In this issue...
UNCLE SAM WANTS YOU…
to Use Renewable Energy and Energy-Efficient Building Practices
Builders who incorporate energy efficiency and renewable energy practices into the design and construction of their homes can offer their customers numerous benefits, including slashed utility bills, increased comfort, improved health, higher resale values, and satisfaction with the knowledge that they are benefiting the environment. Today's skyrocketing and unpredictable fuel costs have amplified homeowner interest in saving energy, making the benefits of integrating energy efficiency and renewable energy even greater.
Fortunately, now is an excellent time to get started with renewable energy and energy-efficient construction practices. New federal tax incentives and rebates, energy-efficient mortgages and a plethora of state and local energy programs and initiatives offer financial motivation for builders and homeowners who may have been previously discouraged by the higher initial costs often associated with energy efficiency and renewable energy.
Federal Tax Incentives. The new Energy Policy Act of 2005 contains provisions for federal tax incentives for a variety of energy-efficiency technologies and practices. For example, builders who construct new homes that use 50 percent less energy than the requirements outlined in the International Energy Conservation Code (IECC) may receive a tax incentive of $2,000. Manufactured homes meeting ENERGY STAR® criteria may receive $1,000.
Additionally, homeowners can claim a percentage of the cost of a photovoltaic system or a solar water heater, up to $2,000. And, for existing homes, homeowners can benefit from tax incentives equaling 10 percent of the cost, up to $500, for upgrades such as insulation and envelope improvements, windows, and high-efficiency central air conditioners, heat pumps, furnaces, boilers, or water heaters, and ground source heat pumps. Because improvements must meet specific requirements and may be subject to caps, homeowners should review this provision
carefully.
Additional credits are available for commercial builders and manufacturers who offer high-efficiency appliances.
These provisions are available through December 31, 2007. However, the NAHB Energy Subcommittee is leading an effort to prolong them. "We'll be working on getting the benefits extended or even increased," said builder John Wesley Miller, a member of the subcommittee. "The higher oil prices go, the better chance we have of improving these incentives."
At press time, the specific details of how the IRS will enact the policy were not finalized. Updated information will be available from the IRS (www.IRS.gov), as well as from the Tax Incentives Assistance Project, or TIAP (www.energytaxincentives.org). The TIAP is designed to give consumers and businesses information on making use of the income tax incentives offered as part of the Energy Policy Act of 2005. Builders and homeowners may also want to contact their CPA for specific tax implications before beginning installation of energy-efficient or renewable energy technologies.
Energy-Efficient Mortgages. Energy-efficient mortgages (EEMs) can help homebuyers shoulder higher initial costs of advanced technologies such as photovoltaics, solar water and space heating, and energy efficiency. The EEM program, which is sponsored by the U.S. Department of Housing and Urban Development (HUD), takes the owner's savings on monthly uti-lity bills into account when determining how large a mortgage the household can afford. As a result, more new homebuyers can afford energy-efficient homes, and existing homebuyers do not need a separate cost loan for making energy improvements.
Conventional EEMs are offered by lenders who can sell their loans to Freddie Mac or Fannie Mae. The Fannie Mae loan also adjusts the value of the home to reflect energy efficiency improvements. With an FHA EEM, lenders can add 100 percent of the additional cost of energy efficiency improvements to the approved mortgage loan, for up to $4,000 or 5 percent of the home up to $8,000, whichever is greater.
State and Local Programs. Builders and homeowners can also find assistance in their own backyards. State and local energy programs provide various rebates, incentives, and credits for installing renewable energy systems and energy efficiency improvements. For example, the California Energy Commission's Emerging Renewables Program offers rebates to consumers who install qualifying renewable energy systems, such as photovoltaics, small wind turbines, and solar thermal electricity systems. In Arizona, a Solar Energy Credit offers taxpayers a credit for solar or wind energy systems for 25 percent of the cost or the system, up to $1,000. Wisconsin residents can receive a general property tax exemption for the value added by solar or wind energy systems, and the state's Focus on Energy Program, a public-private partnership, offers zero-interest loans and cash-back rewards for homes that incorporate photovoltaics, wind, and solar hot water systems.
Getting Started. Because of the wealth of state and local programs available, builders may want to begin by contacting their State Energy Office. State Energy Offices can also help builders and consumers understand federal income tax incentives. A list of State Energy Offices can be found at the State Energy Program (SEP) site, available on the DOE's Energy Efficiency and Renewable Energy website at www.eere.energy.gov/state_energy_program/seo_contacts.cfm.
Builders can also contact their local utility company to find out about any renewable or energy efficiency rebates, incentives and programs the company may offer.
The Database of State Incentives for Renewable Energy (DSIRE) is also a good starting point. The DSIRE, which can be found online at www.dsireusa.org, is a comprehensive source of information about state, local, and utility incentives that promote renewable energy.
Additional resources:
For 2006 EVHA Finalists, Effective Marketing is Key to Success
Each year, EnergyValue Housing Award (EVHA) winners raise the bar for incorporating energy efficiency into the
design, construction, and marketing of their homes. This year's winners, who were unveiled at the 2006 International Builders' Show in Orlando, Fla., are no exception.
The 2006 finalists include a Zero Energy Home, a passive solar concrete home, a manufactured home, and a home located in a co-housing development. Overall, the finalists demonstrated a stellar approach to air tightness combined with climate-appropriate efficiency technologies and techniques to average a Home Energy Rating System (HERS) score of 91.7, which is approximately 60 percent more efficient than the Model Energy Code requirements.
Yet EVHA builders understand that success extends beyond the construction process. Even the most efficient builders still face the challenge of customers who may know little about the value of energy efficiency or how one home performs differently from another. Even with recent hikes in energy costs, many buyers are initially more interested in the home's aesthetic features than its HERS score. This year's finalists demonstrated exceptional strategies for promoting energy-efficient homes and distinguishing themselves in the marketplace.
According to Jamie Sabin, president of Aspen Homes of Colorado, giving homebuyers too much information too quickly can actually repel customers.
"The biggest challenge is focusing your message," Sabin said. "People always want a single, simple idea, and building isn't a single idea. You have to give people something they can grab onto to get them interested in the details."
Aspen Homes, which was nominated as a finalist in the production home, cold climate and affordable home, cold climate categories, "grabs" potential customers with a widely advertised heating guarantee. The guarantee, which is calculated from the home's HERS rating, can make the idea of energy efficiency more tangible to customers. The company also offers a checklist entitled "Not All Homes Are Built Equally," which lists energy-efficiency features with straightforward descriptions.
"We used to have an Energy Center, with diagram after diagram," said Sabin, who added that customers who were just learning about energy efficiency did not respond well to overwhelming amounts of information. Now, the company uses smaller notes that impart easily digestible bits of information.
This is also a strategy used by Chisholm Creek Development, LLC, which was nominated as a finalist in the affordable home, moderate climate category. According to David Ritchie, Chisholm's president, the company posts "factoid" posters throughout their homes. The posters display statements such as, "Putting a geothermal system in a typical home is equal, in greenhouse gas reduction, to taking two cars off the road," and are intended to make energy efficiency easy to understand. "We want to communicate that energy efficiency is not mysterious," Chisholm said. "It's something that takes careful planning, but it's not rocket science."
For The Cohousing Company, which was nominated as a finalist in the multifamily home, hot climate category, outreach was a crucial component in the success of its Cohati Cohousing development, which sold out before construction began without the aid of a single real estate agent. Several years before the company began construction of the community, it initiated local interest in the concept by widely distributing its book, A Contemporary Approach to Housing Ourselves, in bookstores, and providing public forums where potential homebuyers could learn more about the project.
For a complete listing of this year's winners and more information on the EnergyValue Housing Award program, visit the NAHB Research Center's website at www.nahbrc.org/evha. The EVHA is coordinated by the NAHB Research Center in partnership with the U.S. Department of Energy through the National Renewable Energy Laboratory, and the National Association of Home Builders.
Residential Construction Performance Guidelines for Professional Builders & Remodelers
These performance guidelines, compiled by NAHB and published by BuilderBooks in 2005, are exceptional in their coverage of all areas of residential construction, and are an effective tool for anyone interested in consistent, high-quality construction.
Builders and remodelers can provide copies of the Consumer Reference Book for the guidelines to their customers to help set and manage expectations about the construction process, reduce callbacks, and improve consumer satisfaction. The guidelines can also assist in resolving issues about reported construction defects or deficiencies, and help builders and remodelers arbitrate disputes and avoid litigation.
The guidelines are organized into 12 chapters, in order of construction sequence. The Glossary of Common Terms, list of Organizational Reviewers, and a Subject Index offer additional resources.
Each item in a chapter specifies: 1) Observation (description of deficiency or construction condition); 2) Performance Guidelines (standards, acceptable tolerances, or standard practice); 3) Corrective Measures (recommended corrective action, where applicable); and 4) Discussion (commentary, when appropriate).
There are some areas and items within the guidelines that may be considered negotiable, or there may be other acceptable standards of practice. Also, some permitted tolerances referenced in the guidelines are greater than would be generally acceptable to many home builders, remodelers, and consumers. For example, under the "Basement & Crawl Space Poured Walls" section, it is noted that a wall bowed 1 inch in 8 feet, and a cold joint crack that exceeds 1/4-inch in width are acceptable - those would seem excessive to many contractors and inspectors, and are higher than industry standard practice. Bowed walls less than 1/2-inch in 8 feet, and cracks less than 1/8-inch, would be more tolerable to most builders and consumers.
The Guide was reviewed by more than 300 home builders, remodelers, and trade organizations, and is a valuable resource for builders, remodelers, trade contractors, consumers, homeowners, and inspectors. To purchase the Guide or for more information, visit www.builderbooks.com.
Field Evaluation: Insulating Blanket Helps FPSF Withstand Winter
Last year, Indianapolis home builder C.P. Morgan began investigating frost-protected shallow foundations (FPSF), a PATH technology that allows builders in colder climates to build a shallow foundation, saving both time and money. The insulated foundation prevents frost heave, increases energy efficiency and improves homeowner comfort. In addition to these benefits, C.P. Morgan particularly liked another advantage that FPSFs offer: the ability to build year-round.
In cold weather, concrete can be covered with an insulated blanket during the curing period to prevent cracking. Once the slab has cured, the blanket is removed and construction begins. However, C.P. Morgan was concerned about how well an FPSF would perform during freezing temperatures if construction on the rest of the house was delayed due to labor/scheduling or weather.
To determine whether the slab alone would be susceptible to frost heave and cracking, the NAHB Research Center installed 25 sensors at various locations and depths under the foundation footers and slab. Sensors were also placed at 6-inch intervals up to three feet in the ground in two reference locations away from the foundation. The foundation was poured and monitored with and without the insulating blanket at regular intervals throughout the 2004-2005 winter season.
Data gathered from the project showed little chance of frost heave or cracking when the insulating blanket was left in place. However, once the insulating blanket was removed, soil temperatures plummeted, dropping below freezing levels under the shallow areas of the slab.
Based on the results of this PATH Field Evaluation, it is recommended that builders who want to take advantage of the year-round building benefits of FPSFs should cover the slab with an insulating blanket until outdoor air temperatures remain above freezing or the structure is built on the foundation.
For more information on FPSFs, visit the PATH Technology Inventory on www.ToolBase.org.
Retaining Employees in a Tight Labor Market
The construction industry's labor market is notoriously transient, especially these days when it seems like there's too much work and too few skilled laborers to do it. Quality-focused companies strive to establish consistency in the home building process, but in a tight labor market where cash is king, retaining loyalty among work crews has become almost an art form.
Because paying more isn't always the final solution, keeping crews in tact remains a challenge. Some common issues employers contend with include:
- Crews abandoning ship because they are criticized for errors
- Preferential treatment of a "good" employee being met with dissatisfaction from others
- Choosing between accepting sub-par craftsmanship or no workers at all
- Competitors drawing crews away by offering higher wages
These obstacles don't mean that the quality of a company's work inevitability has to decline. Although ensuring quality results in a tight labor market is a challenge, there are approaches that successfully counter this negative trend. The National Housing Quality (NHQ) Program, which was developed to provide builders and trade contractors with business solutions and systematic approaches to quality control, recommends that companies focus on a few basic methods to overcome these issues.
- Respect the work force and give them reasons to put down roots; make the company a great place to work.
- Always pay workers on time and with transactions early enough in the day to make bank deposits.
- Provide ongoing training to keep workers informed of proper techniques and management expectations.
- Create a genuine team environment by providing shirts, hats, or other unifying company attire.
- Support employee development by inviting a tool supplier to the jobsite for a repair/adjustment seminar, to demonstrate proper operation methods, or to demonstrate new tools and applications.
- Never discipline or embarrass an employee in front of his co-workers, rather pull him aside to discuss the issue at hand.
- Always praise employees in front of their co-workers if they go above and beyond or are an example of what the team should be.
- Be open to hiring back a crew who took a job elsewhere, but did not get the satisfaction they were seeking.
Trade contractors of all types constantly scramble to keep qualified people on their jobs and to keep their builder customers satisfied, but the door swings both ways. Builders must provide the proper incentives to secure the best efforts of their trade partners, and continue to meet customer demand. Regardless of the state of the labor market, homebuyers will always demand quality workmanship in their new home. It's a tough job, but well-run companies across the country are applying these approaches and others, and continuing to satisfy their customers.
Keeping good workers on board takes more than just money. Respect, opportunities for growth, and a sense of community within the company are a good start. For more information on how applied quality assurance techniques can improve your business, visit www.nahbrc.org/quality.
Zero Energy Homes: The Results Are in
The Summer 2003 issue of ToolBase News reported on the grand opening and purchase of the groundbreaking Tucson Zero Energy Home, built by builder John Wesley Miller in conjunction with the NAHB Research Center. Since the home's purchase, the Research Center has been tracking its daily energy usage.
For 2005, the home's owners averaged a monthly utility bill of about $15 - the first time that a Zero Energy Home (ZEH) has produced over 80 percent of its total annual energy from solar energy systems. The bills were lowered from a $30 per month average with various improvements to the solar thermal system, including a new controller and new back-up demand heater, in late February 2005. The percentage will approach 90 to 95 percent this year, when the full benefits from the solar thermal system improvements are realized.
This remarkable achievement demonstrates the considerable energy savings afforded by the ZEH approach, which combines renewable energy sources with a home that requires less energy, thanks to an efficient design, and uses the energy it requires more efficiently, thanks to efficient appliances and lighting. The Tucson home made extensive use of active and passive solar energy for its electrical needs (the home does not use gas), as well as a solid masonry design, R-14 polystyrene exterior wall insulation, radiant barriers, and high-efficiency windows, lighting, air conditioner and appliances.
Zero energy homes are connected to the local electric utility, like any typical home. When the ZEH home cannot produce enough energy with its renewable energy system, it uses energy from the utility. When the home produces more energy than it needs, it sends the surplus back to the utility. In the Tucson home, this reciprocal relationship resulted in the very low monthly utility bills, mentioned above. And, because such a large portion of their energy supply is provided by the sun, those bills will remain stable over time, even as utility prices increase.
A second ZEH project in Califon, N.J., is set to be the nation's first net-zero energy remodel. Working with the NAHB Research Center, Asdal Builders retrofitted a 4,000-square foot Victorian home with a photovoltaic roof panels, a geothermal heating and cooling system, and a solar hot water system. As a result, the home is expected to be very close to a net-zero energy structure once it is occupied. Results will be posted on ToolBase.org as they become available.
For additional information on the design, construction, and marketing of the Tucson, Ariz., and Califon, N.J. ZEH projects, visit the ToolBase Zero Energy Homes Project web pages at www.ToolBase.org/zeh.
ToolBase: New Web Tools for the New Year
ToolBase.org has always offered the home building industry a valuable assortment of online resources. Now, the site offers several new tools and improvements that make it even more useful and easier to use than ever before.
The redesigned PATH Technology Inventory still offers an easily-navigable clearinghouse for finding updated and practical information about up-and-coming technologies that demonstrate great potential for improving housing performance. And now, the Inventory also offers more extensive information about codes, product installation, implementation issues and solutions, cost, and builder testimonials.
Over 40 technologies in the inventory also feature detailed Computer Assisted Design (CAD) drawings. ToolBase developed these drawings to provide builders and architects with assistance when speci-fying innovative technologies. With this feature, architects and builders can now generically spec out blueprints for construction, without the need for specifying a particular manufacturer for an advanced technology. CAD drawings are available in four different formats: DWF, DWG, and DXF files, which are compatible with various types of CAD software, and PNG files, which are compatible with virtually any known image software and web browser capable of viewing standard and web graphics.
Another new addition to the ToolBase.org line-up is ToolBase TechSpecs - technology reports written specifically for builders; "Your Blueprint for Using Advanced Building Technology." Each TechSpec focuses on incorporating advanced technologies and construction practices into mainstream building projects, and details what it takes to go from your current product or practice to the advanced technology. The write-ups include images, code considerations, definitions, and a checklist of the steps and considerations needed before making the switch.