After a slow start, the Indiana Builders Association in recent weeks has been “ramping up” its program to weatherize low-income housing and, in the process, create remodeling jobs. Builder-members participating in this effort are now weatherizing about 150 homes per week, and sometime this summer the HBA expects to meet its goal of weatherizing 3,300 units, says CEO Rick Wajda.

“This program couldn't have come at a better time, and it has definitely created more jobs,” says Tom Grinslade, owner of Grinslade Premier Homes in Fishers, Ind., who has had several of his employees trained as energy auditors to participate in the trade group's program, which started weatherizing homes last October 8.

Indiana awarded the association $21 million of the $130 million the state received from what the federal government allocated for weatherization from the $787 billion American Recovery and Reinvestment Act of 2009. However, through Feb. 16, Indiana had completed just less than 5%—974 out of 19,736—of the housing units it plans to weatherize under this grant. And that’s nowhere near the worst performance among all states, according to a progress report on the Department of Energy’s (DOE) Weatherization Assistance Program, which went into effect a year ago.

The program depicted in that report hasn’t exactly exploded out of the starting gate. Only $368 million of the $4.7 billion approved and awarded to all 50 states and five territories had been spent through mid-February. And only 30,297 housing units had been weatherized out of the 586,015 planned for this two-year program, well behind what DOE envisioned would be completed by the program’s halfway point.

While some states—such as Delaware (which has weatherized more than one-third of its planned total), Mississippi (26.9%) and Ohio (21.2%)—seem to have their acts together better than others, five states—Alaska, Hawaii, Rhode Island, Texas, and Wyoming—and the District of Columbia had weatherized zero homes.

Indeed, the 10 states that had received the highest amounts of weatherization grants aggregately had completed only slightly more than 2% of the housing units planned. One of those states is Michigan, which had weatherized only 385 of 33,410 housing units. Bob Filka, CEO of the Michigan Home Builders Association in Lansing, says his association has been trying to put members together with local community action agencies through which the stimulus money for weatherization is being funneled. So far, though, builders’ involvement has been sporadic. “It’s a marketing issue and an implementation issue,” he states.

Filka sounds more optimistic about a partnership the Michigan HBA just entered into with the state on a new retrofit grant program with “energy efficient parameters.” This would incorporate elements of another program called “Michigan Saves,” which is being piloted in the Traverse City, Mich., area. Launched only a few weeks ago, Michigan Saves is a collaboration of Member Credit Union, which is providing personal loans to homeowners for energy upgrades; Brown Lumber Installed Sales & Services, which provides the manpower; and Cherryland Electric Co-operative, which is charging homeowners on behalf of the credit union through their utility bills. Sally Talberg, Michigan Saves’ program and operations manager, tells BUILDER that this program is backstopped by a $6.5 million loss reserve for potential defaults.

Numerous Roadblocks

States using federal dollars for weatherizing low-income housing took longer than expected to get their programs rolling for a variety of reasons. In its first three months, award money could only be used for training installers and auditors. These stimulus dollars also fall under the Davis-Bacon Act, a statute from the 1930s which mandates that all workers on federally funded projects be paid their markets’ prevailing wages. That created planning and administrative challenges for contractors and other participating agencies until the Labor Department finalized its wage determinations for residential weatherization workers in September.

In Indiana, the HBA hired an administrative staff to subcontract weatherization jobs in 38 counties for homes whose household incomes are less than 150% of their area’s poverty levels. (The trade group pays contractors, whose bills are approved through the state’s Housing and Community Development Authority.) Ironically, one of the reasons the state’s weatherization program took longer to initiate was because Gov. Mitch Daniels reportedly viewed the stimulus in terms of job creation and reached out to builder groups to get them involved. That meant builders and contractors had to be qualified, and auditors had to go through six weeks of training.

Grinslade, the Indiana builder whose company is auditing the weatherization of three to four houses per week under the BA's program, says the training regimen has been quite involved. First there was a pretest, on which workers had to score at least an 80 to move to two weeks of online training, which has 10 chapters followed by a 100-question test. Then there was a few weeks of classroom training and one week of field training. Grinslade isn't complaining, though, because he believes that his company will be able to market itself as an energy auditor even after the weatherization program is completed.

Another, unexpected, mitigating factor that slowed the Indiana BA's program initially has been this winter’s severe weather, which Wajda says made it difficult to find HVAC contractors available to participate in the weatherization effort. “They’re already busy, and we have a backlog of homes that are waiting for the HVAC guy before they can be audited.”

The Indiana BA excludes window replacements from its weatherization menu because, says Wajda, it didn’t think the return would be enough for its members. So its builders are tackling projects such as cleaning and/or replacing furnaces and water heaters, caulking, and blow-in insulation. Dennis Spidel, a custom builder in Angola, Ind., says most of the 35 weatherization jobs he’s done through this program have been insulation-related, which cost anywhere for $500 to $2,500.

Spidel says job scheduling “has been a bit of a nightmare.” And his company isn’t used to “testing in and out of a project, which we have to do to make sure the houses aren’t too tight [in terms of ventilation]. We’ve learned a lot from this.” In fact, Spidel says this program “has worked pretty well for us. It’s almost fully automated now, and I don’t have to go out and bid for these jobs.” His company does four to five weatherization jobs per week, and he adds that next week he’ll be going through the installer training himself.

Picking Up New Business

One of the more sophisticated weatherization programs in the country is Project Reenergize, which the Builders Association of Minnesota launched on Oct. 1, 2009. This program received only $3 million of the $185 million that Minnesota got in stimulus money for weatherization, but by the end of 2009, Project Reenergize had completed 800 weatherization projects, out of a total of 1,423 housing units that had been weatherized throughout the state by all agencies as of Feb. 16, 2010, according to the DOE report.

Pamela Perry Weaver, executive vice president of the Minnesota builders' group, says that the Project developed a 2.5-hour program that trained 800 contractors and 200 auditors in three weeks. She points out that Minnesota contractors has an advantage over those in some other states because they are required to go through seven hours of training before they can be licensed. In addition, Minnesota has one of the strictest energy codes in the country, so its contractors were already familiar with weatherization techniques.

Project Reenergize is somewhat unique in that it doesn’t weatherize specifically low-income housing. In fact, there are no income limitations, as the Project bases eligibility on the size and age of the house: no larger than 3,000 square feet, and built before 2000. “We approached this purely from a market perspective, to create jobs,” says Weaver. So when a contractor goes through the training program, it is given only two rebate packets and is responsible for finding homeowners who want the work done. After that, the contractor receives more packets based on the quality of its work. The Project does not require third-party certification; instead, it trains its participating contractors and auditors how to self-certify jobs and report the results.

The maximum rebate available to a homeowner is $2,500, or $4,000 when attic air sealing is done. Weaver notes that contractors in this program have been getting a lot of ancillary remodeling work that’s unrelated to weatherization. “Our average rebate check is $2,300, but the average contract has been for $11,000, so this is going well beyond weatherization,” she says.

Project Reenergize should have 1,400 weatherization jobs completed by April 1, says Weaver. And its successes haven’t gone unnoticed. Weaver sits on a task force that the National Association of Home Builders has formed recently to come up with ways to get more builders across the country involved in the weatherization program. The Minnesota Housing Finance Agency, which is administering that state’s low-income housing weatherization, is modeled after the Project and is being marketed to contractors that way. And one of the drafts reportedly circulating around Washington for the Obama adminstration’s proposed $6 billion “Cash for Caulkers” program borrows ideas from Project Reenergize.

Weaver admits her association's program isn’t perfect. “I still consider it a pilot,” she says. If she had to do it over again, she’d require that a certain number of windows to be weatherized or replaced and would lower non-attic rebates. That said, Weaver has been lobbying Minnesota to allocate more of its stimulus award to Project Reenergize.

She thinks that states’ weatherization programs would be farther along if DOE had “prescribed the outcome it wanted and how that’s measured,” and then let the states design the process themselves. But Weaver isn’t entirely convinced, either, that federal government’s dual goals—to weatherize low-income houses and to create jobs—are compatible. She wonders about bureaucrats’ understanding of market dynamics when she recounts a teleconference she participated in last month with representatives from the White House, the Council of Economic Advisors, HUD and DOE. “One of the questions that surprised me was, ‘Where are you getting the people to do the work?’" Weaver recalls. 

Her response: "They’re our members."

John Caulfield is senior editor for BUILDER magazine.

Editor's Note: New information from Indiana builder Tom Grinslade has been added to this story since its initial posting on March 2, 2010.

Learn more about markets featured in this article: Washington, DC, Providence, RI, Anderson, IN.