Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Remodelers expect lead paint rules to be major challenge
Remodelers are getting ready to deal with the challenges of the new EPA lead paint regulations.
In just two months, remodelers will face a major change in the way they have to do business when the Environmental Protection Agency's new Lead Renovation, Repair and Painting rules take effect for homes built prior to 1978. Some have called it the biggest change to hit the remodeling market in decades.
Despite that, our research shows many remodelers are not aware of the coming rule changes, and even among those who are aware, a significant number do not plan to be certified for lead- safe renovations by the April 22 effective date of the regulations, despite the potential of $37,500-a-day in fines for violations.
We surveyed our readers and talked to remodelers and others in the industry about just what all this means for the average firm.
Remodelers are worried that the new regulations will continue to widen the increasing gap between professional firms and the fly-by-night "Chuck in a truck." Just like many small operations that don't get licensed, have liability insurance or follow other legal requirements, the fear is that they won't bother following the regulations.
That was the top threat of the new rules identified by our survey, with 37 percent of remodelers saying it was the biggest challenge to their business and more than half identifying it as one of the top two challenges.
"We suspect that we will see much more of that, much more of people just hiring unlicensed contractors or doing it themselves," says Tom Garcia, CEO of Southern Evergreen, a remodeling and home building company in Summerfield, N.C.
Barely a third of remodelers say they understand the new lead paint regulations.
While willful disobedience may be part of the problem, many contractors probably have simply no idea there are new regulations on the way.
"We've been talking about this in the associations for years, but there are a lot of folks out there that don't have the vaguest idea this is coming," says Jon Chandler, CEO of the Oregon Home Builders Association.
The EPA hasn't done nearly a good enough job getting the word out about this, Garcia says.
"We're on top of this thing, but you get down to a painter that's out there driving around in his pickup truck, he may not even know about this," he says. "For some period of time, years probably, we're going to be competing against folks that probably have not even heard of all this."
While the majority of remodelers are either certified or plan to be, a significant numbers don’t intend to get certification.
The numbers bear that out. Only 36 percent of the remodelers who responded to our survey knew what the new rules entailed. Another 52 percent had heard about the rules but didn't know any details about them, and 12 percent didn't even know there were new regulations on the way. Increased project costs
Why this matters, of course, is that it's an additional cost that not everyone will incur. The increased cost of doing business was cited by 21 percent of remodelers as their top concern with the rules.
The big question, then, is how much will compliance actually cost remodelers. The EPA puts the figure at $35 a job, a number most remodelers consider laughable. Although NAHB hasn't reached an exact dollar figure, the association's members agree it'll be higher than that, says Therese Crahan, executive director of the NAHB Remodelers. NAHB has been working on this issue for years with the EPA and other groups.
Most remodelers expect it to cost them significantly more than the EPA estimate of $35 a project to follow the new rules.
"From a labor cost standpoint, it's easily going to add 20 or 30 percent," Garcia says. "And that's not just in the field, but also in the office as well because there's so much documentation that needs to occur to be able to prove that the work was done properly in the event of an EPA audit."
Not everyone agrees that project costs will significantly increase under the new regulations.
Rich Cowgill, president of Vision Design and Build in Willow Springs, Ill., is a trainer with Public Health and Safety, a Chicago-based, EPA-accredited training provider. He has taught more than 100 remodelers so far and says that the additional cost of compliance is the biggest concern they have when they get to class.
"What I'm finding, though, is that for most remodelers, at least the good ones, it's not adding much to the job," he says. "Most guys do put Visqueen down on the floors, put up dust barriers so dust doesn't float down the hallway. It's just the cleaning that gets more involved."
However, most remodelers said it will significantly add to their cost of doing business. Only 2 percent of remodelers in our survey said they expect the regulations to add less than $100 to the cost of a job — less than the 4 percent who said it would add more than $5,000 to the average project. Twenty-two percent put the cost at $500 to $1,000, and an equal number said it would cost between $1,000 and $5,000.
Remodelers say most of their clients will not be willing to pay more for them to follow lead-safe work practices.
Who's going to pay for it?
If there is a significant additional cost for compliance, as most remodelers believe, the challenge will be convincing homeowners to pay for the work. Many said that that will be a major challenge of the new regulations.
Nearly a quarter of remodelers said none of their clients will pay the additional cost of the work and another 39 percent said less than 25 percent of their clients will bear the expense.
Many remodelers report that their clients know nothing about the new regulations — not surprising, as there has been little attention given to educating homeowners about them. While the EPA has promised a consumer education campaign was forthcoming, nothing has happened yet.
Most remodelers don’t have a favorable opinion of the lead rules, but many are undecided.
"Consumer awareness is probably the biggest lag with this," says Matt Watkins, an environmental policy analyst with NAHB. "Consumers don't know about this. That really falls on the EPA, and we haven't seen anything from them."
The latest word from EPA is that a campaign might be ready to be launched in July — three months after the rules take effect, Watkins says.
"That's really going to be the challenge — figuring out how to sell this to your potential clients," he says.
Selling the additional cost to homeowners will probably require an emphasis on safety and hoping that they will want to follow the law, Garcia says.
"We're just going to sell it on the safety aspect, telling them, 'It's a requirement by the federal government, and it's designed for the safety of the occupants of the home,'" he says. "And we hope that the prospective client will feel that's important enough to undergo the additional cost, but we can't control that."
Increased costs of doing business and competition from contractors that won’t follow the rules are top concerns.
On average, completing the necessary training to be certified by April did not rate as a major concern for remodelers, coming in at an average rank of No. 5. However, many of those who have been working on the issue for the last several years see it as a significant challenge.
The EPA has been slow to approve trainers, and while there are more than 100 accredited firms as of this writing, many states, including Arizona, Iowa, Louisiana, Oklahoma and West Virginia, do not have any.
"It's unlikely everyone that needs to can get trained," Watkins says. "We don't see them having the firms necessary in place to train everyone."
NAHB had proposed to the EPA a six- to 12-month delay in enforcement, but that idea was rejected.
That concern prompted the Oregon Home Builders Association to create an online certification program. The online training replaces the classroom component of the EPA-required training and would only need to be supplemented by a 3-hour hands-on course, says Chandler.
"When we looked at the number of contractors that would have to take this class and the length of the curriculum and so on, it just seemed the logical way to do it," he says.
After completing the training, contractors could print out a certificate of completion, take that to an approved, hands-on trainer and complete the training that way. The program was designed for Oregon-based firms but will be open to contractors throughout the country, Chandler says.
"Once they start enforcing, it's going to be a nightmare," Chandler says. "We're working as hard as we can to get people trained, but just logistically, there aren't enough hours in the day to get everyone certified."
Part of the issue may be that many remodelers appear to be waiting to get certified. As of late December when our survey was conducted, only 12 percent of remodelers said they had been certified, although another 47 percent said they intended to be certified by April. Still, 15 percent of remodelers said they did not plan to get certified, and 17 percent said they were unsure if they would.
Those who do no work in pre-1978 buildings, not surprisingly, were the most likely not to get the necessary certification, with only 19 percent of them saying they were or planned to be certified. However, 10 percent of remodelers who get more than half their business from pre-1978 homes said they had no plans to get certified.
Cowgill says that although his classes in the Chicago area can accommodate 40 students, so far he has averaged about 12 per session.
"I think a lot of them are choosing not to do it until somebody gets nailed," he says. "The fine is up to $37,500 per day, but until they see some article in the paper that this guy got nailed for $50,000, they're not going to take it seriously."