadership received a letter from six national contracting associations, including ACCA, representing over 193,500 contractors nationwide, expressing the true contractor consensus, which is that the most efficient and effective way to offer a rebate program to homeowners is to pay the homeowner, and not require a small business contractor to float a loan it can ill afford for a lengthy period of time.

Yes, the proposed Home Star legislation mandates that rebate aggregators pay contractors within 30 days (although the 30 days would start with the filing of paperwork, NOT with the actual purchase of equipment, which may occur weeks before the job is done). The question we ask is, "Or what?"

The actual reality is -- our thousands of members have learned firsthand through participation in multiple incentive and rebate programs in states all over the country … the deadlines are often missed, and the cash-strapped contractor has no real recourse. Even if there are "penalties" the contractor still doesn't get paid.

We are talking about small business livelihood here, real people, real jobs … not an abstract number on a ledger in a corner office on Wall Street.

As just one example, one small contractor told us this week that it took 14 months for a rebate aggregator to "catch up" to a 30-day deadline for providing rebates of only $350-500 per customer, a much smaller amount than Home Star rebates would be. Fortunately for this contractor, the program sent the money to the homeowner. Otherwise, the contractor would have built up more than $53,000 in accumulated receivables, and may have been forced to lay an employee off.

Residential contractors are almost all very small businesses, which as you know are facing a serious credit crunch right now.

Requiring these contractors to become bankers will place highly-skilled, highly-qualified contracting businesses at a competitive disadvantage, and funnel most of the Home Star rebate jobs to large chains and national franchise operations.

I'm sure you agree that the best way to ensure the development of a "green collar" workforce that is sustainable for the long-term is to support the community-based businesses who are our economy's driving force … not place them at a disadvantage.

The HSC writes that they believe a homeowner rebate will create bureaucratic delays and result in the filing of improper forms by homeowners. This is wholly inaccurate, as we have never suggested that homeowners should be required to file paperwork.

In fact, in order for the program to work properly, contractors should complete paperwork on behalf of the homeowner (just as they do now for many state incentive programs). We only ask that the program be structured so that the federal rebate is sent to the homeowner, after the sale, not carried as a receivable by the contractor.

Similarly, the HSC's argument that a homeowner rebate would increase rebate volume does not make sense to us. The volume of rebates depends on the number of jobs performed, not at whom the rebate is directed. It would only increase rebate volume to the extent that expanding the number of participating contractors will increase opportunities for homeowners to conduct efficiency improvements to their homes, which is the purpose of the program.

Accreditation Requirements for "Gold Star"

We believe the accreditation requirements for participation in the "Gold Star" program, as written, are unnecessarily burdensome on small business, and unnecessary for meeting the program's goals. Here's why.

The "Gold Star" program is designed to promote whole house energy improvement, and include documentation of the work. That documentation is done essentially through the performance of a software evaluation before the work is done, and a software evaluation after the work is done.

But the bill also requires that contractors be accredited by the Building Performance Institute (BPI), or meet some other requirements to be set by the administration, but which are not stated in the legislation. The HSC states that they support the specific inclusion of BPI in the bill, because "contractors have an immediate path to certification" in a program that will "be spent out over two full years."

If the purpose of the Gold Star program is to promote whole home energy improvements, then let's make the bill about promoting whole home energy improvements.

We think that documentation is a good idea. So we believe that contractors applying for a Gold Star rebate on a homeowners' behalf should also be required to include an independent report from a third-party energy auditor.

But we do NOT believe that contractors should be required to attain accreditation from any specific organization, because there is no evidence that any such accreditation program in existence has any impact on actual energy improvement.

The Home Star legislation as drafted would force highly-experienced, high-quality small contracting businesses to do one of three things:

• Spend thousands of dollars on training and equipment in order to compete for Home Star jobs; or,
• Choose not to participate in the Home Star program, thus denying homeowners choice and funneling federal rebate dollars to a smaller number of firms; or,
• Become a sub-contractor to someone who may have little more than a few hours of classroom (or online) training, but is somehow considered by this legislation to be more "qualified" in home performance.

In its letter to you, BPI wrote, "BPI has implemented processes to ramp up accreditation quickly through an online application which allows companies meeting the minimum requirements to be accredited within hours."

We assume BPI wrote this to convince you that, despite the fact that there are 29 states with NO BPI-accredited contractors, and more than 80% of BPI-accredited contractors are in only TWO STATES, BPI believes the accreditation process is so simple and quick that there will soon be many more accredited contractors.

But they only raise further questions about the requirement. If this accreditation is really so easy to get, how beneficial can it be?

It certainly takes a lot more than a few hours, or even a few weeks, or even a few months - to develop expertise in quality mechanical systems, which are the largest user of energy in America's homes.

And it certainly takes a lot more time than that to develop the customer relationships and quality reputations that small HVACR contractors have built all across America, in every state, and every community.

We think there is a better, simpler, far more practical and far more beneficial approach to Gold Star. Leave in an accreditation option if you must. But also allow contractors the option of foregoing the unnecessary accreditation, and hiring an independent third-party recognized rater (e.g., RESNET-recognized HERS rater, BPI rater, etc.) to document the efficacy of Gold Star jobs.

We remain strongly supportive of the goals of the Home Star legislation. However, we also feel strongly that this legislation, if it is to meet its goals, must take into consideration the operational and economic realities of those companies who actually work in the field and will actually conduct the retrofits.

We pledge to work with you toward the development of a Home Star program that will work for all of America, including the two important changes we describe above.

Sincerely,

THE AIR CONDITIONING CONTRACTORS OF AMERICA

John Sedine
Chairman of the Board

Paul T. Stalknecht
President & Chief Executive Officer

For more than forty years, the Air Conditioning Contractors of America has served the educational, policy and technical interests of the small businesses that design, install, and maintain indoor environmental systems. ACCA is a non-profit organization with members in all 50 states and over 20 countries. Learn more at www.acca.org.

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